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What is Funeral Insurance?

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    Funeral insurance, simply put, is a life insurance policy that pays for your funeral, burial, and other "last expenses." Burial insurance, final expense insurance, and preneed insurance are all terms used to describe funeral insurance. Although these regulations are fundamentally the same, there are a few changes that we'll go over with you. Let's call it burial insurance for the sake of simplicity.

    It's important to remember that funerals are extremely expensive events that might put a strain on your family's finances. Funerals might cost thousands of dollars these days, however, like with anything, it all relies on the choices you choose. Purchasing funeral insurance can assist in covering these costs and provide piece of mind.

    The average cost of a funeral in Australia is $7,449, according to a 2018 Finder.com.au poll, making it a financial commitment for your family after you pass away. One of the biggest issues they may confront is that they will want to give you the finest send-off possible, yet they may be concerned about the cost.

    You pay a regular premium for your funeral insurance policy with Funeral Insurance. When you pass away, your family receives a lump sum payment, which is normally made within 24 hours of making a valid claim. To assist you in planning a funeral for a loved one, look through our comprehensive list of Melbourne Funeral Services.

    How Much Does Life Insurance Cost?

    The price of life insurance varies greatly depending on a variety of criteria. The sort of life insurance you purchase will be one of the most significant cost variables. For the same level of coverage, a term life insurance policy is much less expensive than a whole life insurance policy.

    The following are some of the most common factors that influence life insurance premiums:

    • Age. You'll pay less for an insurance if you get it when you're younger. This is because your chances of dying are lower.
    • Sex. Females have an almost five-year greater life expectancy than males. As a result, men tend to pay more for life insurance than women.
    • Health. Your health has a significant impact on the cost of life insurance. To determine your life expectancy, the insurance will look at your previous and current medical conditions. When a loved one dies, the last thing you want to worry about is funeral arrangements. Peter Tziotzis Orthodox Funerals offers a diverse religious and traditional funeral services that will accommodate your needs and reflect the life of your loved one.
    • Lifestyle. Higher life insurance rates can be attributed to your driving history (such as a DUI conviction), criminal background, and dangerous employment and hobbies (such as scuba diving).

    How Does Life Insurance Work

    Life insurance is a popular asset that many people include in their long-term financial plans. Purchasing life insurance protects your loved ones by providing the financial support they may require after you pass away. For example, you might get life insurance to help your spouse pay their mortgage or other costs, or to pay for your children's college tuition.

    When buying life insurance, it's crucial to understand how it works and how the proceeds of your policy will be distributed to your beneficiaries. This might assist you in determining the optimum payment choice for your estate planning objectives. We provide religious and traditional funeral services at Peter Tziotzis Orthodox Funerals.

    A sort of insurance contract is life insurance. When you buy a life insurance policy, you agree to pay premiums in order to maintain your coverage. If you die, the life insurance company can pay a death benefit to the person or people you specified as policy beneficiaries.

    Some life insurance policies allow you to receive both death and living benefits. A living benefit rider allows you to access the death benefit of your policy while you're still alive. When you're terminally ill and need money to pay for medical care, this form of rider can help.

    When purchasing life insurance, it's important to consider:

    • How much coverage you need
    • Whether a term life or permanent life policy makes more sense
    • What you'll pay for premiums
    • Which riders, if any, you'd like to include

    A life insurance calculator can aid in the selection of a death benefit in terms of coverage quantities. A term life insurance policy protects you for a specific period of time, but a permanent life insurance policy protects you for the rest of your life as long as premiums are paid. Term life insurance is less expensive than permanent life insurance, however permanent life insurance can provide benefits such as cash value accumulation.

    Main Types of Life Insurance

    Term Life Insurance

    According to the Insurance Barometer Report, term life insurance is the most popular type of life insurance offered, in addition to being the most affordable (71 percent of purchasers).

    Term life insurance provides coverage for a certain period of time, and the premium payments remain the same throughout the policy's tenure. The most common policy lengths are 10, 15, 20, 25, and 30 years.

    Your beneficiaries can submit a claim and receive the death benefit money tax-free if you die during the policy's term.

    When the policy's term ends, you may be able to renew it in one-year increments, which is known as guaranteed renewability. However, the rate of renewal will increase each year.

    Permanent life insurance

    Permanent life insurance provides coverage for the rest of your life. It costs more than term life because it:

    • It can last for the duration of your life.
    • Usually builds cash value.

    Over the course of the policy's life, the cash value component grows tax-deferred. It serves as the policy's savings component. You can usually borrow against the cash value of the policy or take a withdrawal. You can obtain the cash value of the policy minus any surrender charges if you decide to cancel it.

    Because the cash value of some policies might build up over time, don't expect to have access to a large sum of money straight once. The predicted cash value will be shown on your policy illustration.

    There are several varieties of permanent life insurance:

    • Whole life insurance has a fixed death benefit as well as a cash value component that rises at a guaranteed rate. Many whole life insurance policies provide dividends, which can be used to lower premiums or increase cash value.
    • The flexibility of universal life insurance is typically superior to that of whole life insurance. Within certain limits, you may be able to change your premium payments and death benefit. Depending on the policy type, the cash value of a universal life insurance policy will grow. An indexed universal life insurance policy, for example, will have cash value linked to an index such as the S&P 500. You can usually choose and manage investment subaccounts in a variable universal life policy.
    • Burial insurance is a low-cost life insurance policy with a low death payout, usually between $5,000 and $25,000. Burial insurance is intended to cover solely the costs of the burial and final expenses.
    • Survivorship life insurance, often known as "second to die life insurance," covers two people, generally a married couple, under one policy. The policy pays out the death benefit to the beneficiaries once both spouses have died. Survivorship life insurance is typically purchased as part of a larger financial strategy to support a trust or pay federal estate taxes.

