What is funeral insurance?
Funeral insurance covers funeral expenses at the time of death and is included in a small amount of short-term insurance (mini-insurance).
What is “short-term small-amount insurance”?
Insurance with a small amount of insurance and an insurance period of one year (two years depending on the field) within a certain insurance industry business scale.
Funeral insurance is inexpensive, often does not require a doctor’s consultation at enrollment, and is characterized by fewer enrollment requirements than non-life insurance products.
Additionally, although there is an upper age limit for non-life insurance products (65-75 years), funeral insurance products can also be used up to age 89.
There are two types of funeral insurance, funeral insurance and life insurance (whole life insurance), so it is necessary to clarify the purpose of the insurance and consider which one to hire. There are.
Market price for funeral expenses
According to the “11 Funeral Questionnaire Survey Report (August-September 2016)” conducted by the Japan Consumers Association, the market price of general funeral expenses is 1.95 million yen.
In addition to the cost of the funeral, the funeral requires the following costs:
Example of funeral expenses
• Action and dedication overnight
• Offerings to monks and temples
Also, it can cost more than 3 million yen in total because it costs money to organize the leftovers and establish graves.
It is financially expensive to cover these costs with savings, but if you have funeral insurance in advance, you can cover funeral costs.
How to prepare for a funeral and your strengths and weaknesses.
There are two main ways to cover the cost of a funeral.
How to prepare for a funeral
• Funeral insurance (small short-term insurance) – Recommended for seniors who want to prepare for funeral expenses only
• Life insurance (whole life insurance): recommended for young people who want to take out life insurance
Let’s review the strengths and weaknesses of each insurance.
Funeral insurance (short-term small-amount insurance)
The advantages and disadvantages of purchasing funeral insurance (small-amount short-term insurance) in preparation for a funeral are as follows.
Benefits of purchasing funeral insurance (short-term small-amount insurance)
• Monthly premiums are cheaper than non-life insurance products.
• The warranty period is one year, which makes it easy to verify contract details.
• Even sick people can participate because it is not necessary to consult a doctor.
• There are insurance products that can be insured even for people over 80 years of age.
Disadvantages of contracting funeral insurance (short-term insurance of small amounts)
• Since it is a disposable type insurance, there is no refund for cancellation.
• Due to the upper limit of the insurance amount, the principal can go bankrupt if you enroll for a long period of time.
The advantage of funeral insurance (short-term small-amount insurance) is that the monthly premium is cheaper than non-life insurance products.
In addition, many times it does not require a medical consultation, which has the advantage that even people with chronic diseases and the elderly can participate.
On the other hand, since funeral insurance is disposable insurance, there is the disadvantage that premiums paid up to that point will not be refunded at the time of cancellation.
Please note that there is a limit on the amount of insurance, so you may lose your principal if you enroll for a long period of time.
Because of these strengths and weaknesses, funeral insurance is suitable for “seniors who just want to cover their own funeral expenses.”
Life insurance (whole life insurance)
The advantages and disadvantages of taking out life insurance (whole life insurance) in preparation for a funeral are as follows.
Benefits of taking out life insurance (whole life insurance)
• There is a sense of security that the warranty will last a lifetime.
・ In case of cancellation, a large amount of payment is possible as a cancellation refund.
Disadvantages of taking out life insurance (whole life insurance)
• Due to the savings feature, the monthly premium is set high.
• Strict registration requirements, such as doctor visits and notification requirements.
• There is a limit on the age you can join (65-75 years)
• The biggest advantage of life insurance (whole life insurance) is that it gives you a sense of security that will last a lifetime.
Even if you cancel, you can get a refund or cancellation according to the time.