Life Insurance vs Funeral Insurance

Life Insurance vs Funeral Insurance: Which Insurance do You Need?

Life and Funeral Insurance, both offer a lump-sum benefit in an unfortunate event of terminal illness or death of the policyholder, but at the same time, both products differ from each other, and your decision should be based upon which insurance suits your needs the best.

Life Insurance vs Funeral Insurance

Life Insurance vs Funeral Insurance
Life Insurance vs Funeral Insurance

What is a Life Insurance?

There are various types of life insurance available in the marketplace, but the common feature in all the different kind of life insurance policies is that your family is paid a lump sum amount in an unfortunate event of your death or terminal illness.

Some Pros and Cons of Life Insurance


  • The beneficiary of the policy can use the lump sum payment received upon the death of the policyholder in any manner they desire.
  • Some Life insurance policies also cover accidents, illnesses and injuries.


  • Requires medical testing, hence if you are in poor health or have pre-existing health conditions, your insurance premiums can rise.
  • The beneficiaries are at times paid after the funeral, hence are forced to bear the funeral cost.

What is a Funeral Insurance?

Funeral insurance is a form of insurance wherein the insurance covers the cost of a funeral in an unfortunate death of the policyholder. Some of the features of funeral insurance are as mentioned below.

  • It is a simple form of insurance product with not many complicated terms and conditions.
  • It is very inexpensive and is considered as one of the most economical insurance products available in the market
  • It generally does not require medical testing of the policyholder.
  • Funeral insurance ensures a prompt payment, i.e. the beneficiaries for the policy are paid immediately upon the death of the policyholder.

Some Pros and Cons of Funeral Insurance


  • The beneficiaries are paid promptly upon approval of the claim.
  • Generally, medical examinations are not required.
  • It is suitable for people who have pre-existing health conditions and are unable to obtain economic life insurance coverage.


  • Policy Premiums can be expensive when compared to term life policies.
  • Policyholders end up paying more on funeral insurance than their actual funeral when they live longer lives.

How to Select Between Life Insurance and Funeral Insurance

  • Objective – If you objective is ensuring the financial well-being of your family upon your death, in such a case life insurance is the right product for you.
    If your objective is ensuring your family is not burdened with your funeral cost upon your death, in such as case funeral insurance is a much more suitable insurance product for you.
  • Health Condition – If you are in good health and do not have any pre-existing medical condition, in such as the case you shall be eligible for economic premium rates and life insurance is the right insurance product for you.
    In case you are in not in good health, have pre-existing medical issues, you will be charged with high insurance premium and in such as funeral insurance is much more suitable for you.