Burial life insurance, also known as funeral or final expense life insurance, refers to a whole life insurance policy that is designed for end-of-life expenses.
Do you need burial insurance?
Death is unavoidable, unfortunately. If you require funds to pay for bills accumulated upon your death, a burial policy is an excellent option.
The good news is this type of policy is easy to qualify for.
We will break down everything you need to know about burial life insurance, including a complete overview, the purchasing process and frequently asked questions – so that you can make an informed decision.
Table Of Contents
Burial Insurance Overview
Here, we’ll cover the primary features and functions of burial, or final expense, insurance.
Policy Covers Funeral Expenses
Aptly named, burial insurance is primarily used as a means for loved ones to cover the costs of your funeral and final medical bills.
- Casket or cremation
- Funeral service
- Hospital and nursing home bills
Burial Insurance Is Whole Life Insurance
It is important to know that burial insurance is a form of whole life insurance. In other words, you do not need to worry about outliving your life insurance policy.
Your policy never expires.
As long as you pay your premiums, your loved ones will receive a death benefit, regardless of when you pass away.
Cash Value Accumulates
Further, whole life insurance policies accumulate cash value. This means that you may borrow against your policy while you are still living.
Cash value does take time to build, and any unpaid balances at the time of your passing reduce the death benefit accordingly.
Modest Face Amounts
Designed to cover funeral costs and not much more, burial insurance policies are modest in size.
Generally speaking, face amounts range from $2,000 – $40,000. The average burial insurance policy is somewhere around $10,000.
To compare, the average funeral, which keeps increasing in price annually, will likely cost you somewhere between $7,000 – $12,000.
If you are in need of a larger policy to cover a mortgage, major debts, or to protect the financial livelihood of those who depend on you, a traditional life insurance policy makes more sense.
However, traditional coverage, like fully underwritten term or whole life insurance, is harder to qualify for and premiums are more expensive.
It’s important to remember that some coverage, like burial insurance, is better than no coverage, depending on your health and pocketbook.
No Medical Exam
Burial insurance does not require a medical exam. That means you skip the needles and nurses.
Because underwriting, the process of risk assessment on your life insurance application, is simplified, same-day approval happens all the time.
Easy To Qualify
Unlike traditional life insurance, burial life insurance utilizes a lenient underwriting process. In fact, same-day approval happens all the time.
Most people will be approved for burial insurance.
Different types of burial insurance exist. Most, but not all, will require you to answer a few health questions and none will require a medical exam. In other words, even if you are experiencing some medical problems, a burial policy is still an option for you.
There are two primary types of burial insurance:
- Simplified issue – some health questions
- Guaranteed issue – no health questions
You should know that the best option for most people is to purchase a policy that includes some health questions, known as simplified issue. Why? By answering those questions, you will pay less money for more coverage – and coverage begins right away.
Carriers utilize “knockout” health questions, similar to the following for simplified issue policies:
- Are you hospitalized, receiving hospice, or living in a nursing facility?
- Have you been diagnosed with a terminal illness?
- Has a physician advised you to receive an organ transplant or an amputation?
- Have you been diagnosed by a physician as having AIDS or as HIV positive?
Note – each life insurance company’s specific burial insurance health questions vary.
On the other hand, if you have been diagnosed with a terminal illness, live in a nursing home, or can’t pass other knockout health questions, a guaranteed issue policy is always available.
A guaranteed issue policy should not be your first choice. Opt for a simplified issue policy if you can qualify.
Keep in mind, guaranteed issue life insurance always includes a waiting period. In other words, you will need to live for 2-3 years after the purchase of your coverage before your loved ones will receive the entirety of a policy’s proceeds.
Burial insurance is one of the simplest forms of coverage to purchase. Expect a straightforward process when applying.
- Determine your needs by working with an independent life insurance agent.
- Select the right carrier and policy to fit your financial requirements.
- Fill out an application, usually accomplished over the phone.
- Receive an application decision, often within minutes.
- Your burial policy will be delivered to you either electronically or in the mail.
Remember, because burial insurance is permanent, your policy will not expire as long as you are making your premium payments.
Consider the following frequently asked questions when deciding if burial insurance is right for you.
How much will burial insurance cost?
Burial insurance policies are affordable, primarily because the death benefit is modest compared to other forms of life insurance.
There are a number of primary factors that affect the cost of your policy:
- Policy face amount
- Tobacco use
Here are two examples, based on the average burial policy of $10,000:
- 65 year old average health female, non-smoker: $42.80/mo.
- 75 year old poor health male, smoker: $85.16/mo.
What is the average cost of a funeral?
$7,000 – $12,000
However, funeral costs vary by state. Further, the costs of funerals are increasing annually.
Costs include a funeral service, casket or urn, embalming or cremation, flowers, and obituary.
Keep in mind, most individuals have final medical bills in addition to the cost of a funeral.
Will my policy ever expire?
As long as you make your premium payments, your policy will not expire. Burial insurance is permanent.
Do I have to use my policy on burial expenses?
In fact, the death benefit of your policy can be used in any way you see fit.
Perhaps your loved ones need funds to:
- Pay off credit card debt.
- Start a college fund for grandchildren.
- Make a donation to a charity or church in your honor.
- Cover loan payments.
Should I buy a burial life insurance policy?
The truth is, no one gets out of here alive. If you are in need of funds to cover bills when you pass away, burial insurance is a smart choice.
How To Buy
You need to do a few important things in order to find the best burial insurance policy for your needs.
First, conduct a needs assessment. Write down all unpaid debts, including medical bills. Also, discuss with your loved ones your desired funeral arrangements. That way, you can understand costs associated with your plans.
Next, review multiple quotes with an independent agent. Every burial insurance carrier is different. You will want to collaborate with an agent sitting on the same side of the able as you, so-to-speak.
You can feel confident reviewing all of your options, and selecting the best policy for you.
Finally, be sure to carefully select your beneficiaries and review your policy often. Life changes and you will want to make sure that your policy proceeds are going to those who will be in charge of your end-of-life care.
Think of it this way. Grief won’t be coupled with financial burden. Your policy will give your loved ones peace of mind, knowing that they will have the necessary financial resources to pay for the costs associated with your funeral and final bills.