The difference between funeral insurance and life insurance

Life insurance is an investment that is still highly valued by the French. This savings product should not be confused with other types of insurance, such as funeral insurance. In fact, these two products have neither the same goals nor the same function.

Funeral insurance and life insurance: different purposes

Life insurance is a savings product. It allows you to realize a personal project, such as a trip or renovating a house for example. Thanks to this contract, the insured can also build up savings for retirement. It will make it possible to supplement one’s resources at a time when incomes often fall.

In the event of the insured’s death, before the end of the contract, one or more beneficiaries, appointed by the insured, will in principle receive the saved capital.

For its part, funeral insurance is an income product. Its purpose is therefore different. The money in the contract must actually be used to finance the funeral of the insured. This is the sole purpose of funeral insurance if the insured chooses a capital contract.

But there is also a service contract. This provides, in addition to their funding, the organization of the funeral.

A function that is not the same

Money set aside

Of course, life insurance and funeral insurance have a few things in common. In both cases, it is a question of putting money aside, although the purpose is different.

And on these two contracts, these amounts are obtained, at least in part, by means of contributions. In the case of life insurance, their size and frequency is left to the discretion of the insured. The subscriber of the burial insurance can choose between a single premium, a temporary premium or a lifetime premium.

One of the products is an investment, the other is not

Life insurance is an investment, but funeral insurance is not. This is another big difference between these two products.

In fact, every year life insurance generates profits which are paid out to the insured in the form of interest. In terms of funeral insurance, only the guaranteed capital stipulated in the contract is paid to the beneficiaries. explains Funeraire-info.

However, some contracts contain a capital revaluation clause to take into account, at the end of the contract, the price increase that is likely to have occurred during the interval.

Differences in availability and use of capital

Between the two products there are also differences about the availability and use of capital, as well as the form it may take.

The life insurance capital is available at any time, although it is more advantageous for tax reasons to keep it for a certain period of time. Therefore, the money placed in life insurance policies is not blocked.

The insured can get it back whenever he wants, in whole or in part. These payments are called redemptions. We are then talking about full or partial redemption. As far as taxation is concerned, the insured has the choice between two solutions.

In addition, the insured can decide that the money from his life insurance is paid out to him in the form of capital or annuity. This last solution will allow him to build up a regular income supplement at the time of retirement.

Finally, he can do with this money what he sees fit. He can finance a trip, buy a car or use this money to supplement his retirement income.

The situation is different in the case of funeral insurance. In fact, the capital is blocked until the death of the insured. It is therefore not available before. Moreover, it is only paid in the form of capital.

In the case of a capital contract, this guarantee capital is paid to the beneficiary designated by the insured. His name must appear on the contract. If it is a service contract which stipulates the execution of the funeral, the capital is paid to the funeral operator with whom the insured will have agreed to carry out the organization of the funeral.

In this case, it is actually the funeral home that is the beneficiary of the contract. Finally, and unlike what happens with life insurance, the capital of the funeral insurance can only be used to finance the funeral. Only a possible supplement can be used by the recipient when it suits him.

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