Tuesday, May 3, 2011

Cremation as an Alternative to Burial and Your Life Insurance Coverage

The cost of cremation is by far smaller than that of a burial in Canada.  Nonetheless, the cost of cremation still vary widely.  Much depends on the complexity of the cremation ceremony that you select, the region you are home in, and the funeral provider that you use.  If you have been hesitant to ask thus far, according to a article on cremation, a direct cremation normally comes at about $700.  With an obit, holy service, transportation and catering, decorations and viewing, the total expense may climb up to $2,700.  Although much cheaper than the burials worth thousands of dollars, this is still a significant item in the budgets of most of us.

The Cremation Association of North America (CANA) claims that the ratio of cremations to traditional funerals in Canada, from about 5.89% in the seventies to over 68% in 2009. An article on the funeral “business” from Sun Media asserts that last year, cremation amounted to a slight majority of all funerals in Canada.  The climbing "popularity" of incineration in the recent years can be credited to one thing – inexpensiveness.

LSM Insurance is aware that many of us are interested in substitutes of the traditional funeral to save some money.  In Canada, life insurance can be a very effective strategy for doing away with the wide range of outlays associated with cremation.

Life insurance proceeds are paid out tax-free and, in most cases, the coverage can be taken out for a quite reasonable monthly fee.  Life insurance policies usually fall under one of the following three groups:

  1. Traditional Life Insurance, where the client is required to subject her- or himself to a medical check-up and answer a comprehensive list of health questions.
  2. Simplified Issue Life Insurance that does not require medical tests and the insured has to complete anywhere from 3-twelve health-related questions.
  3. Guaranteed Issue Life Insurancewithout health check-ups and the insured needen’t complete any questions.  Guaranteed Issue Life Insurance is also referred to as No Medical Life Insurance

One trouble with guaranteed issue as mentioned above (and certain simplified issue insurance plans) is the contractual limitation of the payout to a return-of-premium and applicable interest in case the insured passes away within the first two years due to non-accidental causes.  This safeguard is in place to prevent insurance policies from becoming a speculative form of investment for otherwise uninsurable applicants.

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