Funeral vs. Life Insurance: Know the Difference
Many people confuse funeral policies with life insurance, but these two long-term insurance products serve very different purposes. Understanding the difference helps you make the right choice for your family's future.
A funeral policy helps cover the costs of your funeral and related expenses (transport, burial, food, etc.).
Key Features:
A funeral policy helps cover the costs of your funeral and related expenses (transport, burial, food, etc.).
Key Features:
A life insurance policy provides a lump sum to your beneficiaries when you pass away. The funds can be used for anything, including:
Key Features:
Cash Value & Withdrawals
| Feature | Funeral Insurance | Life Insurance |
|---|---|---|
|
Lump sum benefit |
No |
Yes |
|
Usage restrictions |
Yes – Funeral only |
None |
|
Cash value accumulation |
No |
Yes (selected policies) |
|
Can borrow/cash out early |
No |
Yes (conditions apply) |
|
Taxable withdrawals |
N/A |
Sometimes |
