As you run your business, you must understand that death is inevitable. Whether it’s 20 or 40 years from now, the day will come when you’ll finally breathe your last. Thus, you have to plan for your demise so that your loved ones don’t have to bear too heavy a financial burden. One way to do so is to take out burial insurance. What’s great about this policy is that it can be advantageous not only to you but to your company as well.
How Does Burial Insurance Work?
As with any other type of purchase, you must know how burial insurance works before taking out a policy and reaping the benefits it brings. Burial insurance is meant to cover your final expenses. Here are some critical funeral expenses your family may have to pay for upon your passing:
- Purchasing a casket
- Embalming the body
- Requesting the services of a crematorium and buying an urn
- Carving and installing the headstone
- Hiring a hearse to transport the body from the funeral home to the place of burial
- Digging the grave and filling it afterward
- Purchasing ready-cut flowers or hiring a florist for the job
- Buying a burial plot
- Paying staff for the ceremony
- Printing programs and memorial cards
- Hiring vehicles for the funeral procession
According to recent research, adding up all those expenses yields the following averages:
- Cremation with a traditional funeral service: USD$7,000 to USD$9,500
- Cremation with a memorial service: USD$4,000 to USD$6,000
- No funeral or memorial service: USD$750 to USD$4,500
- Burial with a traditional funeral service: USD$12,500 to USD$17,500
- Burial with a memorial service: USD$11,500 to USD$15,500
You can agree that such expenses can significantly burden your family, especially if you didn’t properly plan for them. And that’s where burial insurance comes in. In essence, you pay manageable monthly premiums over several years to help your chosen beneficiaries cover your funeral expenses without too much hassle. Once you pass on, the insurer pays the total death benefit to your appointed beneficiaries.
In line with the average funeral costs, burial insurance policies usually bear face values between USD$2,000 and USD$25,000. But still, expect some companies to go lower and others higher.
The Benefits To Your Business
Burial insurance isn’t only helpful in regard to funeral expenses. It’s also beneficial to your business in the following ways:
1. Succession Planning
It’d do you a world of good to have a solid succession plan for your business. Without this, your passing may trigger all sorts of disagreements between your kids, spouse, and other relatives.
One way to ensure that your business succeeds even when you’re gone from this world is by setting up a buy-sell agreement, wherein your next of kin purchases all of your shares and maintains control of the business.
Since this process requires some money, your appointed successors can use the death benefit to fund the buy-sell agreement. This way, your business seamlessly continues with its operations despite being under new management.
2. Tax Minimization
By getting burial insurance, you’re able to reduce your taxes given that taxes on cash value savings are deferred. Even more appealing is the fact that the death benefits can be accessed by your beneficiaries free from income tax.
The small amount you save on taxes each year can accumulate to thousands of dollars by the time you pass away. Of course, you can always utilize that money for other purposes such as paying for business expenses.
3. Securing Loans
Most banks and commercial lenders allow you to use a burial insurance policy as collateral for a loan. This would make the loan a secured one, meaning the interest rates will be lower than that of a personal loan. Also, depending on how much your insurance policy is worth, you can take out high loan amounts.
Remember: getting a loan is an excellent way to help you invest in costly business infrastructure and take your company to a whole new level. And sometimes, unexpected financial crises can force you to borrow money from financial institutions. Thus, having a burial insurance plan helps you quickly secure loans whenever the need arises.
4. Employee Motivation
By now, you’ve likely insured your commercial property and business equipment because they’re critical assets. Likewise, you should consider insuring your staff, especially the ones whom you considerably depend on to smoothly run your business.
You can take out burial insurance for them as a token of appreciation for their consistent efforts and loyalty. If you do so, they’ll be even more motivated to work for you, and happy employees boost your business image and help you rake in huge profits.
Eligibility And Types
In order for you to acquire burial insurance, you have to meet several criteria. Here are the requirements set by most insurance companies:
- Age: You should be between 50 and 85 years old to get a burial insurance policy.
- State of residence: There are burial insurance plans that haven’t been approved in certain states.
- Health: Critical health conditions, such as terminal illnesses, may disqualify you from acquiring standard burial insurance policies. But you can still find plans out there that suit your unique needs.
- Mental capacity: When signing up for the policy, you must be mentally able to enter into a legal contract.
For your reference, here are brief descriptions of the two main types of burial insurance:
- Term burial insurance: This expires after a fixed term, say, 20 or 30 years. If you don’t pass away within that period, the policy becomes null and void, and your beneficiaries won’t receive the death benefit.
- Permanent burial insurance: This requires you to pay premiums from the time you take out the policy until you die, even if it’s 50 years or beyond. The disadvantage of this type is that if you live longer than expected, you’ll end up paying more premiums than the total sum guaranteed. Nevertheless, it’s still beneficial to your loved ones.
Conclusion
Having burial insurance is not only favorable to you in terms of settling funeral expenses. It’s also helpful to your business when it comes to succession, tax minimization, securing loans, and staff motivation.
So see to it that you purchase a policy as soon as possible. The good thing is that you can sign up for any amount you’re comfortable with, which means your monthly premiums will be manageable. Shop around diligently, and you’ll find a reliable burial insurance company that’ll protect your loved ones from financial strain should you pass away.
