Death insurance, sometimes called burial insurance or funeral insurance, is actually a low-level form of life insurance designed to cover final expenses.
But is death insurance enough? For most Americans, the answer is no.
Unlike life insurance, designed to provide income replacement, death insurance covers only burial costs. A death insurance policy worth $10,000, for example, would fail to account for mortgage costs, groceries and other necessary household expenses.
According to LIMRA, the average life insurance needed is $459,000—far more than death insurance offers.
For some families, though, death insurance may be adequate. A retired couple whose home is paid off, for instance, probably doesn’t need life insurance. The same goes for a single adult with no financial dependents. These people might purchase death insurance to cover their final expenses, ensuring these costs won’t be passed to their loved ones.
For the majority of people, life insurance is an absolute necessity. If someone relies on your income, you need life insurance.
The good news is that life insurance is very affordable. A 40-year-old non-smoker can purchase $500,000 of coverage for under $30 per month, on average, according to the Insurance Information Institute.
If you lack coverage, get life insurance quotes right away.