what is burial insurance?
Burial or final expense or funeral insurance is a small whole life insurance policy with affordable premiums designed to pay for funeral and other burial expenses.
Planning for the end of life is a topic many of us prefer to avoid, yet it’s an essential part of ensuring our loved ones are not burdened with unexpected expenses. One way to alleviate this potential financial stress is through burial insurance. Burial funeral or final expense insurance is a type of life insurance policy designed to cover the costs associated with end-of-life expenses, such as funeral services, cremation, and burial.
The coverage amount for burial insurance is typically much smaller than traditional life insurance, usually ranging from $5,000 to $25,000. Despite its smaller payout, burial insurance can be a crucial financial tool, especially for those who may not qualify for more comprehensive insurance policies.
In this article, we will delve into the details of burial insurance, exploring its purpose, types, costs, and benefits. We will also discuss eligibility requirements, the pros and cons, and how to choose the right policy for your needs. Whether you’re considering burial insurance for yourself or a loved one, this guide provides the information you need to make an informed decision.
Definition and Purpose of Burial Insurance
Burial insurance, also known as funeral or final expense insurance, is a type of life insurance policy specifically designed to cover end-of-life expenses such as funeral services, burial, and cremation. Unlike traditional life insurance policies, burial insurance focuses on covering these specific costs rather than providing a substantial death benefit to cover larger financial obligations like a mortgage or income replacement.
The coverage amount for burial insurance is typically much smaller than traditional life insurance, usually ranging from $5,000 to $25,000. This is because the primary purpose of burial insurance is to alleviate the financial burden of funeral and burial costs for the policyholder’s loved ones.
One key difference between burial insurance and other types of life insurance is that burial insurance policies often do not require a medical exam for approval. This makes burial insurance more accessible, especially for older or less healthy individuals who may not qualify for other types of life insurance.
However, it’s important to note that while burial insurance can be a valuable tool for covering end-of-life expenses, it may not offer as much value per premium dollar as a larger life insurance policy. Therefore, the decision between burial insurance and other types of life insurance should be based on individual financial goals and needs.
Types of Burial Insurance
Burial funeral or final expense insurance comes in several types, each with unique features designed to meet different needs. The most common types are simplified issues, guaranteed issues, and pre-need insurance.
**Simplified Issue Burial Insurance** is a type of policy that does not require a medical exam but does require the applicant to answer a few health-related questions. A “yes” answer to these questions could disqualify the applicant.
**Guaranteed Issue Burial Insurance** is a policy that does not require a medical exam or health questions, making it accessible to almost anyone, regardless of health status. However, these policies often have a graded death benefit, meaning if the policyholder passes away within a certain period after buying the policy (usually two or three years), the beneficiaries will receive only a refund of the premiums paid, plus some interest, or a small percentage of the policy’s coverage amount. Accidental deaths, however, are typically covered in full from the start of the policy.
**Pre-Need Insurance**, also known as pre-need funeral insurance, is a policy that funds a funeral service agreement between the policyholder and a specific funeral home. The policyholder decides every element they want included in their funeral service, such as the casket, flowers, and transportation for the family. The funeral home director totals the costs, and that amount is the basis for the pre-need insurance plan. This type of insurance is purchased through a funeral home, which becomes the insurance beneficiary. The advantage of pre-need insurance is that it allows the policyholder to lock in the costs of funeral services at current prices, protecting against future inflation.
Each type of burial insurance has advantages and is designed to meet different needs. Simplified issue and guaranteed issue policies provide flexibility in using the death benefit. At the same time, pre-need insurance offers the peace of mind of planning and paying for all funeral arrangements in advance. The choice between these types of burial insurance should be based on individual needs, financial situation, and personal preferences.
Cost of Burial Insurance
Burial insurance, or final expense insurance, typically costs between $50 and $100 per month on average, with the most common coverage amount being $10,000. However, the actual cost can vary significantly based on several factors, including age, gender, health status, and desired coverage.
