Why a Burial Policy is Better than Money in the Bank.

 

As an agent I hear lots of ideas about life insurance both for and against, but the one that really drives home the point that life insurance is the best way to handle some things like your funeral costs and final expenses.

Many folks who are a little older and have some savings will say, "There is plenty of money in the bank to pay for my funeral, so I don't need a life insurance policy." Sounds pretty iron clad, right? Well, let's look at this with eyes wide open.

First off, this works as long as someone survives you that is an owner on your bank account. You see, the bank will close the account and freeze the assets as soon as the owner dies. If you don't have a spouse that is still alive when you pass and you have not made your kids owners on your bank account, they will not have access to the funds you set aside for your final expenses until after probate is satisficed. 

In other words you can either give your children unfettered access to your money right now or make them wait until Uncle Sam has paid all your debts, fees, taxes and other things and then get the leftovers if there is any left.

So this strategy will only work if you give up control of your bank account to someone who will still be alive after you pass.

Life insurance on the other hand is a contract with the trigger being the death of the person insured and the action being that the money is paid to the listed beneficiary, thus skipping probate and giving your heirs instant access to the cash they will need for your funeral. Uncle Sam will still have your bank accounts and physical assets like the home and such to work through but the life insurance is not taxed, nor is it a part of the probate process unless you have created a trust and made it the beneficiary for a life policy, which has merit in some cases but for burial expenses you want this to go to a person that will take care of your final expenses while your estate is being sorted out.

Let's talk about this in real world terms.  Lets say you are 70 years old and have $12,000 in your bank account earmarked for your funeral. You don't want to make the kids owners on the bank account and you either don't have a spouse or it is a good possibility that your spouse wont out live you.

You are female and in generally good health and the money is in a checking account not making any interest. You apply for a single premium life insurance policy and deposit $10,000 (one time) and have a guaranteed $16,000 that will go directly to your heirs when you die so they can pay for your final expenses and not have to come up with it out of pocket.

You will notice that there is still $2,000 in your checking account so your agent gave your heirs 25% more money when you pass and gave you a $2,000 bonus to hit the casino with or take a cruise with or whatever you want. So, you can see how this single premium life policy is MUCH better than money in the bank.  Don't make your heirs pay out of pocket and hope that Uncle Sam doesn't eat up the cash you had set aside for your funeral. Don't wait until it's too late, you can get a policy as long as you are under 80 and in decent health but the longer you wait the harder it gets.

jasonedwards@shelterinsurance.com