What is burial insurance?
Before seriously considering burial insurance, you first need to understand what it is and how it works. Burial insurance, often referred to as final expense, offers policies ranging anywhere from $2,000 to $50,000 depending on your goals, budget, and the provider’s options.
This money is referred to as a death benefit and is issued to chosen beneficiaries upon the policyholder’s death. This money can then be used for anything you would like covered, such as funeral arrangements, medical bills, credit card payments, etc.
Most people plan to have some sort of funeral service, even if they want to be cremated. Very few people, however, want to think about it and plan it ahead of time. Paying for things after you’re gone seems like an unnecessary hassle—but, this way, the burden is relieved from your loved ones to plan and pay for things themselves.
No, it’s not pleasant to talk about, but it is priceless to have that peace of mind. If that sounds like something you are interested in, burial insurance may be right for you, and you can look forward to the next step.
The next step is to determine whether or not you are eligible for coverage. The good news? Pretty much everyone is eligible for a final expense policy, even if you have a chronic or preexisting condition.
There are two plans to consider—guaranteed and simplified issue. Guaranteed issue costs more, but is available to older and poor-health individuals. Simplified issue costs less and serves those without serious medical concerns.
So you have some options. When looking for a burial policy, consider which type of policy you can apply to, and how it affects your budget.
If you see yourself with a burial insurance policy, your next step should be to decide what you want to use it for. This will help you choose a policy that best fits your needs. This may require making arrangements with a funeral home now—that way, you know the base price you would like to set your death benefit. Then, if you would also like to cover any other expenses, you can plan for those as well.
Finally, with all of these goals in mind, you can search for a good company to work with. Not all insurance companies are the same and finding the one that matches you best is important.
Also, costs will vary between providers—as you venture further into the purchasing process, you can also compare quotes to find the best available option.
How Does Burial Insurance Work?
Generally, burial and funeral insurance policies don’t require a medical exam. The application might ask you just a few health questions, or no questions at all. The rates are based mainly on gender and age. Funeral insurance is usually one of these two types of whole life insurance:
- Simplified issue life insurance: This application has no medical exam and only some health questions. But answering “yes” to any of the questions could disqualify you. For example, applications usually ask if you’re living in a nursing home or if you currently have HIV.
- Guaranteed issue life insurance: There’s no medical exam and no health questions when you apply for guaranteed issue life insurance. You can’t be denied.
The drawback of these easy applications is that the policy will typically have “graded death benefits.” If you pass away within two or three years after purchasing the policy, your beneficiaries will get only a refund of the premiums you paid (plus some interest), or a small portion of the policy’s coverage amount. But accidental deaths, like in a plane crash, are normally covered in full from the start of the policy.
What Else Should I Know?
Final expense insurance lets you choose your beneficiary, and the benefit goes straight to him or her. The beneficiary, usually a partner or relative, will make sure that instructions are followed and funds are properly dispersed.
Here are some other things you should know about final expense insurance:
- It’s available to folks in poor health with graded benefits. This means only a share of the policy will be accessible for the first few years of coverage.
- Additional benefits may be awarded if there’s an accidental death.
- The value of this kind of policy can increase over time. It functions like a savings account, with the balance rising as you pay in.
- The older you are, the higher your initial premium will be. However, your premium’s amount will not increase as you age.
- The specific final arrangements remain flexible, although you provide instructions.
- You have flexibility when you choose service providers. So, you can allot funds without being bound to a certain provider, plan, or geographic area. Final expense insurance keeps your options open. The timeframe from when you choose a policy to when you use a policy can be lengthy, so this flexibility is a tremendous advantage.
- A $10,000 policy costs roughly $2 per day.
- Many people think that final expense only covers burial costs, but this is not the case. The insurance can cover a multitude of expenses, which allows your family to use the benefits for whatever they need to pay. The coverage includes common final costs, like probate or legal fees, medical bills, and any debt.
- You may borrow against the tax-deferred value of your policy. Besides preparing for your family’s future, you’ll also have an available line of credit in case of an emergency.