**Age**: The cost of burial insurance generally increases with age. For example, a 50-year-old might pay about $32-$43 per month for $10,000 in coverage, while a 69-year-old might pay significantly more for the same coverage. Another source suggests that a healthy 50-year-old seeking $10,000 in coverage might pay between $25 and $40 per month.
**Gender**: Women typically pay less for burial insurance than men because they tend to live longer. For example, at age 60, a woman might pay around $32 per month for $10,000 in coverage, while a man might pay around $43 per month for the same coverage.
**Health Status**: Health status can also significantly impact the cost of burial insurance. Those in good health generally pay less than those with health issues. For example, a 60-year-old woman in good health might pay around $32 per month for $10,000 in coverage, while a 60-year-old woman who uses tobacco might pay around $45 monthly for the same coverage.
**Coverage Amount**: The desired coverage also affects the cost of burial insurance. For example, a 60-year-old woman in good health might pay around $32 per month for $10,000 in coverage but around $47 per month for $15,000.
It’s important to note that these are average costs, and actual costs can vary based on the insurance company and the specific policy terms. Therefore, comparing quotes from different insurance companies to find the best rates is advisable.
Coverage and Benefits
Burial insurance, also known as funeral or final expense insurance, is designed to cover the costs associated with end-of-life expenses. The coverage amounts typically range from $5,000 to $35,000, although some insurers may offer higher limits.
**Coverage Amounts**
The coverage amount is the death benefit the policy pays out upon the insured’s death. This amount is typically between $5,000 and $35,000, but it can be higher or lower depending on the specific policy and the insured’s needs. The coverage amount is intended to be sufficient to cover the costs of a funeral and other related expenses.
**Expenses Covered**
Burial insurance is designed to cover a variety of end-of-life expenses. These can include:
– Funeral home services
– Burial or cremation
– A casket or an urn
– The purchase and installation of a headstone at the cemetery
– Obituary notices
– Flowers
– Transportation
In addition to these funeral-related costs, the death benefit from a burial insurance policy can also be used to cover any outstanding debts that the insured may leave behind, such as credit card debt, medical bills, and legal bills.
Benefits of Burial Insurance
One of the main benefits of burial insurance is that it provides financial support to the insured’s loved ones at a difficult time, helping to ease the burden of funeral and other end-of-life expenses. The death benefit is paid directly to the beneficiary, who can use it however they see fit. This flexibility can be particularly beneficial if unexpected expenses or debts are to be paid.
Another benefit of burial insurance is that it is typically whole-life insurance, meaning the premiums cannot increase. The death benefit cannot decrease over time. This provides certainty and stability for the insured and their loved ones.
Furthermore, burial insurance policies often have simplified underwriting processes, meaning they may not require a medical exam and only involve answering a few health-related questions. This can make burial insurance more accessible to individuals who might not qualify for other types of life insurance due to their health status.
Eligibility for Burial Insurance
Burial insurance is typically available for individuals between 50 and 85. However, some policies may be designed to cover everyone in a family, not just individuals. Despite previous health challenges, seniors can still qualify for burial insurance. In some cases, even those without health insurance or pre-existing conditions can usually obtain a policy.
**Requirements to Qualify**
The requirements to qualify for burial insurance are minimal. If you’re in the United States when you apply, have a Social Security Number (SSN) or Taxpayer Identification Number (TIN), and legally sign a contract, you can get a burial policy.
Most burial insurance policies do not require a medical exam. Instead, they are issued based on answers to health questions on the application. Some plans may not even require you to answer health questions.
**Application Process**
The application process for burial insurance is relatively straightforward and similar across most companies that offer these policies. Here are the typical steps involved:
Work with an agent to find the best life insurance plan for you.
Complete the health questionnaire if required.
Review the monthly premium to ensure you can afford it.
Choose when you want your premium payments deducted from your bank account or credit card.
Sign the application. In many cases, you can receive instant approval from the insurance company.
