If you are looking for the complete guide to burial insurance and final expense insurance you have come to the right place! Burial insurance is one financial tool that you should consider to help you plan for final expenses. You often see burial insurance called final expense or funeral insurance.
Most likely you’ve seen advertisements on TV or over the internet. Burial insurance, funeral insurance, and final expense insurance are whole life insurance policies designed to cover funeral and final expenses.
Burial insurance is a way to ensure our loved ones aren’t burdened with our funeral costs.
We should think about the funeral and final expenses that our family will be responsible for when we pass away when making our end-of-life plans. Final expenses are the expenses incurred when we die. While we don’t want to think about death our loved ones who will be left behind will not be burdened with financial stress if financial plans are made ahead of time to make sure everything is paid for.
Since we get so many questions about burial insurance, we decided to provide you with the complete guide to burial insurance and final expense. Here’s everything you need to know!
Before we get into our Complete Guide to Burial Insurance and Final Expense, here are some other informative articles:
- Funeral Expenses That People Overlook
- What Happens When A Spouse Dies With No Life Insurance
- Is Burial Insurance Permanent?
- Burial Insurance With No Waiting Period
- How Much Does Burial Insurance Cost?
- Burial Insurance For Parents
FOR EASIER NAVIGATION:
- What Is Burial Insurance?
- Characteristics Of Burial Insurance
- Types Of Burial Insurance
- Who Needs Burial Insurance?
- What Does A Burial Insurance Cover?
- How Burial Insurance Companies Determine Eligibility
- How Are Burial Insurance Rates Determined?
- Determining The Amount Of Coverage You Need
- How Much Does A Burial Insurance Cost?
- Applying For A Burial Insurance Policy
- Who Pays The Burial Insurance Premiums?
- Burial Insurance Vs Prepaid Funeral Plans
- What To Look For In A Final Expense Or Burial Insurance Policy
COMPLETE GUIDE TO BURIAL INSURANCE AND FINAL EXPENSE
WHAT IS BURIAL INSURANCE?
Our complete guide to burial insurance and final expense will start by explaining exactly what burial insurance is.
Burial insurance is a type whole life insurance policy designed to cover the expenses that come with passing away like burial, funeral service, and other final expenses. It is permanent life insurance that does not expire.
It is available for people between the ages of 50 and 85. This policy accumulates cash value which can be borrowed from or surrendered for cash value. The face amount (death benefit) can go from $1,000 to $25,000 although some insurers offer up to $50,000 of coverage.
CHARACTERISTICS OF BURIAL INSURANCE
Is burial insurance worth it? Let’s take a look at the different characteristics of burial insurance.
Permanent coverage – Coverage will last for your whole life. The life insurance company can’t cancel your coverage because of your advancing age or new health problems that occur as we age.
Level premiums – your premium will stay the same for the duration of your policy. Your rates locked in and are guaranteed never to increase in the future. You will pay the same low premium amount every month for life.
Fix death benefit – your death benefit will never decrease for any reason.
Beneficiary – Your beneficiary will receive your death benefit when you pass away. Your beneficiary can be a spouse, partner, child, family member, or another person responsible for your end of life plans.
No medical exam – burial insurance has a simplified underwriting which does not require you to take a medical exam. You will only need to answer a few health questions. A guaranteed issue policy does not ask any health questions!
Lower coverage amount – the coverage amount of burial insurance is typically capped at $25,000 to $50,000. The lower coverage is because burial insurance is specifically designed to cover final expenses and not intended to provide supplemental income to beneficiaries.
Builds cash value – your whole life insurance lets you build up a cash value on a tax-free basis with every premium payment you make. This cash value can be borrowed for emergency purposes or can be used to pay your premiums.
TYPES OF BURIAL INSURANCE
When applying for burial insurance, you have two basic options: Simplified Issue or Guaranteed Issue policies. Here’s what you need to know about these types of burial insurance policies:
Simplified Issue Burial Insurance
Simplified issue burial insurance is easy to obtain for most people because it takes away the hassle of medical exams and lengthy application in getting life insurance.
With this final expense life insurance no exam, there is no physical exam, and you are only required to answer a few health questions on the application. These questions are answerable with yes or no.
You may need to answer questions like:
- Do you smoke?
- Do you reside in a nursing home or care facility?
- Do you have heart disease?
- Are you diagnosed with a severe illness like cancer or kidney disease?
- Do you have HIV?
Most seniors will can qualify for simplified issue policy.