Who Needs Burial Insurance?
Final expense life insurance is an overlooked type of coverage geared to senior citizens who no longer need it for income replacement. Final Expense Life Insurance stays in force up until the age 100 or even after which means that older adults looking for some much-needed peace of mind may find this option a good choice and something their family can count on if they are unable to provide themselves with final expenses such as funeral costs, burial services, etc.
How To Apply For Burial Insurance (What to Expect)
Burial insurance is sold through private insurance companies. Let’s discuss applying for burial insurance and what you should keep in mind when going through the process.
Apply with a Private Company. Or Through an Agency Like Us!
Applying for burial insurance is an important decision, but the application isn’t the first step of the process. Before that, make sure to do the research required to select the right policy and insurance provider.
Researching your options is necessary, as there are many different prices and offerings available. Being sure you selected the right policy is necessary, as you’ll most likely be paying into the policy regularly for years to come.
Applying for burial insurance is done through private insurance companies. Or, you can apply through an independent agency like Final Expense Direct. Making sure you choose the right insurance provider is extremely important, so let’s talk about what that means and how you can do it.
Choosing an Insurance Provider
Choosing the right insurance provider is important because they’ll be the ones to answer any questions or make any changes to your policy. Being able to trust your insurance provider will give you peace of mind and make the application process less stressful. Applying for burial insurance can be overwhelming, so choose an insurance provider who understands that and will support you throughout the process.
How Do I Know Which Policy to Choose?
So you’ve done the necessary research… now what? Getting a quote from an insurance agency will specify how much you’ll pay for a burial insurance policy. Being able to understand quotes and decipher if they’re a good fit for you is important. Remember, it’s good to know all your options, and you should never feel pressured into buying an insurance policy.
For many, price is the biggest component of a burial insurance policy. Finding a policy that will give you a fair, affordable premium is extremely important. Make sure to take into account various financial possibilities and make a plan for all those situations. If you aren’t sure about a policy, take the time required to understand it fully. Work with your insurance provider to go over all that the policy covers and make sure it fits your burial insurance needs.
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Pros & Cons of Burial Insurance
Pros of Burial Insurance
Final expense insurance provides financial protection to your spouse, children, and other dependents in the event of your death
You can purchase a policy for as little as $10 per month
A final expense policy also pays up to $100,000 in event of your death
Some policies include free life insurance coverage for a child or grandchild who is 18 years old or younger
Final expense insurance pays for funeral costs
Life insurance is a one-time payment that can be used to cover any debt you may have or provide money for your family members
It may cover grief counseling as well as medical treatment if needed after someone passes away from an accident or illness
Whatever you think final expense costs...
It's probably less.
No money down • No medical exam
Burial Insurance Cons
What’s Covered By Burial Insurance?
How Much Burial or Funeral Insurance Should I Buy?
Burial insurance policies usually range from $5,000 to $50,000. The death benefit can go directly to your beneficiaries to handle burial expenses. You may wonder, how does it differ from ordinary life insurance?
Traditional life insurance offers more coverage that can be used to pay burial costs, PLUS daily living expenses, college tuition, mortgages, and other debts. If burial insurance is a missing item in your financial plan, we list some carriers below that offer suitable coverage to help you pay for final expenses.
How much does burial insurance cost?
Similar to life insurance policies, burial insurance varies in costs. It depends on how large a policy you select. Other factors are in play as well, such as your gender, age, and health. Expect to pay around $50 per month, on average, for a $10,000 burial insurance policy.
Burial Insurance vs. Term Life Insurance: Average Rates for a 50-Year-Old Male
What’s the Difference Between Burial Insurance and Other Life Insurance?
Burial Insurance vs. Pre-need Funeral Insurance
Pre-need burial policies are sold directly to you through a funeral home and will often have the following kinds of features:
They are guaranteed issue policies that will be issued no matter your health, age, lifestyle choices or any other factors. (If you're in poor health, or have pre-existing conditions, though, it's likely that they'll only sell you limited coverage.) -- The premiums can be pre-paid for up front; this is sometimes required as part of arrangements with the funeral home if you want them to handle any post-death care such as embalming services.