Receive your policy 1-10 business days later, depending on whether you elect to receive a paper copy in the mail or not.
The application process usually takes 10 to 20 minutes. You must supply details about yourself, such as your name, birthday, age, gender, and address. You may also be asked about your medical history and history of a family disease or any incidents.
Pros and Cons of Burial funeral insurance
**Advantages of Burial Insurance**
**Ease of Access**: Burial insurance is relatively easy to obtain, especially for older individuals or those with health issues. Most policies do not require a medical exam, and approval is often based on answers to a health questionnaire.
**Coverage of Final Expenses**: Burial insurance covers the cost of funeral and burial expenses and other end-of-life costs such as medical bills. This can provide peace of mind and ease the financial burden on your family.
**Fixed Premiums**: Burial insurance is a type of whole-life insurance with a fixed monthly premium. This means that your rates will not increase over time.
**Cash Value Accumulation**: Some burial insurance policies can accumulate cash value over time, providing an additional financial resource.
**Flexibility in Use of Funds**: The death benefit from a burial insurance policy can be used for any purpose, giving your beneficiaries the freedom to address the most pressing financial priorities.
**Disadvantages of Burial Insurance**
**Cost**: Burial insurance can be expensive, especially for older individuals. The premiums increase with age, and older people may end up paying more in premiums than the policy will pay out.
**Coverage Limitations**: The death benefits for burial insurance are typically low, often between $5,000 and $25,000, although some insurers may offer higher limits. This may not be sufficient for those who need a substantial death benefit to cover a mortgage or provide income replacement.
**Waiting Period**: Many burial insurance policies have a two-year waiting period. If you die of natural causes within the first two years of taking out the policy, your beneficiaries won’t receive the total payout.
**Risk of Lapsed Coverage**: If you stop paying premiums, your coverage may lapse, leaving your beneficiaries without the expected financial support.
**Potential for Misleading Policies**: Some insurers may try to steer consumers towards more restrictive and expensive policies, especially when a consumer doesn’t present major health problems.
Choosing the Right Burial Insurance
Choosing the right burial insurance involves careful consideration of several factors. Here are some tips to help you make an informed decision:
**Estimate Your Final Expenses**: The first step is to estimate your end-of-life expenses, including funeral and burial costs, medical bills, and any other debts you may leave behind. The National Funeral Directors Association estimates the average funeral cost around $9,000.
**Determine Your Coverage Needs**: Decide how much coverage you need based on your estimated final expenses. Burial insurance policies typically offer coverage ranging from $5,000 to $50,000.
**Consider Your Budget**: The premiums for burial insurance can vary significantly depending on the coverage amount, age, and health status. Ensure that the policy you choose fits within your budget.
**Choose Your Beneficiary**: Decide who will receive the death benefit from your policy. This could be a family member, a friend, or a funeral home.
**Compare Multiple Quotes**: Getting at least three quotes is recommended to ensure you’re getting the best price.
**Consider the Insurance Provider’s Reputation**: Look for a company with a good track record of paying claims promptly and fairly.
**Understand the Policy Terms**: Ensure you understand the policy terms, including any waiting periods and what happens if you stop paying premiums.
**Consider Additional Features**: Some policies may offer additional features, such as accidental death benefits or cash value accumulation.
**Ask Questions**: Don’t hesitate to ask your potential insurance provider questions. This can include inquiries about pre-need insurance, customizations to the service, and their years of experience.
**Consider Your Health Status**: If you’re in good health, you might qualify for more traditional life insurance policies that offer more coverage at a lower cost.
Remember, your right to burial insurance depends on your circumstances and needs. It’s essential to research and consider all your options before deciding.
Burial Insurance with No Waiting Period
Burial insurance with no waiting period is a whole life insurance policy that provides immediate coverage upon the first premium payment. Suppose the insured passes away after making just one premium payment. In that case, the beneficiary will receive the full death benefit, assuming there was no misrepresentation to the insurer during the application process.
