Although not as common in the U.S. insurance market, death insurance differs significantly from health insurance. In some countries, they may even be considered complementary.
However, to understand the differences, it is essential to know what each of these products is and how they work.
What is death insurance?
This is a policy specifically designed to cover expenses related to death. Although they are often confused with life insurance, they are not the same:
- A life insurance policy provides compensation in the event of the death of the insured.
- A death insurance policy covers the expenses related to the death of the insured.
Thus, a funeral or death insurance policy usually covers aspects such as:
- Burial expenses
- Transfer expenses of the deceased (and of the family members in some cases)
- Bureaucratic costs of the proceedings
- Psychological support
Depending on the type of policy, other more advanced aspects may also be covered, although this is not usual.
The cost of this insurance is low in comparison to what health insurance can cost. They are not widespread in the US market, although in some European countries, for example, they are very common.
Health insurance is a very diverse product. There is no one single health insurance product but rather a service that is increasingly flexible and adapted to user profiles.
In general, health insurance policies will offer coverage related to the prevention and treatment of the insured’s illnesses. The main coverages are:
- Medical services: care, diagnosis, treatment
- Specialized services
- Wellness services: dentists, psychology, wellness, etc.
Sometimes these health insurances may even offer compensatory coverage in case of death to cover certain expenses. However, they usually offer additional life insurance.
Health insurance vs. Death insurance
The two products are not comparable. While health insurance is broad and is intended to cover practically all of a person’s health needs, death insurance is very specific and is only intended to cover expenses in the event of death.
On the other hand, it is understood that death coverage can be covered in a life insurance as part of the indemnity agreed with the insurer. Therefore, it could be a product more comparable to life insurance than health insurance in any case.
However, these products are perfectly compatible with each other. Health insurance will rarely include anything related to the coverage of expenses after the death of the insured. Funeral insurance, on the other hand, offers a low cost, usually monthly, to take care of your expenses.