Is it worth having a death insurance policy? How much does it cost? This type of policy, colloquially known as “death insurance”, allows the company to pay for the funeral home, the transfer of the deceased, the flowers, the coffin and the cremation or burial.
In this post we analyze the cost and profitability of taking out a death insurance policy and from what age it is interesting to take out each type of premium. Once the first bill has been formalized and paid, the client is covered, which provides great peace of mind for the insured and his or her relatives.
We must take into account that this insurance is one of the most popular in our country and a large percentage of the population has it (more than 21 million people) and we must know which is the best funeral insurance. For many decades it has been one of the star products, since assuming the cost of a funeral all at once is a great effort for the economy of the closest relatives, who are the ones who have the obligation to pay for the funeral.
How much does a funeral cost?
An ordinary funeral can cost between 3,000 and 7,000 euros, although if the body has to be transferred between cities, the total cost can reach more than 10,000 euros. If the transfer is international, it is better not to think about it.
To give you an idea, life insurance does not have to have an exorbitant cost, for example, a married couple of about 40 years with 3 children can subscribe to an insurance of little more than 6 €/month for the 5 of them.
However, keep in mind that the cost of the death insurance is related to the age of the insured (especially in the natural and mixed premium). Therefore, the older the insured, the higher the cost of funeral insurance.
What is the cost of a funeral insurance policy and is it profitable?
The final cost of a death insurance policy will depend on the number of years of life the insured person reaches and the type of premium contracted. Keep in mind that…
Up to the age of 50-55 years, the mixed premium is the best and does not rise much in price when we get older. From 55 onwards, the level premium is ideal to avoid a jump in the high cost when we turn 65-70 years old.
Not all death insurance policies are the same. As we mentioned, the type of premium the type of premium we choose will determine the annual price evolution:
Natural premium
The natural premium is regulated according to the age of the contracting party. The older the person is, the higher the premium to be paid, which will increase year by year. This type of insurance is not very profitable for people over 50 years of age, but it is very profitable for young people up to about 35 years of age.
2. Level premium
This type of premium increases as the cost of the funeral increases and establishes a fee that is considered fixed, regardless of age. In other words, it rises in line with the CPI of the cost of the funeral service, not as you get older. From 55-60 years of age it can be an interesting option.
3. Mixed premium
At the beginning, a natural premium is paid (usually until the age of 60-70) and then you switch to the level premium. It is usually the most profitable for young people.
4. Single premium
It is paid in one lump sum. It is usually only of interest to elderly people who have not had this insurance during their lifetime.
It should also be noted that it is possible to take out this insurance in a family plan, insuring as many members as desired.
Is a funeral insurance policy profitable?
The reason why this insurance is so commonly chosen is because of its broad coverage (funeral expenses, transfers, cremation or burial) and, mainly, because of the support it provides in the first moments of these days of mourning. You don’t have to worry about the cost or what to do in these first moments. The company and the funeral home take care of it.
For this reason, the figures for this type of insurance in Spain are surprising: as we have said, there are more than 21 million people protected out of a population of 46 million and, at present, funeral insurance covers 60% of funerals each year in Spain.
Have you been thinking about the possibility of taking out this type of policy? At PIB Group Iberia we advise you to find the insurance that best suits your age and your spatial needs. Discover our funeral insurance and contact us so we can help you.
