“Is burial insurance worth it”? is a common question we get asked from time to time.
Burial insurance can be a great way to make sure you can cover all the costs associated with your end of life. It can eliminate the financial burden from your family during a challenging time.
Most of your family members will not be able to come up with $5,000-$15,000 immediately upon your death for your cremation or burial expenses. Leaving behind funds to cover your final expenses will be an important financial safety net for those who are left behind.
In this article, we will help you decide if burial insurance, funeral insurance, or final expense insurance is right for you.
WHAT IS BURIAL INSURANCE?
Burial insurance is a type of whole life insurance with a specific purpose, and that is to pay funeral, burial, and final expenses. It does not expire and will remain in force as long as you pay the premiums on time.
When you die, the insurance company will pay a tax-free check to your beneficiary. There are no limitations on how the death benefit payout can be used.
Your beneficiary can use the payout to pay for your funeral and other expenses. If there is something left over after paying the final expenses, your beneficiary can use the money however they want to.
How does burial insurance differ from funeral insurance or final expense insurance?
Burial insurance is also called funeral insurance and final expense insurance. They are, in fact, all the same thing. These terms are interchangeable throughout the insurance industry.
Purchasing a final expense or funeral insurance policy will going to give you the same benefits as burial insurance.
Burial insurance policies are small policies that are meant to cover the end of life expenses. You can rest assured that your loved ones will not have undue stress because of your passing.
You can call it final expense insurance, funeral insurance, or burial insurance. All of these terms describe the same thing.
IS BURIAL INSURANCE AND LIFE INSURANCE THE SAME THING?
Burial insurance is, in fact, a form of life insurance with a smaller face amount than traditional life insurance policies. It’s because burial insurance is designed to cover your final expenses.
Life insurance policies, on the other hand, are purchased to cover a wide variety of needs like income replacement or mortgage protection – the difference between the two lies on your purpose of buying.
The death benefit payout from burial insurance can be used for other expenses depending on your beneficiary. However, benefit payouts are designed to cover final expenses primarily.
That’s the reason why burial insurance policies are generally offered in the amounts of $2,000 to $25,000, whereas, life insurance provides benefits of hundreds of thousands of dollars up to millions of dollars.
TYPES OF BURIAL INSURANCE
You have 2 basic options when applying for burial insurance.
SIMPLIFIED ISSUE BURIAL INSURANCE
Simplified issue burial insurance is easy to obtain because it does not require a medical exam and lengthy application to get coverage. There is no physical exam, and you are only required to answer some basic health questions on the application.
Here are some sample health questions that you may see on the application:
- Are you currently residing in a hospice or nursing facility?
- Are you diagnosed with a terminal illness like cancer?
- Do you have HIV or AIDS?
- Do you smoke?
Majority of applicants can answer no to these health questions and qualify for simplified issue burial insurance with coverage from the very first day.
Simplified issue burial insurance is generally cheaper and allows for higher death benefits. It also offers first-day coverage without a waiting period.
How Simplified Issue Burial Insurance Companies Determine Your Eligibility
Every life insurance provider will evaluate your health to determine your eligibility.
They will often check the following to verify your overall health:
- Your answers to the health questions on the application
- Your prescription history
- Your Medical Information Bureau file
After reviewing these things, they will determine if you are qualified. Most insurance companies will decide within minutes of submitting your application.
However, some companies can take up to three days before you will know if you are approved for coverage or not.
Pros of Simplified Issue Burial Insurance
- No medical exam
- First-day coverage
- No waiting period
- Minor health issues like high blood pressure and high cholesterol are accepted
- Less expensive than guaranteed issue burial insurance
Cons of Simplified Issue Burial Insurance
- Higher premium compared with term life insurance (this is because it is permanent life insurance up to age 121 years old).
GUARANTEED ISSUE BURIAL INSURANCE
You will be approved for coverage regardless of your medical condition.
GI policy is the best insurance option for people with a terminal illness or severe medical condition who can’t qualify for any life insurance.
Guaranteed issue burial insurance works this way:
- There is a mandatory two to four-year waiting period (NEVER go with a 3-4 year waiting period plan!) before the insurance company will pay the full death benefit for natural causes of death.
- If you pass away during the waiting period, the insurance company will refund all your premiums plus 7-10% interest.
- If you survive the waiting period, the company will pay the full death benefit amount to your beneficiary.
- 100% cash death benefit will be paid for accidental deaths even during the waiting period.
Pros of Guaranteed Issue Burial Insurance
- No medical exam
- No health questions to answer
- Guaranteed approval regardless of the medical condition
Cons of Guaranteed Issue Burial Insurance
- A waiting period before the policy will pay the full death benefit
- Probably the most expensive insurance policy you can buy
What’s good about burial insurance?
1. No medical exam – burial insurance does not require you to undergo a physical or medical exam. It can be completed on a simplified basis by answering some health questions. Guaranteed issue burial insurance doesn’t even have any health questions at all.
2. No health questions policy available – if you have severe medical conditions and don’t want to take a medical exam, you can opt for a guaranteed issue no health question policy. You will be approved for coverage regardless of your health.
Those with a chronic illness like COPD or renal failure, and the elderly often have a hard time getting life insurance. In this case, burial insurance will be your best option for insurance coverage.
3. Relaxed underwriting – health issues like high blood pressure, high cholesterol, and diabetes are accepted for first-day coverage.
4. Fast approval – burial insurance for seniors don’t require a medical exam, so you save time in underwriting. The application can be approved in a matter of minutes to a few days after applying.
5. Fixed premium – the amount you will pay will remain the same throughout the life of the policy. It will not increase due to age or health condition.
