Types of funeral insurance: a complete guide
Funeral insurance, better known as death insurance, is one of the most widely recognised policies in Spain. There are various types of death insurance, depending on the premium to be paid or the coverage to be taken out.
After the death of a loved one, the relatives have to deal with a series of formalities which, in addition to the bureaucratic burden, entail high financial costs. The aim of the death insurance is to reduce the administrative and financial formalities that must be carried out at such a painful time for the families and relatives of the deceased. From BMI Brokers, we explain what it is and what types of funeral insurance exist in Spain.
What is funeral insurance?
Before knowing the types of funeral insurance that exist, we are going to explain what this type of policy consists of. Funeral insurance is a contract by means of which the insurer, in the event of the death of the insured person, is responsible for all the expenses that may be derived from this that are included in the policy: funeral, incineration or cremation, burial…etc.). In the event that the sum insured exceeds the costs and expenses of the services rendered, this amount is payable to the policyholder or, failing this, to the heirs of the deceased.
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In addition, the purpose of funeral insurance is not only to cover the expenses arising from the death of a person, but also to resolve the logistical issues that arise, such as the transfer, the wake room in the mortuary, or the rental of the niche, as well as inheritance procedures, orphan’s or widow’s pensions, or wills, among others.
Given the popularity of this policy in Spain, there is a wide variety of types of funeral insurance with different covers, so you can choose the one that best suits your needs.
What does funeral insurance cover?
When taking out funeral insurance, it is important that you take into account the cover provided by the different types of funeral insurance. These are some of the ones that are generally included:
- Funeral parlour
- Burial or cremation service
- Religious services
- Escort cars
- Handling and processing of documents relating to the death of a person
What type of funeral insurance are there in Spain?
Below, we detail the types of funeral insurance that you can find depending on the premium to be paid:
Natural or Renewable Premium Death Insurance Annually
The Natural Premium or Annually Renewable death insurance is a type of policy that is contracted for a period of one year and that is automatically renewed, once this time has elapsed, until the death of the insured person. The premium or fee to be paid in this type of death insurance is very low when you are young, and as the insured person reaches the age of majority, the amount will increase progressively. Depending on the insurance company, there is a maximum age limit for taking it out.
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Semi-natural Premium Death Insurance
Semi-natural premium death insurance is a type of policy similar to the previous one, but with some variations.
In this case the premium is reduced when it is contracted at an early age and, as in the previous case, it increases as the insured person reaches a certain age, however, in this case it is updated every five years.
Once the insured person has reached a certain age, depending on the insurance company, normally between 60 and 70 years of age, the premium levels off.
Level Premium Insurance
The Level Premium Insurance or Constant Premium consists of paying the same amount of premium during the whole period of validity of the insurance contract, as its name indicates. The premium is paid annually and, for its calculation, the insurance company has calculated the average of the premiums to be paid in a period of time (normally on the years of life expectancy that the insured person has according to certain data).
One of the aspects that differentiates it from other types of death insurance is that the insured person knows the premium to be paid during the whole time that the contract is in force.
Mixed premium insurance
This is the combination of two types of funeral insurance, the Annual Premium insurance and the Level Premium insurance. This insurance is divided into two parts; first, until the insured person reaches a certain age, normally between 60 and 70, depending on the company, the same calculation is carried out as in the Natural Premium Insurance. The amount of the premium increases progressively as the years go by.
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Once the insured has reached the age established in the policy, the rate becomes a level rate. This is one of the most popular types of funeral insurance due to the financial savings it represents in the first years of the contract, compared to the level premium funeral insurance.
Single Premium Death Insurance
This type of funeral insurance is intended exclusively for people who reach a certain age, between 60 and 70 years of age, and have not previously taken out any other funeral insurance.
It consists of the payment of a single premium, which covers the expenses and costs of the services provided that are included in the insurance policy after death. If you are interested in taking out this, or any other type of insurance: life, car, home, health, at BMI we can help you find the one that fits your needs so that you don’t have to worry about anything.
For more information do not hesitate to contact us, we will be delighted to help you.