How to Qualify
Applicants must answer basic health questions to qualify for burial insurance with no waiting period. The eligibility requirements for immediate coverage can vary between insurance companies, but at a minimum, you must answer these health questions, and no medical exam is usually required. It’s important to note that certain severe health conditions may result in a mandatory two-year waiting period with some policies.
Best Companies Offering This Feature
Several companies offer burial insurance with no waiting period, and they are often the best choice for individuals who want immediate coverage and are in relatively good health. Some of the top companies that provide policies with no waiting period include:
– **Transamerica**: Offers the Immediate Solution plan with no waiting period for individuals aged 18 and above.
– **Foresters Financial**: Provides the PlanRight Whole Life Insurance with a waiting period dependent on the final approved plan for individuals aged 50 to 85.
– **Colonial Penn**: Offers Permanent Whole Life Insurance with no waiting period for individuals aged 40 to 75.
– **Fidelity Life**: Provides RAPIDecision Final Expense with no waiting period for individuals aged 50 to 85.
– **Mutual of Omaha**: Known for having no waiting period and generally low monthly premiums.
When considering a burial insurance policy with no waiting period, it’s crucial to compare multiple quotes and understand the terms and conditions of each policy. Look for a reputable company with a strong financial rating and a track record of fair and prompt claims processing. Additionally, be aware of any health conditions that might affect your eligibility for immediate coverage, and be prepared to answer health-related questions during the application process.
Top Burial Insurance Companies
Burial or final expense insurance is a type of whole life insurance designed to cover funeral and other end-of-life expenses. Here are some of the top burial insurance companies, their offerings, and what makes them stand out:
**State Farm**: State Farm is often rated as the best burial insurance company due to its flexible and comprehensive guaranteed issue whole-life policy. It consistently ranks high in customer satisfaction studies and offers some of the most affordable premiums among insurers.
**AARP/New York Life**: This partnership stands out for its low consumer complaints. They offer guaranteed acceptance life insurance, making it a good choice for those who may have health issues that could complicate getting a policy.
**American Family**: Known for its bundling options, American Family allows customers to combine different types of insurance for more comprehensive coverage.
**Ethos**: Ethos offers instant coverage, making it a good choice for those who need a policy quickly.
**Mutual of Omaha**: This company is recognized for its accessibility and instant online application process. It also offers an accelerated death benefits option.
**Fidelity Life**: Fidelity Life is a top pick for its strong financial strength and various policy options. It offers the RAPIDecision Final Expense policy, which provides immediate coverage with no waiting period.
**Foresters Financial**: Foresters Financial offers the PlanRight Whole Life Insurance, which provides immediate coverage depending on the final approved plan.
**Colonial Penn**: This company provides Permanent Whole Life Insurance with no waiting period, making it a good choice for those who want immediate coverage.
When choosing a burial insurance company, it’s important to consider its financial strength, customer satisfaction ratings, policy offerings, and premium costs. Getting quotes from multiple providers and comparing offerings is crucial to finding the best insurance for your needs.
Top Funeral burial Insurance Comparison
| Company | Estimated Monthly Cost for $10,000 Coverage |
|---|---|
| State Farm | $40-$100 |
| AARP/New York Life | $45-$100 |
| American Family | $50-$100 |
| Ethos | $49-$100 |
| Mutual of Omaha | $50-$100 |
| Fidelity Life | $50-$100 |
| Foresters Financial | $50-$100 |
| Colonial Penn | $42-$100 |
| Transamerica | $50-$100 |
| Gerber | $50-$100 |
Please note that these costs may vary based on age, health, and location. It’s also important to note that not all companies may offer a $10,000 coverage option.
Burial Insurance vs. pre-need funeral insurance
Burial and pre-need funeral insurance are designed to cover end-of-life expenses, but they differ in how they work, their flexibility, and how the funds can be used.