Choosing the best policy for your needs may require doing some research on local laws and regulations, or on what funeral home providers in the area are charging for their services.
The fees associated with prepaying your burial policies are relatively small and can involve a flat fee, or perhaps 5 percent of the value of the policy annually (with a maximum yearly amount).
The real problem with these policies is that a specific funeral home or funeral company is named the beneficiary, not a family member, unlike Burial Insurance. This means all the money will only go to your funeral expenses and can't be used for any other family needs.
Burial Insurance vs Final Expense Insurance
Burial insurance and final expense insurance are the same thing with different names. These kinds of policies can be term life policies or whole life policies and are bought directly from an insurance company, not through a funeral home.
They will generally cost less than pre-need insurance and will feature a beneficiary you name and not a funeral service provider. That's good, because it doesn't lock you into using a particular funeral home -- but it does present the risk that the named beneficiary might not spend the money as intended, such as on the deceased's funeral and death care. Some of these policies can get a bit fancy, with features of whole life insurance policies such as cash-value accumulation
Best Burial Insurance Companies
Since many life insurance carriers also offer burial insurance, you have several options. We studied them and picked the top three — based on the plan’s flexibility, premium rates, coverage, and the kind of plans offered. These are all companies we work with!
- Mutual of Omaha
Great for Smaller Burial Expense Needs
If you think you’ll have a smaller funeral or may choose cremation, you probably won’t need $25,000 + in burial insurance. Mutual of Omaha offers smaller guaranteed whole life policies (these are burial policies) — with coverage starting at $2,000 — to people ages 45 to 85. The age range could vary slightly by state.
There’s a two-year waiting period. This means that if you die within the first two years, your beneficiary would only get a benefit amount that equals the premiums you’ve paid — plus 10%. However, after the first two years, your beneficiary is deserving of the full benefit amount.
Excellent for Additional Protection
Burial insurance can make it easier for your loved ones to handle burial and funeral expenses after you’re gone. But some policies also include living benefit protections. AIG Direct has a guaranteed issue whole life policy — intended to help with final expenses — while also providing coverage for chronic and terminal illnesses. This additional protection is a real game-changer.
If you’re diagnosed with a chronic illness (like HBP or diabetes), AIG will return all premiums paid up to 25% of the policy’s face value. If you’re diagnosed with a terminal illness (like breast cancer), AIG gives you access to 50% of your death benefit amount — while you’re alive — to help pay for medical care or other costs. These perks come with an administrative fee. But again, the options can provide some additional relief should you develop a severe illness later in life.
Great for No Waiting Period
Buying burial insurance when you’re younger and healthier? If so, a waiting period may not be a huge fuss. On the flip side, having a 1-3 year waiting period could disturb your financial approach — if you’re “high-risk” (you have a severe health condition or you might pass away before the waiting period ends).
Transamerica’s Immediate Solution burial policy is meant to cope with that. With no waiting period, this policy covers you pronto. If you’re between 45 and 85, you can apply for coverage ranging from $1,000 to $50,000. Your age determines the maximum benefit amount.
Competitive pricing is available for those who want to get burial coverage right away, and they can add on riders for accelerated death benefits if needed.
Is Burial Insurance Worth It?
Burial insurance not only covers the costs associated with burials, but it can be useful for other debts your family may face after your death. By considering burial insurance, you are considering a safety net that can be financially useful for your loved ones so they are not left with big financial costs.
So, is burial insurance vs final expense insurance worth it? Here are several reasons as to why you should consider it:
Reason One – You can easily qualify
Your premiums will be lower than other types of insurance, you don’t have to have a medical exam, and you’re a short questionnaire away from ensuring your loved ones will not have to worry about their financial burdens.
And as far as your policy goes, the premiums will never go up, and your death benefit will never go down.
Reason Two – Unexpected exorbitant expenses can happen at any moment
Relying on savings to cover all costs is based on the assumption that you won’t have any costly emergencies from now on. Bills don’t have a time limit on how quickly they can rack up. And once your savings have been depleted, how are you going to have enough left over to cover your funeral expenses and beneficiaries?
