Burial Insurance vs. Life Insurance

Life insurance and burial insurance, both designed to relieve financial burdens upon the death of an individual, are two very different types of insurance policies.

One major difference in the two policies is benefits. Life insurance pays one lump sum in the event of a death. For example, if you have a policy with a death benefit of $500,000, then your beneficiaries will receive that amount at the time of your death. Your family can use the money to pay for funeral expenses or for whatever is wanted or needed. There are no restrictions on how the money can be used. Burial insurance, often referred to as funeral insurance, is intended to pay for final expenses only and no lump sum check will be issued to use as your family members see fit. The benefit from a burial policy is basically a pre-paid funeral plan.

Another difference between burial and life insurance is the potential for the accumulation of cash value for the policy. Some life insurance policies accumulate a cash value as the policy is paid on. This cash can be drawn out of the policy; however, the death benefit is lost. Under some policies, cash can be obtained through a loan and then be repaid. With burial insurance, the is no cash value for the policy and you cannot borrow against it.

Life insurance comes with two options--whole life and term life. Whole life insurance exists for the duration of your life. Term life will expire after a pre-determined amount of time. Burial insurance coverage will be in place until death and will pay for final expenses only.

Life insurance provides more benefits and options for policy holders than burial insurance. Both types of insurance provide funds in the event of death, however, that is where the similarities end.

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