I often get calls from family members of terminally ill people wanting to know if they can get hospice burial insurance for their loved ones. They hope that even though they or their family member did no financial planning for cremation, burial, or final expense costs, there will be an insurance company that will pay these expenses for them.
Sadly, if you or a family member are in hospice, you are considered high risk and are uninsurable for the programs that offer first-day coverage. The last thing life insurance company wants is to sell you life insurance, then only weeks or months later, have to pay out a large death benefit.
To be clear -No insurance company will approve you or a loved one for first-day coverage if you are in hospice or have been told you need hospice services.
If you are in hospice, getting guaranteed issue life insurance with a waiting period is your only option. Still, I don’t recommend guaranteed issue life insurance if you or a loved one is in hospice.
In this post, I will inform you of who should buy guaranteed issue life insurance and why I don’t recommend guaranteed issue life insurance for hospice patients, and what are the non-burial insurance options open for you.
I also encourage you to get this insurance coverage for you or your loved ones before you need it, before you become terminally ill, and before you are told you need to enter hospice. Planning now will save your family and loved ones grief and financial hardship after your death.
FOR EASIER NAVIGATION:
- What Is Burial Insurance?
- Burial Insurance For Hospice Patients
- Why I Don’t Recommend Guaranteed Issue Burial Insurance For Hospice Patients
- Who Should Buy Guaranteed Issue Life Insurance?
- Non-burial Insurance Options For Hospice Patients
- When Is The Best Time To Buy Burial Insurance?
- How Can Funeral Funds Help Me?
WHAT IS BURIAL INSURANCE?
Burial insurance is also called funeral insurance, cremation insurance, or final expense insurance (they will be used interchangeably throughout this article). Burial insurance is whole life insurance intended to provide funds to cover funeral and end-of-life expenses.
Burial insurance is available to people between the ages of 50 and 85 and amounts ranging from $2,000 up to $25,000. It should be purchased before a health professional advises hospice, not after. It should be purchased before you are diagnosed with a terminal illness, not after.
Burial, cremation, or final expense coverage is ideal for people on a limited income or poor health who don’t have money to pay for their final expenses. Burial, cremation, or final expense coverage is not ideal for people in hospice or entering hospice.
Burial insurance does not require a medical exam or doctor’s visit to qualify. But there are health questions asked to purchase plans with first-day coverage (being in hospice is one of them).
Programs that ask no health questions are called guaranteed issue life insurance. These programs would seem to be ideal for hospice patients or life insurance for terminally ill because they ask no health questions, but there is a catch with these plans; these plans have a mandatory 2-year waiting period.
This 2-year waiting period makes guaranteed issue life insurance a terrible choice for hospice final expense needs.
Characteristics of traditional Burial Insurance
Here are the characteristics of traditional burial insurance:
- First-day coverage
- No medical exam – it does not require a medical exam to qualify.
- Permanent coverage – your coverage will never expire. It will last your whole life.
- Level premiums – your premium will never increase in the future.
- Level benefit – death benefit will never decrease.
- Small coverage options – you can buy as little as $2,000 to $25,000.
- Tax-free – your beneficiary will get the death benefit payout free of tax.
There are two types of burial insurance:
Simplified issue life insurance – this is also life insurance without health exam. This policy is easy to obtain and if offers first-day coverage. You only need to answer a few health questions to qualify (hospice is one of them), and most people qualify for this plan.
However, some pre-existing health conditions or participating in risky activities may cause your application to be denied by the insurance company.
The major benefit of simplified issue burial insurance is immediate coverage. This policy does not have a waiting period. It is also priced much lower than guaranteed issue life insurance.
Guaranteed Issue Life Insurance – this is also called no-questions-asked burial insurance. You can’t be turned down for any reason with this insurance.
Your approval is guaranteed regardless of any health or medical conditions. This is the best option for people who have serious health issues who can’t qualify for any other life insurance. GI policy is often thought of as life insurance for terminal illness.
Guaranteed issue life insurance policies have a mandatory two waiting period before they pay the death benefit. If a company or insurance agent offers you a three or four-year waiting period plan, stop talking to them immediately!
