There is some confusion between life insurance and death insurance, and there are those who think that their usefulness is the same. However, each of these insurances protects you in a different way.
What do life insurance and death insurance have in common?
It could be said that both life insurance and death insurance serve to cover the same risk: the death of a person. However, each of them offers different coverage. They are two complementary insurances, which can be of great help to your family or loved ones by giving them compensation in the event that you are absent, but both the amount of compensation offered by each insurance and its usefulness, its coverage or the price of the cousin, they are different.
What is life insurance, and what is it for?
Life insurance is designed, above all, to guarantee the economic stability of your family or your loved ones in the event that you are absent. These insurances provide your family with an amount of money that can help them to face all kinds of expenses or debts.
When a person takes out life insurance, they establish a fixed amount that they want their relatives to receive in the event of their death, regardless of what they are going to use that money for.
In addition, AARP life insurance includes other coverage such as absolute and permanent disability, which allows the insured himself (the person who takes out the policy) to receive that money in the event of an accident that causes disability that prevents him from working.
What is funeral insurance, and what is it for?
Funeral insurance is designed to cover the costs of funeral services and procedures related to death. In other words, in the event that you die, this type of insurance guarantees that your family will not have to take care of the payment or the procedures related to the burial, cremation, transfer of the body, document management, etc.
It is insurance that offers punctual compensation to cover specific expenses, so your family will not be able to have that money for other matters.
Main differences between life insurance and death insurance
- The purpose of the compensation: As we said, the main difference between life insurance and death insurance is the purpose for which the compensation is intended. In the case of life insurance, the compensation can be used to maintain the family economy or so that you can bear the expenses derived from a disability, and in the case of death insurance, the amount that the insurer contributes goes entirely to cover the expenses related to the procedures for the death of the person who hires it.
- The coverage of each insurance: Another clear difference is the coverage that each insurance includes. While life insurance may include additional coverage such as absolute and permanent disability, the coverage included in death insurance only refers to the death of the insured and its consequences.
- The insured amount: While in life insurance, the insured decides what capital he wants to ensure so that his relatives receive it; in death insurance, it is the insurer who decides what the insured capital will be. In addition, in life insurance, the insured capital is usually very high, with compensation exceeding €350,000 in some cases, while in death insurance, it is usually less than €10,000.