It is quite common for family members to feel the need to purchase insurance after the death of a family member or close friend. Often, they are motivated to protect other family members from the financial stresses that occurred after the recent loss. While the motive is noble, there is still reason to proceed with caution. Jay McDonald recently posted an article entitled “14 Useless Insurance Policies.” Included in that list are:
- Accidental death insurance
- Cancer/dreaded disease insurance
- Optional group life insurance.
Gail Hillebrand, senior attorney for Consumers Union says, “All of the single-purpose insurances turn out to be a bad deal.” MacDonald adds, “…on more than a dozen policies—especially narrowly focused single-purpose coverage on things like accidental death, cancer, credit card fraud and mortgages—we simply fall victim to fear and salesmanship…”
At SharedSorrows.com, we receive calls weekly from grieving families who are struggling to find a way to pay for the funeral services of a loved one. Rather than purchasing a pre-paid funeral plan, funeral insurance or accidental death insurance, we strongly recommend purchasing a term-life insurance policy from a reputable insurance company. Single-purpose policies (such as funeral insurance) restrict the ways in which insurance proceeds may be used. Thus, if you can only afford a $15,000 policy, is it more important to you to have an elaborate funeral—or to have a reasonable funeral, and have remaining funds that will allow a family member to travel to the services or funds to allow your spouse to pay off the mortgage? Make sure the policy will protect you and your loved ones—not enrich unethical funeral service providers!