However, it is possible to be denied coverage based on health or lifestyle. Smoking, pre-existing conditions or participating in risky activities can cause your application to be denied.
Simplified issue funeral and burial insurance is usually cheaper than other forms of life insurance and allows for higher death benefits. This type of burial insurance offers immediate coverage and doesn’t have a waiting period.
The benefits of Simplified Issue Burial Insurance:
- No medical exam
- Immediate coverage, no waiting period
- Less expensive than guaranteed issue life insurance
Guaranteed Issue Burial Insurance
This is a whole life policy that doesn’t require medical exam or answers to health questions upon application.
You will be approved for a guaranteed issue burial policy regardless of your medical history. A guaranteed issue funeral policy is the best option for people who have serious health issues who can’t qualify for any type of life insurance.
This is how guaranteed issue policy works:
- Insurance companies offering guaranteed issue policies have a mandatory two to a three-year waiting period before paying the full death benefit for natural cause of death.
- If you die during the 2-year waiting period, the insurance carrier will either pay a percentage of the death benefit or refund all premiums paid with interest or
- If you survive the waiting period, the company will pay 100% of the face amount to your beneficiary.
- During the waiting period, the full cash death benefit will be paid for accidental deaths.
Pros of guaranteed issue life insurance:
- No medical exam or health questions to answer
- Guaranteed approval regardless of any medical condition
- Easy to apply
Cons of guaranteed issue life insurance:
- 2-3 years waiting period before the policy can be in force
WHO NEEDS BURIAL INSURANCE?
Burial insurance will provide your family with an affordable way to plan and pay for your funeral.
After you determine the kind of expenses associated with your funeral, you can estimate the costs. If you find that handling those expenses will cause financial problems for your loved ones, you should consider purchasing burial insurance.
You will need burial insurance if:
- You do not have any permanent life insurance
- You have not pre-planned your funeral
- If you don’t expect to have available funds at the end of your life to cover your final expenses.
- You don’t have enough in your savings account to cover the costs of a funeral.
- You have debts
- Your family and friends are not in the financial position to pay for the cost of your burial.
- You have life insurance, but you don’t want your estate to be depleted by your final expenses.
- You don’t want your loved ones to be burdened with your final expenses.
The leading group of people that should consider a burial insurance plan is the senior citizens.
These burial insurance policies can be an excellent choice for the elderly that don’t have traditional life insurance coverage. Burial insurance is available for 50 to 85 years old. There is no medical exam which means severe health condition won’t stop you from getting coverage.
Other people that can benefit from burial insurance are those people who are looking to save money on their life insurance rates. Because burial insurance has a lower face amount, the premiums are much affordable than traditional life insurance policies.
WHAT DOES A BURIAL INSURANCE COVER?
Burial insurance cash death benefit is given to the beneficiary when the insured dies. People purchase buy burial insurance to cover their final expenses so that family members and friends will not pay for their final expense bills.
Burial insurance can cover the cost of:
- Funeral services
- Casket or urn
- Burial plot
- Headstone or grave marker
Additional final expenses you must pay aside from the funeral costs:
- You will need to pay church or venue charges
- Travel expense for your family who will go to the funeral
- Refreshment for the funeral guests
- Missed time from work
- Probate lawyer fees
The cash death benefit will be given to your beneficiary when you pass away.
There is no rule about how your beneficiary will spend the money. The death benefit can be used on anything, and it is not required to be spent on funeral expenses alone.
HOW BURIAL INSURANCE COMPANIES DETERMINE ELIGIBILITY
Assuming you sign up for simplified issue policy, every burial insurance company will assess your health to determine your eligibility and rates.
Burial insurance companies will look at the following:
- Your answers to the health questions
- Your prescription history
- Your Medical Information Bureau file for any relevant records
After they gather all this information, they will determine if you are eligible for burial insurance.
Most insurance carriers will decide within minutes of submitting your application. You will know right then if you qualify or not. However, some companies can take up to three days before you will know if you have been accepted or not.
HOW ARE BURIAL INSURANCE RATES DETERMINED?
Burial insurance rates are determined by:
- Tobacco use
These factors will help determine the type of coverage you can qualify for.
DETERMINING THE AMOUNT OF COVERAGE YOU NEED
The amount of coverage you need for burial insurance policy can vary depending on your needs.
The first step is to figure out how much money you will need to cover your funeral. The cost of the funeral is the largest single cost for most families dealing with the loss of a loved one.