Policies with three and four-year waiting periods are the most expensive and most terrible plans on the face of this earth! If you recently bought one of these policies, it should be replaced immediately to get you better coverage and lower pricing in almost every case.
If you die from any accidental reason, this policy will pay from the very first day. Death resulting from slips, trips, falls, car accidents or any other accidental cause of death are 100% covered with these plans.
If you die for any health or medical reason during the waiting period of a guaranteed issue life insurance policy, the company will refund all of your premiums plus interest, typically with a 5-10% interest rate.
Your beneficiary will receive your full death benefit for any cause of death after reaching the two-year waiting period time limit.
Your beneficiary can use the death benefit to pay debts, medical bills, or other expenses.
BURIAL INSURANCE FOR HOSPICE PATIENTS
If you are thinking about buying burial, cremation, or final expense life insurance for hospice, you are out of luck…you waited until it’s too late to get coverage for the best plans that offer first-day coverage.
It breaks my heart that I can’t help family members looking for final expense hospice insurance options that offer first-day coverage. Any kind of insurance product should be bought before it’s needed.
If you wrecked your car yesterday and you didn’t have automobile insurance, no company would sign you up today for a plan that rewarded you for procrastinating. You are effectively asking them to pay you $20,000 to $50,000 to replace your car with you only making one $50-$100 payment.
If your refrigerator broke down yesterday, no insurance company would sell you an appliance warranty today to fix your refrigerator. You are effectively asking them to pay you thousands of dollars to replace your refrigerator for one small payment.
The same thing applies to death insurance. No insurance company will sell you first-day coverage death insurance after being diagnosed with a short time to live.
Guaranteed issue life insurance is available, but it has a 2-year waiting period, so this is not a great plan for people entering hospice.
WHY I DON’T RECOMMEND GUARANTEED ISSUE BURIAL INSURANCE FOR HOSPICE PATIENTS
If your doctor thinks you’ll die in the next six months, buying guaranteed issue (GI) burial insurance will not help your family much at all.
Here are the reasons why I don’t recommend guaranteed issue burial insurance for hospice patients:
1. 2-year Waiting Period
The number one reason why I don’t recommend guaranteed issue life insurance for people in hospice is the two-year waiting period.
GI policies only offer immediate first-day coverage for accidental death. There is also a mandatory two-year waiting period for any medical or health-related cause of death.
You need to live for the first two years before your policy pays for a medical-related cause of death. This requirement makes these plans a terrible choice for people in hospice or people that are expected to die in the next 24 months.
This two-year waiting period is the insurance companies way of not paying money to people who have procrastinated purchasing this insurance and who are literally on their deathbed and trying to buy burial insurance.
Your beneficiary won’t receive the full death benefit
If you pass away during the waiting period for any reason other than an accident, your beneficiary will not receive the full death benefit. They will only receive the Return of Premium (ROP) plus interest, usually 5-10%.
If you die from an accident, the policy will pay a 100% death benefit to your beneficiaries, even if you bought the policy recently.
2. Premiums Are Expensive
Guaranteed issue burial insurance is the most expensive type of life insurance. It is two to three times more expensive than life insurance policies that ask health questions. The additional cost is the result of the additional risk the insurance company takes in approving your coverage without asking you any health questions.
3. Limited Death Benefit Option
Guaranteed issue life insurance amounts are only available in small amounts, often between $2,000 and $25,000, and will cover final expenses such as a funeral, burial, medical bills, and small debts.
WHO SHOULD BUY GUARANTEED ISSUE LIFE INSURANCE?
I try to qualify people for first-day coverage. The last time I looked at my sales numbers, 82% of the people I helped qualified for first-day coverage.
I only sell guaranteed issue life insurance under these circumstances:
- The applicant has a life expectancy of two years or longer.
- The applicant has medical conditions that make them uninsurable for traditional life insurance.
- When the guaranteed issue is the most affordable policy because of their health.
- When applicants insist on no-health-questions asked life insurance application.
Guaranteed issue life insurance can provide essential insurance coverage to some people who need insurance but don’t have other options.
If you have any of these conditions, buying guaranteed issue burial insurance is often your best option:
These medical conditions are considered high-risk because they generally reduce the amount of time you will live. Applicants with any of these conditions will get declined if they have been diagnosed or treated for these conditions in the last two years.