    How to Choose a Life Insurance Policy Type

    It might be difficult to find the correct life insurance policy with so many options available.

    To begin, choose between term and permanent life insurance.

    If you just need life insurance for a short period of time, consider a term life insurance coverage. For example, if you want insurance to cover your working years as a potential "income replacement" if you pass away.

    If you have a tight budget, term life insurance is a smart option. Because term life insurance only lasts for a set period of time and is not a cash value policy, the premiums are lower than those for permanent life insurance. Peter Tziotzis Orthodox Funeral Directors are here to help make the funeral process as smooth and stress-free as possible for you and your loved ones.

    Your life insurance needs may change as you progress through different periods of life. Your choices will be determined by your policy and insurer. A lot of term life insurance policies can be converted to permanent life insurance policies. You can convert your term life insurance policy to a permanent coverage without having to reapply or take a life insurance medical exam.

    Permanent life insurance is a good alternative if you want to grow cash worth. But, depending on the policy, assume you're buying a permanent policy solely to profit from the cash value accumulation. In such situation, you're better off placing your money into a savings or investment vehicle than than a permanent policy, because you won't be paying for the life insurance and charges. A permanent life insurance policy, on the other hand, will cover you for the rest of your life.

    Also, cash value isn't usually meant for recipients. Any cash value reverts to the life insurance company upon death. The death benefit of the policy, not the death benefit + cash value, is distributed to your beneficiaries. However, some policy types will provide a death benefit as well as cash value, but at a higher cost.

    What Are the Benefits of Life Insurance?

    Most individuals are aware of the most important advantages of getting life insurance: If you die unexpectedly, your family gets the money, and you get the peace of mind that they'll be able to carry on without you. While those advantages apply to all types of life insurance, other major benefits are dependent on the type of policy and the quantity of coverage you receive. There are additional advantages for women. Peter Tziotzis Orthodox Funerals offers a full range of funeral services to help make this difficult time a little bit easier for you and your family. 

    All life insurance can provide you with financial assurance that your family will be financially secure in the event of your death. However, the more life insurance you buy, the more benefits it will provide to your family in the event of a disaster. Some employees, for example, are provided with a small amount of life insurance — say, $25,000 – through their employer. While that may appear to be a substantial sum of money in theory, it may only be sufficient to cover funeral costs and a few mortgage payments in practise. However, with a higher coverage amount, your family will be able to take advantage of even more perks, such as:

    • In order to compensate for years of lost wages, you'll need to replace your income.
    • Getting rid of your mortgage
    • Other debts, such as vehicle loans, credit cards, and student loans, are being paid off.
    • Providing funds for your kids' college education
    • Assisting with additional responsibilities, such as caring for elderly parents

    Different types of plans can provide additional benefits in addition to your coverage amount:

    • Because death benefit distributions are normally tax-free, life insurance has tax advantages. Some policies include provisions that allow money to be transferred to successors with less tax consequences.
    • Some plans contain a cash value that builds up over time and can be used to pay premiums or even to supplement retirement income.
    • Life insurance is frequently combined with other types of protection, such as disability insurance, which replaces a portion of your salary if you become disabled and are unable to work.
    • Many insurance contracts feature important "riders" or contractual provisions that offer benefits prior to death.

    How to get more benefits – and value – when buying life insurance.

    Purchasing life insurance when you are younger and healthier is generally the most cost-effective option. Life insurance firms typically provide reduced rates to younger consumers for the following reasons:

    • They tend to have a longer life expectancy.
    • They are less likely to have been diagnosed with a serious disease.
    • They are likely to pay premiums over a longer number of years.

    Are you no longer in your twenties? Don't be concerned. There are still many economical solutions available. However, if you want to get the most bang for your buck, do your research and decide out exactly what you want from your coverage. Most policies have riders that can provide valuable advantages for a nominal additional fee. The following are two of the most popular riders:

    • Accelerated death benefit: This rider can help pay for medical treatment for a chronic or fatal sickness that has been diagnosed. While this can be very helpful in a pinch, you should be aware that any monies you withdraw will usually reduce the death benefit awarded to your family.
    • Disability premium waiver: If you have a disability, this useful rider allows you to cease paying premiums while still maintaining coverage.

    There are different types of riders to be aware of, so consult an experienced professional – such as a Guardian financial adviser – before choosing one insurance over another. You could also look into other options for lowering your insurance expenses, such as:

    • Getting a joint insurance policy for you and your spouse
    • Obtaining group insurance through your employer
    • Buying a whole life insurance policy with cash value that can be utilised to lower monthly premiums later.

    FAQs About Funerals

    Even if you're awaiting a decision on a qualifying benefit, you must apply within 6 months after the funeral. If you have an invoice or signed contract from the funeral director, you can file a claim before the funeral. It can't possibly be a guess.

    Pay monthly funeral plans are available from all funeral plan providers and typically range from one to twenty years. Some firms even allow you to pay via direct debit for up to 25 years, however this is dependent on your age, as most payments must be completed by the age of 80.

    If you can't afford a funeral, the government may be able to help with a Funeral Expenses Payment. Other alternatives include using the deceased person's bank account or planning a Public Health Funeral.

    In most cases, the estate of the deceased person is responsible for settling any outstanding obligations. The assets of a person pass to their estate after they die. The debt will usually not be paid if there is no money or property remaining. In most cases, no one else is responsible for a deceased person's debts.

    Insurance. When you die, many life insurance policies pay a lump sum to a beneficiary of your choice. It will cover your funeral expenses as well as your survivors' normal financial requirements. The payment is made shortly after your death and does not require probate.

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