According to NFDA the median cost of a funeral is $8,755, not including any additional cost such as flowers and obituary. It is wise to allot $12,000 to $15,000 to cover your future funeral costs. Other final expenses to consider are remaining medical bills, credit card bills, legal costs, and living expenses.
In addition to the cost of the funeral, you should add in other related expenses to determine how much coverage you need.
For example, let’s say you owe $5,000 in medical bills and $3,000 in credit card bills. ($12,000 for funeral + $5,000 for medical bills + $3,000 for credit card bills = $20,000) You will need no less than $20,000 of life insurance coverage.
In this guide to burial insurance and final expense, we recommend that it is wise to overestimate instead of underestimating because you may have to pay other expenses that are associated with the funeral.
HOW MUCH DOES A BURIAL INSURANCE COST?
Your gender, age, tobacco use, the type of policy you choose and the face amount will determine how much premium you should pay.
Perform comparison shopping before buying burial insurance because some companies have lower premiums compared with others for the same type of insurance products.
Fill up the instant QUOTE form on this page to undestand the cost of burial insurance. You can check at the prices we offer from different life insurance companies.
This is a sample monthly premium for a male nonsmoker looking for a $20,000 face amount Guaranteed Issue life insurance:
- Age 50: $42.15
- Age 55: $51.50
- Age 60: $61.83
- Age 65: $81.67
- Age 70: $106.03
- Age 75: $143.06
You will notice that the premium increase with age.
Tobacco users pay higher premium than nonsmokers depending on the type of policy applied for. Burial insurance has level premiums or fixed premium so it will not increase over the years.
You have lifetime coverage but don’t let the policy lapse due to non-payment.
APPLYING FOR A BURIAL INSURANCE POLICY
When applying for burial insurance or final expense insurance, a medical exam is never required.
This means that you won’t need to submit a blood and urine sample. This is particularly helpful for those who fear needles and those who have certain health-related conditions.
You will be asked specific questions on the application for final expense insurance coverage.
The insurance company will want to know information like:
- Tobacco usage
- Alcohol usage
- Lifestyle and dangerous hobbies
Because there are no physicals required, you will usually be approved quickly.
You will also have a choice on how you make the premium payment. You can make monthly, quarterly, semi-annual, annual or lump sum.
WHO PAYS THE BURIAL INSURANCE PREMIUMS?
Most of the time an older adult can pay the premiums himself. However, an adult child can purchase a policy for his parents especially if he will be assigned as the beneficiary.
If your elders may not be able to purchase insurance for themselves, you may be able to buy senior care final expense insurance for your parents. The legal requirements vary from state to state, but you will need to have an insurable interest in the insured.
BURIAL INSURANCE VS PREPAID FUNERAL PLANS
Prepaid funeral plans are linked to a funeral goods and services contract with a specific funeral home.
The major benefit of prepaid funeral plans is having your funeral expenses paid in advance. Some plans include a list of affiliated funeral homes that can serve you when the time comes.
Some funeral homes fund their services with life insurance and they collect the death benefit.
Sometimes, funeral homes may use life insurance to help fund their products, but they intend to collect on the death benefit.
Burial life insurance plans give cash benefits to the beneficiaries that they can use to cover the funeral of their loved ones. The beneficiary may use the cash benefit to pay for final expenses, medical bills and use any money left for their needs. The death benefit can pay for final expenses and leave a legacy to the family.
WHAT TO LOOK FOR IN A FINAL EXPENSE OR BURIAL INSURANCE POLICY
In this guide to burial insurance and final expense, we recommend that if you’re shopping for a burial insurance policy, you need to pay attention to the fine print and the price.
The type of policy and coverage amount is important for you to get the best pricing and to save the most money. Make sure that the price fits your budget so you will never have to worry about missing a payment and losing the policy.
A burial insurance policy is not a one size fits all, so be sure to work with an independent agency like Funeral Funds. We can offer you a quote from multiple companies so you can choose which one fits your needs.
Look for a policy with these features:
- No medical exam – although you will need to answer some health questions.
- Level premiums – premiums will never increase as you get older
- Fixed death benefit – that will never decrease with age or health condition
- Top-rated insurance company – with an A- (excellent) or better from A.M.Best
- Whole life policy – that builds cash value
Compare benefits and premiums before deciding on the policy to buy.
When you are ready to purchase the best funeral insurance, it is better to work with an independent insurance agency like Funeral Funds who can directly compare multiple policies for you.
We can help you shop the market for the best insurance policy that fits your specific needs. We work directly with different top-rated insurance companies. Calls us at (888)862-9456 or fill up the quote form to get a free quote online.