How does burial insurance work?
You simply choose the amount of coverage you want and determine who will be the beneficiary upon your death. As long as you pay your premium, your coverage will last your entire lifetime. Premium payment schedules vary by insurer, but you can typically pay either monthly or annually.
The beneficiary should contact the insurance company to begin the claims process as soon as possible following the death of the insured. The beneficiary may be required to provide identification along with a claims form, as well as a certified copy of the death certificate.
What does a burial insurance policy cover?
Burial insurance is designed to cover the costs your loved ones will face in the event of your death, but there are no restrictions on how the payout can be used. Your beneficiaries might choose to use your burial insurance payout for:
- Funeral arrangements, including viewing and service
- Burial costs, including interment
- Cremation costs
- Medical bills
- Outstanding debt
- Legal costs
Given the lower coverage amount, there may not be much, or any, of your death benefit left after your beneficiaries have used it to pay your end-of-life expenses. If you wish to leave behind a more substantial sum, consider a policy that can hold more significant value, like a traditional whole life insurance policy.
How much does burial insurance cost?
Burial insurance is often considered one of the more affordable types of life insurance available, even for older applicants, due in part to its lower coverage amounts. Final expense life insurance rates start at just $58 a month with coverage amounts from $5,000 to $35,000 with eFinancial, and premiums can be paid monthly or annually.
Who can get a burial insurance policy?
Coverage is typically available for those between the ages of 50 and 85. One of the benefits of burial insurance is that it doesn't require a medical exam to qualify. Depending on the type of policy you pursue, even those without health insurance or who have a pre-existing condition can usually obtain a policy.
What types of burial insurance are available?
There are several types of burial insurance policies to consider:
Simplified issue: The insurer will evaluate your health based on a series of medical history questions, but a medical exam is not required. Certain factors may result in being denied a policy, such as pre-existing conditions, smoking, or risky activities.
Guaranteed issue: You won't need to answer any medical questions or take an exam. However, because this type of policy brings more risk to the insurer, your cost will likely be significantly higher. This policy may also have the provision of modified benefits — meaning the full death benefit won't be available until the policy has been in effect for a certain period of time, typically 24 or 36 months. If you were to pass away due to natural causes before this waiting period, your beneficiaries would only receive a limited portion of the payout. Full benefits are typically paid in the event of accidental death.
Pre-need insurance: This type of burial policy involves a contract with your funeral service provider. The agreement includes specific products and services you select through the funeral provider, and the policy's payout goes directly to them rather than individual beneficiaries you'd select.
Does burial insurance have waiting periods?
It varies by insurer and policy type, but some burial insurance policies include a waiting period during which your beneficiaries would receive a limited death benefit or no benefit at all. When shopping for burial insurance, you should verify with your prospective insurer whether a waiting period exists so you know when your coverage starts.
Is burial insurance worth it?
According to the National Funeral Directors Association, the median cost of a funeral with viewing and burial in 2021 was $7,848. So if you're on a tight budget and can't afford a standard life insurance policy, burial insurance can provide you with the coverage you need to handle major end-of-life expenses. However, if you already have savings set aside for your end-of-life expenses and you want an affordable policy designed to support your loved ones if you die unexpectedly, a term life insurance policy may be more suitable than burial insurance.
Does term life insurance cover funeral costs?
A term life insurance payout can cover whatever your beneficiaries decide to use it for, including your existing debts and funeral costs. So if you already have a term policy large enough to cover your final expenses, you may not need a separate funeral insurance policy. However, term life insurance will expire if you outlive the policy's term. Burial insurance is typically a whole life policy that lasts until you pass away. If you want to make sure your funeral costs are covered no matter when you die, a burial insurance policy can make more sense than a term life policy. You might also consider purchasing both — a term life policy to replace your income if you die before retirement, and a burial policy to cover your final expenses, no matter when you die.
