In my experience, my father was sold a shit policy where they assured him that he would receive $15,000 when he died to cover any funeral expenses. They didn't tell him that he had to be paying into the policy for 5 years in order for him to receive that $15,000. When he passed away, two years later, they sent my mom $3500 - exactly what he had paid in premiums. His funeral was $6200.
Of course after that, I looked into the same thing you are looking into. The people who tell you, give us the money and the funeral will be covered (pre-paying for funeral), I just didn't trust the information that they gave me. Instead I took out a term policy on my mom for 20 years, $50,000 and it costs me $120 per month. It's rated because she's had breast cancer, she's over weight and she smokes. She is 64 years old. I chose the term over the pre-paying funeral because it's guaranteed $50,000 even if she passes away tomorrow.
I even thought of just investing the $200 per month into a segregated fund, gain higher interest than the funeral pre-payment and as long as I'm paying into it, if she lives 30 years, I will still have the money. The trick is, the main purpose of a term life insurance policy is to actually replace an income or pay off a mortgage. The ideal situation is of course to get term when you are in your 30's, get a 35 year term, and invest your money. The problem with me saving the money in a fund was if she died before the 20 years, like in 5 or 8 years, I wouldn't have enough funds built up. That's why I chose term.
