Many people get confused between life insurance and final expense insurance. However, the difference is quite simple – final expense insurance is just a smaller life insurance policy that offers clients more flexibility. Some clients come to a certain point where they consider converting their life insurance policy into a burial policy. To learn more about how to convert your life insurance policy, read on.
Life Insurance vs. Burial Policies
Understanding the difference between life insurance and final expense insurance, also called burial policies, is key to understanding why someone may want to convert in the first place. A life insurance policy is a more comprehensive policy, typically $50,000 minimum. A burial insurance policy, in contrast, is anywhere from $2,000 to $50,000 maximum. Because life insurance policies are larger, they’re generally more expensive and more challenging to qualify for. Both life insurance policies and burial policies can be used for anything the beneficiaries would like. In most situations, you’re able to convert from a term life insurance policy to a burial policy.
How to Convert from Life Insurance to Burial Insurance
Converting from a term life insurance is relatively simple:
- Take a look at your policy. Most policies will write whether a conversion is possible.
- Check your policy to determine the conversion period. Some policies will let you switch at any time, while others have a specific conversion period where you’re only allowed to convert during that time frame.
- Contact your agent or company to request a conversion.
Most life insurance companies will have you fill out documents or questionnaires to go on with the process.
Why You May Want to Convert
Some people convert from a term life insurance policy to a burial insurance policy due to the conditions of the term limit. A term life insurance policy is when a company sells you a policy that will only pay your beneficiaries if you pass away within a certain number of years – the term. Many policies sell term limits where the time is 25 years. The benefits of these policies are that they are generally more affordable than plans that do not have a term limit. The disadvantage of this type of policy is that your loved ones will not receive any money if you do not pass away within this time frame. All of the money that you had paid into the policy will have been for nothing.
This is why people convert to burial insurance. As people get further into their term limit life insurance, they realize that they may exceed the limit, and their family will not get a death benefit. They then convert to a burial insurance policy with no limit to guarantee a death benefit for their families.
Reach Out to Senior Life Services
To better understand the nuances of term limits and converting from life insurance to burial insurance, contact us at Senior Life Services today.