Why Funeral Insurance is Favoured in Western Countries and Its Relevance in India

Aman

12 February, 2024

Table of Contents

Expenses Associated with Funeral
Benefits of Funeral Insurance
Reasons Why Funeral Insurance Must Be Adopted in India
To Conclude

Funeral insurance, also known as burial insurance cremation or insurance or final expense insurance, is a type of life insurance that covers the cost of funeral and burial services for the insured person.

Funeral insurance, comparatively a budding concept in India, is favoured in many western countries, such as the United States, Canada, Australia, and the United Kingdom, because it provides peace of mind and financial security to the bereaved family members who have to deal with the loss of a loved one and the expenses associated with it.

Expenses Associated with Funeral

According to a relevant report by the International Association of Funeral Directors and Embalmers (IAFDE), the average expense on a funeral in the US was $7,640 in 2020, while the same expense in United Kingdom was £4,184 in 2019.

Similarly, in Australia, people needed to pay an average cost of $7,449 for funeral of their loved ones in 2019, and $8,500 in Canada in the year 2018. These costs can vary depending on the type of service, the location, the provider, and the personal preferences of the deceased and the family.

Funeral insurance can help cover these costs and ease the financial burden on the surviving relatives. Funeral insurance policies typically have low premiums, ranging from $10 to $100 per month in US/UK.

Funeral insurance in India is further cheaper starting at as low as ₹118 per month, depending on the age, health, and coverage amount of the insured person. Funeral insurance policies usually pay a lump sum benefit, ranging from ₹5,000 to ₹1,00,000 or more, to the beneficiary upon the death of the insured person. The beneficiary can use the money to pay for the funeral/cremation and burial expenses such as pyre expenses, transportation, traditional rituals mandated by religion, as well as any other outstanding debts or bills of the deceased.

Benefits of Funeral Insurance

Funeral insurance can also offer other benefits, such as:

Flexibility: The beneficiary can choose how to use the money, whether to pay for the funeral and burial services, or to donate it to a charity, or to save it for future needs.
Simplicity: Funeral insurance policies are easy to apply for and do not require a medical exam or a lengthy underwriting process. The insured person can choose the coverage amount and the payment frequency that suits their budget and needs.
Guaranteed acceptance: Funeral insurance policies are usually guaranteed issue, meaning that anyone can qualify for them regardless of their age or health condition. Some policies may have a waiting period of two years before the full benefit is paid, but others may pay the full benefit immediately after the first premium payment.
Tax-free: Funeral insurance benefits are generally tax-free, meaning that the beneficiary does not have to pay any income tax on the money received from the policy.

Reasons Why Funeral Insurance Must Be Adopted in India

Funeral insurance is not very popular in India, where most people rely on their savings, family support, or religious and community organizations to pay for the funeral and burial expenses of their loved ones.

However, there are many concrete reasons why funeral insurance should be adopted in India as well, such as:

Rising costs: The cost of funeral and cremation services in India is increasing due to inflation, urbanization, environmental regulations, and changing consumer preferences. According to a survey by the Times of India, the average cost of a funeral in India was ₹25,000 in 2018, but it can go up to Rs. 1 lakh or more depending on the type of funeral/cremation, the location, the provider, and the personal preferences of the deceased and the family.
Financial security: Funeral insurance can provide financial security to bereaved family members who may not have enough savings or income to pay for the funeral and burial expenses of their loved ones. Funeral insurance can also prevent the family from going into debt or selling their assets to cover the costs.
Peace of mind: Funeral insurance can provide peace of mind to the insured person and their family, knowing that they have taken care of their final arrangements and that their loved ones will not have to worry about the expenses or the logistics of the funeral and burial services.
Dignity: Funeral insurance can ensure that the insured person and their family can have a dignified and respectful farewell, according to their wishes and beliefs, without compromising on the quality or the affordability of the funeral and burial services.

To Conclude

Funeral Services are an essential part of the Indian culture and tradition, as they honour the life and legacy of the deceased person. However, the costs of funeral, cremation and burial services are increasing every year, making it difficult for many families to afford them.

Funeral insurance or cremation insurance is a type of life insurance that can help solve this problem. It is a policy that covers the expenses of the funeral, cremation and burial services for the insured person, and pays a lump sum amount to the beneficiary upon their death.

Funeral insurance is popular in many western countries, as it offers financial security and peace of mind to the family members of the insured person.

Funeral insurance can also benefit Indian society, as it can ensure a dignified and respectful farewell for the deceased person, provide financial security and peace of mind to the insured person and their family, and reduce the burden of debt and stress on the surviving relatives.

Funeral insurance is a simple, flexible, and affordable way to plan for the inevitable and to protect loved ones from the financial and emotional stress of losing a loved one. Therefore, funeral insurance should be adopted in India as a smart and sensible way to prepare for the future and to honour the departed