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Paying for a Funeral with an Annuity

Literally speaking, an annuity, which you get through insurance companies, means a series of payments made at regular intervals (monthly, quarterly) over a period of time (for number of years, for life) to an annuitant (the person buying the annuity).

You can purchase an annuity, which is an income security for yourself and your loved ones, for a specified amount and for a number of years, say 10, and then when you die it is used to finance your funeral expenses.

Annuities are sometimes called life insurance in reverse. It is said that while life insurance protects the purchaser from dying too soon, annuity protects against living too long. For in annuity, when you're paid up, they start paying you, instead of your estate or beneficiary.

Both life insurance and annuity have investment element and a significant cash surrender value. But some annuities may not be suitable to your circumstances, so best to check with companies active in the business-Aetna Life & Annuity, Prudential Insurance and Equitable Life Assurance Society of the U.S. to name a few.