Definition - What does Funeral Insurance mean?
Funeral insurance is a contract whereby the insurer guarantees to cover the funeral costs of the insured. Moreover, the policy may also cover related expenses, such as costs of the wake, burial fees, cremation costs, and grave-digging charges.
Insuranceopedia explains Funeral Insurance
A typical funeral insurance requires a policyholder to make monthly premium payments until they reach a certain age. Premiums may be fixed or could increase every year, depending on the conditions of the insurance policy. Often, the result is that the insured pays more than what a person’s funeral would have cost.
Because of this, a similar type of product emerged. Known as pre-paid funerals or pre-need funeral insurance, this allows a person to pay for the cost of the funeral today and make small contributions each month until the value is completely paid.