6. Permanent coverage – burial insurance policies are whole life insurance that will remain in force as long as you pay the premiums. The coverage will not expire when you reach 80 years old. The death benefit is guaranteed to never decrease for any reason.
7. Accumulates cash value – burial insurance has a cash value component that accumulates over time. The cash value may be used to pay your premiums, or you can borrow from it when you have emergencies.
8. Fast claims payout – since burial insurance is designed to pay for the funeral and final expenses, payouts are given quickly to the beneficiary. Once all the paperwork is submitted, they will pay the death benefit within a few days to a week.
9. Flexible – burial insurance plans are not locked up with any funeral home. The insurance provider pays in cash, and your beneficiary can use the funds in any way they see fit.
10. Small face value options – you can purchase as little or as much insurance coverage as you need. The face amount you can purchase range from $2,000 to $25,000, some companies offer up to $50,000 in coverage.
What’s bad about burial insurance?
- If you live long enough, there is a chance that you may end up paying more on your policy than the cost of a funeral. This may happen after you hold your insurance policy for a significant number of years.
- Burial insurance plans are a little more expensive than traditional life insurance.
- If you stop paying your premium for a significant period, your policy will be canceled, and you cannot get your premiums back.
- Low coverage amount averaging $5,000 to $25,000.
- Waiting period for some plans – Guaranteed issue burial insurance comes with a waiting period. If you die from natural causes during the waiting period, the insurance company will refund your premiums plus 7-10% interest.
- Contestability period – burial insurance policies have a two year contestability period where the company can investigate your death. If they found out that you died from a medical condition that you did not disclose on your application, your beneficiary will be denied the death benefit.
WHO NEEDS BURIAL INSURANCE?
Burial insurance is your best option if you are under these situations:
- If you have no life insurance coverage.
- If you want a different insurance policy to cover his final expenses
- If your savings are not enough to cover the cost of a funeral
- If you have cash but would prefer it not to be used for final expenses
- If you don’t want to burden his family when he passes away
- If your family and friends do not have the financial capacity to cover the cost of funeral and burial expense
- If you are paying off medical bills or debts
- Those who have an outstanding debt
- If you want to leave a charitable donation to an organization or person important to you.
HOW MUCH DOES BURIAL INSURANCE COST?
Burial insurance premiums are incredibly affordable. The average cost of burial insurance per month is very affordable, and the most common benefit amount purchase is $10,000. Your specific premium amount might be higher or lower depending on some factors.
Every final expense company has a set amount of premium for each particular age.
For example, they have a range for age 50, then age 51 and so on. However, some burial insurance companies set their premium by age bracket. Typically, each age bracket is set in the increment of 5. For example, they have one price for 50-55 years old, then 56-60. It is wise to avoid these term life policies as they grow more expensive over time.
There is an 8-10% annual premium rate difference for each year of age on most life insurance companies. Each year you wait to purchase a policy would mean a significant increase in your monthly premiums.
They do this because each additional year is putting you closer to death. Those who are older are closer to the end of life that’s why they are more expensive to insure.
Being male or female will also determine the cost of burial insurance.
Insurance companies find it more expensive to insure men than women. Men pay a higher premium than women because on average women live longer than men. The average life expectancy of women is 83.5, while men are only 79.5 years. Women live 5% longer than men.
Burial insurance rates are based on life expectancy. Since women live longer than men, life insurance premiums are cheaper for women. Men are considered the higher risk to life insurance companies; that’s why they pay more for coverage.
Your health will also determine the amount you will pay.
The older you get, the more chances of having health issues. The more health problems you have, the more it will affect your burial insurance costs.
Your health will determine which risk classification you will fall under. Insurance providers usually use words like Preferred of Level benefit to describe their best rating. People who are in perfect health get this rating.
People who are in good health usually qualify for Standard or graded benefit. People with a severe medical condition will always be eligible for guaranteed issue burial insurance.
Final expense companies typically have a lower pricing for non-tobacco users and a higher premium for tobacco users. Smoking increases the chance of dying from various diseases; that’s why smokers are considered higher risk applicants than those who do not smoke.
Tobacco users pay more premiums because of the health risk associated with smoking and how it shortens life expectancy.
IS BURIAL INSURANCE WORTH IT?
While you can find experts debating the pros and cons of burial insurance, in the end, it’s you who will decide if it’s right for you.
If you believe your death will cause a financial burden on your family, you may need to get burial insurance. One of the best things you can do for your family is to make sure they will not financially struggle after you’re gone.
Don’t wait until it’s too late to invest in burial insurance. The younger you are, the lower your premiums will be. By purchasing a policy now, your family will not have to worry about paying your end-of-life expenses.
HOW CAN FUNERAL FUNDS HELP ME?
Trying to find a burial insurance policy needn’t be a frustrating process; working with an independent agency like Funeral Funds will make the process easier and quicker.
If you have any health issues, let us help you; we will work with you side by side to find a plan that fits your needs.
We will work with you every step of the way to find the plan that fits your financial requirements and budget. You don’t have to waste your precious time anymore searching for multiple insurance companies because we will do the dirty work for you.
We will shop your case to different insurance carriers and get you the best price.
We work with many A+ rated insurance carriers that specialized in covering high-risk clients like you. We will search all those companies to get the best rate. We will match you up with the best burial insurance company that gives the best rate.
We will assist you in securing the coverage you need at a rate you can afford. So, if you are looking for funeral insurance, or burial insurance, or life insurance.
Fill out our quote form on this page or call us at 888) 862-9456 and we can give you an accurate quote.