The Role of Burial Insurance in Estate Planning: Integrating Final Expense Coverage into Your Long-Term Financial Strategy

Written by Kim Wilhelm

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Last Updated 14 Apr 2024

Estate planning is a crucial process for individuals and families to ensure that their assets and wealth are distributed according to their wishes after they pass away. 

An essential aspect of estate planning involves deciding to cover the expenses related to one's final rites and burial or cremation. 

This is where burial insurance, also known as final expense insurance, plays a significant role. 

In this article, we will discuss the importance of burial expense coverage into your long-term financial strategy.


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What is Burial Insurance?

Burial insurance is a type of life insurance designed to cover the costs associated with an individual's funeral and burial or cremation. 

These policies are typically purchased by people who want to ensure that their loved ones are not burdened with the expenses of their end-of-life expenses.

Burial insurance policies offer small death benefits, usually ranging from $2,000 to $25,000, which can be used to pay for funeral costs, burial, cremation, and any outstanding debts or medical bills that the deceased may have left behind.

The Importance of Burial Insurance in Estate Planning

When considering burial insurance and estate planning, there are 4 key benefits: 

  • Financial protection for loved ones
  • Avoiding debt
  • Ensuring your wishes are fulfilled 
  • Simplifying the estate settlement process

Below, we break down each of these in more detail: 

Financial Protection for Loved Ones: 

One of the main reasons to include burial insurance in estate planning is to provide financial protection to your loved ones in their time of grief. 

The loss of a family member is challenging enough without the added burden of paying for funeral and burial costs. 

A burial insurance policy ensures that your family will not have to worry about these expenses, allowing them to focus on healing and honoring your memory.

Avoiding debt: 

Burial insurance helps protect your estate from the costs associated with your final expenses. 

Without proper coverage, your family may need to use assets from your estate to pay for these costs, potentially reducing the inheritance you intended for your beneficiaries. 

By including burial insurance in your estate planning, you can ensure that your assets are preserved for your loved ones.

Ensuring Your Wishes are Fulfilled: 

A burial insurance policy allows you to pre-plan your funeral arrangements and make your preferences known. 

This ensures that your final wishes are carried out according to your instructions, providing you with peace of mind and alleviating any potential disputes or confusion among family members after your passing.

Simplifying the Estate Settlement Process: 

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Including burial insurance in your estate plan can help simplify the estate settlement process for your family. 

With the death benefit from the policy, your loved ones will have immediate access to funds to cover your final expenses, making the process less stressful and time-consuming.

Integrating Final Expense Coverage into Your Long-Term Financial Strategy

Integrating final expense coverage into your long-term financial strategy can be tricky, here are some tips you can follow:  

Assess Your Needs: 

Before purchasing a burial insurance policy, it's essential to evaluate your financial situation and determine how much coverage you need. 

Consider the costs of your preferred funeral arrangements, including the funeral service, burial or cremation, a headstone or memorial, and any other expenses you anticipate. 

Additionally, consider any outstanding debts or medical bills you may leave behind.

Compare Policy Options:

Burial insurance policies are offered by various insurance providers, and the coverage, premiums, and policy features can vary significantly. 

Compare the policies available in the market and choose one that best suits your needs and budget. 

Some factors to consider include the coverage amount, premium rates, policy exclusions, and the financial strength and reputation of the insurance provider

Choose Between Term and Whole Life Policies: 

Whole life policies, such as burial insurance, offer peace of mind that the funds will be there when your family needs them the most. Unlike term insurance, which expires at the end of a designated period of time.

Whole life insurance offers fixed premiums and guarantees that will be in place as long as the premiums are paid. Unlike term insurance, where 98% of all policies expire before the death of the insured.

A burial insurance whole-life plan is true to its’ name: that it will protect the insured for their whole life. 

Consider Adding Riders:

Final expense insurance plans offer additional riders, which are optional add-ons to the base policy that provide additional coverage or benefits. Some common types of riders on final expense insurance plans include:

Accelerated Death Benefit Rider: This rider allows the policyholder to access a portion of the death benefit while they are still alive if they are diagnosed with a terminal illness. This can help cover medical expenses or other costs during the policyholder's lifetime.

Waiver of Premium Rider: This rider waives the premium payments on the policy if the policyholder becomes disabled and is unable to work. It ensures that the policy remains in force even if the policyholder cannot afford to pay the premiums due to a disability.

Guaranteed Insurability Rider: 

This rider allows the policyholder to purchase additional coverage at specified intervals without having to provide evidence of insurability, such as going through medical underwriting. It can be useful if the policyholder wants to increase their coverage in the future without having to go through additional medical exams.

Child or Spouse Rider: This rider provides coverage for the policyholder's children or spouse, typically at a lower coverage amount compared to the base policy. It can help provide financial protection for family members in case of their death.

Accidental Death Benefit Rider: This rider provides an additional death benefit if the policyholder dies due to an accident. It can provide an extra layer of coverage in case of accidental death.

Review and update your policy periodically: 

It's essential to review your burial insurance policy regularly to ensure that it remains aligned with your needs and estate planning goals. 

If you experience significant life changes, such as getting married, having children, or purchasing a home, you may need to adjust your coverage accordingly. 

Additionally, the costs of funeral services and burial or cremation may increase over time, so it's essential to ensure your policy provides adequate coverage to account for inflation.

Communicate your plans with your family: 

One of the most critical aspects of estate planning is communicating your intentions and wishes to your family members. 

Discuss your burial insurance policy with your loved ones, including the coverage amount, the name of the insurance provider, and the location of the policy documents. 

Ensure that they understand the purpose of the policy and their role in handling the death benefit in the event of your passing.

Integrate burial insurance into your overall estate plan: 

Burial insurance is just one aspect of a comprehensive estate plan.

Work with an estate planning attorney or financial advisor to create a well-rounded plan that addresses all aspects of your financial life, including your will, trusts, power of attorney, healthcare directives, and any other life insurance policies you may have.

Final Words 

Incorporating burial insurance into your estate planning can provide you and your loved ones with peace of mind, knowing that your final expenses will be covered, and your assets will be protected. 

By evaluating your needs, comparing policy options, and integrating final expense coverage into your long-term financial strategy, you can ensure that your estate plan is comprehensive and provides for the needs of your family. 

Remember to review and update your policy periodically and communicate your plans with your loved ones to ensure a smooth estate settlement process and the fulfillment of your final wishes.

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