What is the significance of the duration of a funeral insurance policy? Guide about funeral procedures

Insurance companies usually refer to the duration of a policy when an insured person is considering changing companies. This factor is key when it comes to renewing a policy, but it does not work in the same way in all insurance policies. Why? What is the significance of the duration of a funeral insurance policy? At Áltima we will explain everything in this regard so that you have a clear idea when you are completing your funeral arrangements.

What is the duration of a funeral insurance policy?

The duration of a funeral insurance policy refers to the time elapsed since the policy came into force, that is to say, since the policyholder took out the policy until the present day.

How does the duration affect the cover and prices of funeral insurance?

In many types of insurance, insurance companies offer their clients discounts or additional guarantees depending on the age of the policy. However, as a general rule, this advantage is not usually applied to funeral insurance.

The companies do not usually take into account the duration of the policy with respect to the premium established in this type of insurance, as those insured have access to the contracted guarantees from the moment they register, unless the company establishes a grace period for some cover.

Therefore, the duration of the funeral insurance does not offer additional benefits for the insured, as it is a very particular type of insurance, which is not based on the accumulation of capital but on covering a risk (death). This means that if you have been paying the insurance for a large number of years, you will not receive any better funeral services, but rather, you will simply have been covering that risk, death, for a longer period of time.

When is the duration important in a funeral insurance policy?

As we have said, the duration does not have an impact on the benefits of your funeral insurance, but it is an influential factor. So when is the duration of a funeral insurance policy significant? The duration of the policy will be taken into account with regard to the age of the insured person.

The price of the funeral insurance will depend on the payment method chosen by the client, bearing in mind that the main factor when calculating the amount of the policy will be the age of the insured person, as the older we are, the greater the risk of death.

It is possible that insurance companies may reward your loyalty in some way, but they will not offer you greater protection because you have been insured for a longer period of time.

But length of cover can be a key factor if you have taken out a level premium insurance, because in this case a rate is set according to the insured person's age when entering the policy. What exactly is this? A level premium insurance policy is calculated so that the same amount is paid every year, regardless of the age of the insured person.

It is essentially a ‘flat rate’, in which the insurance premium remains constant throughout the entire contract. Therefore, the longer you have paid for the cover, the lower the relative price, which means that length of cover will only make sense if you have taken out the level premium insurance a long time ago. This is because when you are young you make a greater effort to ensure that the premium does not go up when you are older.

Life insurance with a level premium can only undergo small increases due to annual valuations or the automatic revaluation of capital. Therefore, they are kept up to date so that they can cover everything necessary even if the cost of living rises and, with it, the cost of funeral services.

In summary, funeral insurance with a level premium is the only case where the rights of the duration of the cover are maintained. This is understood as the rate at the time of taking out the policy so that it does not increase as the policy holder's age increases.

Key considerations when taking out a funeral service with insurance

Now that you have a better understanding of what length of cover is used for in a funeral insurance policy, it is important that you follow these recommendations when contracting funeral services:

• Understand the cover of the funeral insurance, as it is essential to know which services are included and which are not. This type of insurance usually covers basic funeral expenses, but it is important to check whether any additional services you may need are covered, such as an international transfer or a specific type of farewell ceremony.

• Choose a reliable insurance company, as not all offer the same funeral insurance. Comparing different policies will help you find the one that best suits your needs and budget.

• Choose an insurer that offers flexibility. The more options you have when choosing a funeral company, the better it is. Personalisation is a key factor in funeral services and it is always best to have as many funeral services to choose from as possible.

• Assess your budget and evaluate how much funeral insurance will cost you in the long run. Some funeral insurance policies may seem cheap to start with, but premiums may increase with age or the conditions of cover may change, which affects the funeral services you can access.

You already know how much a funeral costs with insurance and without it, so you will be aware that it is best to be insured when it comes to your family's finances. However, it is also essential to take out the insurance policy that best suits your needs.