Burial Insurance
Burial insurance, also known as final expense insurance, is a type of whole-life insurance policy that pays a death benefit to the beneficiary upon the policyholder’s death. The death benefit generally ranges from about $10,000 to $25,000 and can be used for any purpose, including funeral costs, transportation of family members, or any unpaid medical expenses.
Critical features of burial insurance include:
– No medical exam is usually required, and applicants are often insured after answering only a few health-related questions.
– The beneficiary can be anyone of the policyholder’s choosing.
– The death benefit can be used for any purpose, providing flexibility to the beneficiary.
– The policy remains in effect as long as the premiums are paid.
– The policy can move with the policyholder, regardless of where they live.
Pre-Need Funeral Insurance
Pre-need funeral insurance, a prepaid funeral plan, is purchased from a specific funeral home. The policyholder specifies their desired arrangements, and the funeral home prices them out. The policyholder then pays the cost ahead of time, either all at once or over time.
Key features of pre-need funeral insurance include:
– The plan is designed to cover the specific costs that the chosen funeral home charges.
– The payout goes directly to the funeral service provider upon the policyholder’s death.
– The policy covers only the expenses associated with a pre-arranged funeral.
– The policy protects against inflation because funeral costs are locked in at current prices.
– The premiums are paid only for a set amount of time.
Comparison
The main difference between burial insurance and pre-need funeral insurance is the flexibility they offer. Burial insurance provides more flexibility as the death benefit can be used for any purpose, and the beneficiary can be anyone of the policyholder’s choosing. On the other hand, pre-need funeral insurance is more specific and is designed to cover the costs of a pre-arranged funeral at a specific funeral home.
When choosing between the two, consider factors such as your financial situation, your desired funeral arrangements, and the level of flexibility you want your plan to have. It’s also important to compare multiple providers and understand the terms and conditions of each policy.
Frequently Asked Questions about Burial Insurance
- Is burial insurance worth buying?
- Burial insurance can be worth buying if you're looking for a simple policy that offers guaranteed coverage, doesn't require a medical exam, and helps your loved ones take care of your final expenses. It can cover the basic costs of your funeral and burial and outstanding debts such as credit card debt and medical bills. However, if you need a policy that will provide a substantial death benefit to cover larger financial obligations like a mortgage or income replacement, burial insurance may not be the best choice.
- What is burial insurance?
- Burial insurance is a type of whole life insurance policy with a death benefit typically ranging from $5,000 to $25,000. It is designed to provide money for funeral and burial costs for the policyholder and their family members. It can be purchased after answering a few health-related questions on the application and does not usually require a medical exam.
- What is the cheapest burial plan?
- The cheapest burial plan is often a direct burial or direct cremation. A direct burial is the least expensive traditional burial option and can be arranged for around $1,200 to $1,600, not including the cost of a gravesite or grave digging. Direct cremation is another cost-effective option, with prices varying between $695 to $1,395 depending on the location.
- What does burial insurance cost?
- The cost of burial insurance varies based on age, gender, health, and the amount of coverage. For example, a senior woman over 60 and under 65 might pay between $18 to $77 per month for a $5,000 death benefit, while a senior man in the same age group might pay between $23 to $88. The cost increases with age.
- Does Medicare have burial insurance?
- Medicare does not offer burial insurance. It is a health insurance program that does not cover funeral or burial expenses.
- Does Social Security offer burial insurance?
- Social Security does not offer burial insurance. However, it does provide a one-time death benefit of $255 to the surviving spouse or child if they meet certain requirements.
- What is better, life insurance or burial insurance?
- The choice between life insurance and burial insurance depends on your individual needs. Life insurance policies typically offer a higher death benefit and can cover various financial needs, such as income replacement or mortgage payments. Burial insurance is a type of life insurance with a smaller benefit amount specifically intended to cover funeral and burial costs. Burial insurance may be sufficient if you only need to cover final expenses. If you have larger financial obligations or want to leave a more substantial sum to your beneficiaries, a traditional life insurance policy might be a better option.