Life insurance vs. funeral insurance: which one should you get?

Should I get life or funeral insurance?

We value our editorial independence, basing our comparison results, content and reviews on objective analysis without bias. But we may receive compensation when you click links on our site. Learn more about how we make money from our partners.

What’s the main difference between life and funeral insurance?

Both life insurance and funeral insurance provide a lump-sum benefit in the event of death or terminal illness, but both products still offer different benefits that can impact your decision of what option will work best for you.

We’ve outlined what each covers and what can right for you — depending on your situation.
Promoted
PolicyGenius

The easy way to compare and buy life insurance

Get a free quote from more than a dozen term life insurance companies.

  • Find the right amount of coverage that you need.
  • Compare prices from over a dozen companies.
  • Free online access to experts.
  • Already helped over 4.5 million people shop for insurance.

    Life insurance vs. funeral insurance:

    In order to make a more informed decision about which form of coverage is best for you and your loved ones, consider the following pros and cons:

    Pros
    Cons
    • Beneficiaries can use the paid out benefit however they like.
    • If you’re in poor health, coverage may be expensive.
    • Generally more affordable compared to funeral insurance.
    • Your benefit payout may be received after the funeral.
    • Some policies also cover accidents, illnesses and injuries.
    • A medical examination may be required, which is not ideal for people with health issues — particularly seniors.
    Pros
    Cons
    • Benefit is paid as soon as the claim has been approved.
    • Premiums can be more expensive than premiums on term life insurance.
    • Medical exam is usually not required.
    • You may live older than expected and end up spending more on a policy than it would have cost for a funeral.
    • Suited to people with health issues who struggle get affordable life insurance or cannot get coverage at all.

    Do I need funeral insurance if I have life insurance?

    Most life insurance policy benefits are enough to cover the expense of a funeral. If you feel the amount you’re currently covered for isn’t enough, you can add additional coverage to your life insurance policy.

    What if I’m over the age of 50?

    It’s important for people over 50 and senior citizens to consider whether life insurance or burial insurance is the better option. You should assess your current financial situation, as well as your loved ones circumstances in order to make a more informed decision. Reaching out to an adviser is also a good start for figuring out what will be best for you and your family.

    Get a life insurance quote today

    A closer look at funeral insurance

    The basic purpose of burial insurance is taking care of all funeral expenses. The following reasons make funeral insurance a useful product:

    Key benefits

    • Simple. Since it will only cover for your funeral expenses, there aren’t other factors to understand.
    • Inexpensive. Typical funeral insurance cover is between $5,000 and $15,000, making it one of the most affordable insurance products on the market.
    • No medical exam. Since funeral insurance is paid upon death, there’s almost always no pre-existing medical conditions or medical exams upon application.
    • Prompt payout. Once the insured dies, you can process your claim and receive the benefit payment to financially take care of the funeral.

    Is funeral insurance for me?

    • If funeral expenses are your only worry when you die, then this is the ideal insurance product for you.
    • If you’re ineligible for life insurance, then funeral insurance may be suitable for you.

    A closer look at life insurance

    Depending on the type of life insurance policy you take out, you can be covered for death, accidents and illnesses. The key difference between life insurance and funeral insurance is that you get a lump sum benefit that you can use for whatever you’d like.

    Types of life insurance payments available

    Life insurance has different premium payment options — funeral insurance has none. When it comes to life insurance premiums, you can choose between graded and level premiums.

    • Graded premiums. Graded life insurance premiums have cheaper initial payment but increase every year during the life of your policy. This means that as you grow older, your premium payment also goes higher.
    • Level premium Level premiums have higher initial payments, but the premium remains the same throughout the policy. Unless you make changes and adjustments to your policy, you’ll pay the same amount for the life of the policy.

    Why should I consider either type of coverage?

    Whether you get funeral or life insurance, here are some of the benefits you can get from it.

    • Eliminate financial burdens for loved ones. By taking care of your future expenses, including your funeral and mortgage payments, your family can focus more on important things instead of worrying about their finances.
    • Peace of mind. Everybody agrees that one of the reasons people worry is money problems. With adequate insurance, you can be certain that any extra expenses that come with your death are covered.
    • You help your family adjust faster. Aside from the emotional side, death can also affect the family’s finances, especially if the person is the breadwinner. When you have insurance — whether it’s funeral or life — your loved ones will be able to grieve properly without worrying about paying whatever debts or financial obligations you might leave behind.

    Bottom line

    Just remember that before you sign your name on the dotted line, read the fine print carefully so there will be no unpleasant surprises or false expectations when you make a claim because of some misunderstanding.

    Find a life insurance policy today

    Use our magical comparison tool to find the best rates in your area.

    Your information is secure.

    Richard Laycock

    Richard is the Insurance Editor at finder, and has been wrangling insurance Product Disclosure Statements for the last 4 years. When he’s not helping Aussies make sense of the fine print, he can be found testing the quality of Aperol Spritzes in his new found home of New York. Richard studied Journalism at Macquarie University and The Missouri School of Journalism, and has a Tier 1 certification in General Advice for Life Insurance. He has also been published in CSO Australia and Dynamic Business.

    Was this content helpful to you? No  Yes

    Ask an Expert

    You are about to post a question on finder.com:

    • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
    • finder.com is a financial comparison and information service, not a bank or product provider
    • We cannot provide you with personal advice or recommendations
    • Your answer might already be waiting – check previous questions below to see if yours has already been asked

    Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Privacy and Cookies Policy and Terms of Use.
    Go to site