The purchase of burial or funeral life insurance is a practical way to feel more confident knowing you are not going to leave unfinished business when you die. You don’t want to leave bills that can become a burden on your loved ones.
There are two types of plans – Final Expense Policy funded by Life Insurance and Final Expense Policy funded by a Trust. Below is the difference between the two!
Final Expense Policy funded by Life Insurance
Final Expense Policy funded by Life Insurance, also known as burial insurance, is specifically designed to cover your expenses and funeral costs after a loved one passes away.
A Final Expense Policy funded by life insurance means:
- You pay monthly premiums
- Premiums are fixed for life
- Underwriting is required
- Death benefits are tax-free to your estate or beneficiary
- Leftover benefit gets paid to your estate or beneficiary
Final Expense Policy funded by a Trust
Protecting your assets at any age is important, but never more than when you are confined to a nursing home or need to apply for Medicaid.
A Final Expense Policy with a Trust means:
- Single-pay lump sum required to fund the Trust
- Monies dedicated to funeral expenses are completely protected from creditors, such as nursing homes, hospitals, lawyers, etc.
- Leftover benefits get paid to your estate
- Proceeds used for funeral expenses will avoid probate
- The policy may be considered an excluded asset in order to qualify for Medicaid and Supplemental Security Income (SSI)
- Proceeds paid to an estate is tax free