Pre-need life insurance is a specialized form of insurance designed to cover the costs of funeral and burial expenses in advance. This type of policy allows individuals to plan and pay for their final arrangements before they are needed, hence the term "pre-need." By purchasing a pre-need life insurance policy, policyholders can lock in the costs of funeral services at today's prices, protecting their loved ones from potential price increases in the future.
The benefits are typically paid directly to a designated funeral home upon the policyholder's death, ensuring that the funds are used as intended. In this article, we’ll discuss the benefits of pre-need life insurance and explain the difference between pre-need coverage and final expense insurance so you can find the policy that best suits your needs.
Benefits of Pre-Need Life Insurance
There’s a variety of reasons individuals may decide to purchase a pre-need life insurance policy, including the benefits this type of coverage offers. These include:
Peace of Mind: This type of coverage helps ensure that your funeral arrangements are taken care of in advance, offering reassurance that your celebration of life will go according to your wishes.
Financial Planning: Pre-need life insurance locks in today's prices for future funeral services, protecting against inflation.
Support for Loved Ones: Having pre-need life insurance can help reduce both the financial and mental burden on your loved ones during a difficult time.
Guaranteed Acceptance: Pre-need life insurance has less stringent underwriting requirements than traditional term life insurance or permanent life insurance policies.
Flexible Payment Options: Many pre-need policies offer various payment plans, making it easier to fit premiums into your budget.
Pre-need insurance can also work alongside other life insurance policies, ensuring comprehensive coverage for all end-of-life expenses.
The Difference Between Final Expense Insurance and Pre-Need Life Insurance
While both final expense insurance and pre-need life insurance are designed to cover end-of-life costs, they have distinct characteristics and purposes. Understanding these differences is crucial for making an informed decision about which type of coverage best suits your needs.
Purpose and Timing: Pre-need life insurance is intended specifically for pre-planning and pre-paying funeral expenses, while final expense insurance provides a cash benefit to cover various end-of-life expenses, not limited to funeral costs.
Beneficiary Designation: With pre-need life insurance, the funeral home is typically the beneficiary of the policy. Instead, with final expense insurance, the policyholder can choose a family member, another loved one, or even a trust or charity as their beneficiary.
Flexibility: Pre-need is typically less flexible than final expense insurance, as it's tied to specific terms for the policyholder’s funeral arrangements.
Fixed Cost: Pre-need life insurance usually locks in funeral costs at current prices, while final expense insurance provides a set benefit amount, but doesn't guarantee funeral costs.
Overall, pre-need life insurance is more specific but offers cost certainty for funeral expenses, while final expense insurance provides more flexibility in how the death benefit can be used, including paying off medical bills, credit card debt, or other financial obligations left behind by the deceased.
Explore The Right Life Insurance for Your Needs With SelectQuote
Choosing between final expense and pre-need insurance depends on your specific circumstances, financial goals, and preferences for end-of-life planning. If you’re curious about pre-need life insurance, contact SelectQuote. Our licensed insurance agents have nearly 40 years of experience guiding people through decisions about life insurance. They’ll make the process quick and easy by comparing plans from trusted carriers all in one place.