Your choice boils down to two different options:
- Your loved ones will come up with the costs themselves.
- Or, you can provide your family with up to a $50,000 financial cushion to fall back on.
Reason Three – There’s more than just one policy to choose from
Burial insurance isn’t one-size-fits-all; you can find an option tailored to your specific wants and needs.
Types of burial insurance you can get:
- Guaranteed issue – Your medical conditions, no matter how serious, will not disqualify you from joining the policy. You won’t even have to answer any health questions. Your benefits begin after a waiting period, typically between two to three years. If you die before the waiting period, your beneficiaries will not receive the death benefit. On the other hand, that does not mean this policy is a sunk cost. Your family will receive the amount you paid in premiums, and with certain policies, they may also get an additional 10% interest on top of what was refunded to them. Qualifying age is normally between 50 to 80 years.
- Graded benefit final expense – Your beneficiaries receive a percentage of the death benefit if you die during the waiting period. Your beneficiaries will get 30-40% of the death benefit if you die during the first year, and 70-80% if you die during the second year.
- Standard – Standard final expense insurance offers immediate coverage, so the death benefit can directly go into effect instead of requiring a waiting period. You are more likely to get it if you do not have any serious health conditions. The premiums will be slightly higher than the other two options, but you will also be likely to get a greater amount for your death benefit.
Whatever you think final expense costs...
It's probably less.
No money down • No medical exam
Burial Insurance FAQ
Do funeral homes offer burial insurance?
Yes, funeral homes offer a pre-need insurance policy that is usually a guaranteed issue life insurance policy. The problem with these policies is that they are generally a bit more expensive and they name the funeral home or funeral company the beneficiary. This means your family does not have access to the money because it all goes to the funeral home regardless of funeral costs, your stated wishes, or your families needs.
Can You Purchase Burial Insurance For Other Family Members?
If you fear that your family member is approaching the end of their life, you may be concerned about how you will pay for their funeral expenses. Final expense insurance, or burial insurance, is a great solution to this common issue. If your family member doesn’t already have this form of coverage, you may want to look into purchasing final expense insurance for them.
Can I Buy Final Expense Insurance For My Family?
You can purchase a burial insurance policy for any person you have an insurable interest in. An insurable interest simply means that if the person in question dies, you will be impacted financially. Therefore, if you rely on a person for any form of financial support, you have an insurable interest in their life.
Who Can I Buy Burial Insurance For?
Adult children typically have an insurable interest in their parents burial insurance because the child is likely to be responsible for paying for their parents’ funeral costs should they die. The same is likely to apply to your spouse, siblings, children, or other family members. You can also have an insurable interest in close friends or associates, such as business partners. In some cases, you may even be able to insure someone with who you only share property with. To learn whether you can purchase a burial insurance policy for someone you care about, speak with a qualified insurance professional. They have the answers you are looking for.
How To Buy Burial Insurance For Someone Else
Purchasing a burial insurance policy for someone whom you have an insurable interest in is easy, but to secure a policy, you will need to answer some questions. For instance, an insurance representative may need to know if the proposed insured is taking any medications or if they have been hospitalized recently. If they have prior health problems, those will need to be documented as well.
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After determining the proposed insured’s eligibility for a burial insurance policy, you will need to confirm that they have given consent to allow you to purchase a policy for them. You are not allowed to buy a policy for someone without them knowing about it, as consent is needed to buy and qualify for burial insurance policies. If you do manage to get a policy without permission, it will be considered fraudulent, and the policy will be void. The only exception to this is when parents or grandparents purchase burial insurance for a minor child; you won’t need consent to insure someone below the age of 18.
Find Burial Insurance For Your Family
If you have a family member or friend you would like to insure, you should speak with a final expense insurance representative. The knowledgeable professionals of Final Expense Direct can help you find burial insurance coverage for the people you have an insurable interest in. To speak with an agent, give us a call at 1-877-674-0236.