- COPD with 24 hours a day oxygen use
- A heart attack, heart surgery, or stroke in the last 24 months
- Renal failure, on dialysis because of end-stage kidney disease
- Cancer diagnosis or treatment in the last 24 months
- Organ or tissue transplant
- Alzheimer’s disease
- Amputation due to disease
- Wheelchair use because of chronic illness
- Needing help with continence activities of daily living (eating, bathing, dressing, toileting, transferring and continence)
If you have any of these medical conditions, then guaranteed issue life insurance is your best option. Guaranteed issue burial insurance doesn’t ask health questions, so you will be approved for coverage even with these high-risk conditions.
I normally ask applicants a series of health questions to determine if they will qualify for first-day coverage. If they have any of the conditions above, then NO burial insurance companies will accept them. The only option left is to offer them a guaranteed issue life insurance.
Only in a situation where first-day coverage is not available would I offer guaranteed issue life insurance.
The main reason I recommend a no-medical, no-questions-asked guaranteed issue policy for some people is that they can’t qualify for anything else; only under these circumstances will guaranteed issue life insurance be the right choice.
Guaranteed issue life insurance is not a poor choice for insurance if you have a high-risk medical condition. You will need to wait for two-years before the coverage is in full effect, but most people that I help survive past the waiting period.
Once you outlive the first two years, you are fully covered for any cause of death. Your rates will never increase, and your policy can never be canceled (even when your health gets worse over time). Your beneficiary will receive 100% of your death benefit when you pass away.
Guaranteed issue life insurance should be your last option. Don’t settle for a plan with a two-year waiting period if you are in good health or have only minor health issues that qualify for first-day coverage.
Call us at (888) 862-9456 to know your options, and we will let you know if you can qualify for first-day coverage.
NON-BURIAL INSURANCE OPTIONS FOR HOSPICE PATIENTS
If you are in hospice care and cannot qualify for life insurance, here are your non-burial insurance options:
1. Prepaid Funeral Plan
You have the option to take care of your funeral arrangements in advance. Instead of buying burial insurance, you can buy a prepaid funeral plan to cover your funeral and burial expenses. ready
You can buy a prepaid funeral plan at your nearest funeral home. Be warned, though. The final expenses are not cheap. Be prepared to pay between $8,000 and $15,000 to cover your final expenses.
If you choose this option, you need to immediately come up with the money because you need to pay it in full.
2. Savings Accounts
Since you cannot qualify for burial insurance, you can open a savings account or joint savings account to deposit money to take care of your funeral and final expenses.
If you choose this option, you need to deposit around $8,000 to $15,000 in your account so it could be enough to cover your final expenses.
When you pass away, your loved ones can immediately access the funds in your savings account to pay for all the expenses associated with your death.
3. Totten Trust (Payable on Death Account)
If you don’t have burial insurance, you can opt to open a Payable On Death (POD) account. POD allows you to name a beneficiary on your bank account. Your beneficiary can access the funds on your account upon your death to pay for your final expenses.
This option is a bit harder, especially for those with fixed or limited income.
WHEN IS THE BEST TIME TO BUY BURIAL INSURANCE?
You should buy burial insurance just before you become a hospice patient. If you have a family member in hospice, get this insurance on yourself now while you still qualify! You have the first-hand experience that waiting to purchase this insurance creates a terrible financial hardship on your family and loved ones.
Waiting to buy burial insurance when you are in hospice is what procrastinators and poor planners do. Everyone knows they will die someday, so don’t wait until it’s too late to buy your burial, cremation, of final expense life insurance.
The best time to buy burial insurance is NOW! The younger you are, the lower your rates will be.
The healthier you are, the lower your rates will be.
HOW CAN FUNERAL FUNDS HELP ME?
Burial insurance should be purchased from an independent insurance agency like Funeral Funds. My agents and I can sell you burial insurance from over 30 insurance companies and pick the ones with the best plan at the best rate.
Save yourself the work of calling multiple insurance companies by working with us. We are paid a commission by the insurance company no matter what type of burial insurance you choose, and it won’t affect your pricing.
Answer the quote the form on this page, and I will provide you with an accurate quote. Then, I will show you the plan with the most benefits at the lowest price.