What is burial insurance? Since many people are asking us a lot of questions about burial insurance, we decided to give you a complete guide to burial insurance.
Burial insurance, also known as funeral or final expense insurance is a helpful financial tool to pay for your final expenses. It is an excellent way to ensure your loved ones will not be burdened with your end-of-life expenses.
While many people don’t want to think about their death, burial insurance can relieve a lot of stress to our family if we make plans to make sure everything is paid for.
End-of-life planning should be a part of every senior’s financial planning. Burial insurance or final expense plans get more expensive as we grow older. Aside from this, most insurance providers have a maximum age limit to buy a policy. The younger you are, the less your premiums will be.
If you are over 50 years old, and you think you and your family will benefit from burial insurance, click on the quote box to compare prices from multiple life insurance companies.
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WHAT IS BURIAL INSURANCE?
Burial insurance is a whole life insurance policy designed to pay the final expenses that come with passing away, such as funeral service, burial, and other final expenses. It is a permanent life insurance policy that lasts a lifetime.
Once you pass away, your insurance company will pay a tax-free check to your beneficiary. There are no limitations on how the death benefit payout is to be used. Your beneficiary can use the money to pay for your funeral. If there is something left over after paying the final expenses, your family can use the money; however, they see fit.
HOW DOES BURIAL INSURANCE WORK?
No medical exam – final expense insurance plans have simplified underwriting which does not require you to take a physical or medical exam. You will only need to answer some health questions. Guaranteed issue policy will not even require you to answer any health questions.
Permanent coverage – Coverage will last a lifetime and won’t expire at age 80. The insurance company can’t cancel your policy because of your health conditions or advancing age.
CAUTION! Burial insurance is not a term life insurance policy that increases in price every 5 years and expires after you reach age 80! Be careful of these policies you see advertised on TV, in junk mail, and with credit unions!
Level premiums – the amount you pay will stay the same for life. Your premiums are guaranteed never to increase because they are locked in at the age when you bought the policy.
Fix death benefit – your death benefit amount will never decrease for any reason. Your beneficiaries will receive your death benefit when you pass away.
Builds cash value – your whole life insurance allows you to build up cash value with every payment you make. You can borrow from your cash value, or you can use it to pay your premiums.
BURIAL INSURANCE IS UNIQUE IN THREE WAYS:
1. Easy Underwriting
One of the unique qualities of burial insurance is easy underwriting. Most of the health conditions accepted by funeral insurance would get automatic declined from any traditional life insurance policies.
Relaxed underwriting allows many seniors with high-risk medical conditions to qualify for coverage.
2. No Health questions policies
Even though burial insurance has relaxed underwriting, some medical conditions are so risky they are considered uninsurable.
For these high-risk conditions, there are no health questions guaranteed issue policy. Applicants are guaranteed acceptance regardless of their medical conditions.
3. Smaller face value options
Some burial plans providers will let you purchase as little as $2,000 in coverage. No other type of life insurance policies will let you buy such a small amount of insurance protection.
Most final expense companies offer face value options from $2,000-$25,000. Some companies go lower, and some go higher, but you can only buy the coverage you need.
IS BURIAL INSURANCE AND LIFE INSURANCE THE SAME THING?
Burial insurance is, in fact, a form of whole life insurance with a smaller benefit amount than traditional life insurance policies.
It 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 — 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 the beneficiary. However, payouts are designed to cover final expenses primarily.
For this reason, burial policies are generally offered in the amounts of $2,000 to $25,000, whereas, life insurance provides benefits of hundreds of thousands of dollars.
BURIAL INSURANCE VS PREPAID FUNERAL PLANS
Prepaid funeral plans are designed to cover funeral expenses and services from a specific funeral home.
The goal of prepaid funeral planning is to have the funeral paid off in advance at the funeral home. In some cases, the prepaid funeral plan might have a chain of affiliated funeral homes where you can transfer your plan.
One key benefit of life insurance is that you can have your funeral anywhere you choose, not just at a funeral home where you bought your prepaid plan.
Additionally, burial insurance offers the beneficiary a cash benefit that they can use to cover the funeral of their loved ones. The death benefit payout can be used to pay for medical bills, funeral, other final expenses, and save any leftover money.
Prepaid funeral plans and burial insurance are two distinct products. Pre-paid funeral plans are similar to a burial insurance policy with a few differences:
- A prepaid funeral is generally sold by the funeral home or an insurance company associated with them instead of an independent agent.
- With prepaid funeral plans, the beneficiary is either the funeral director or the funeral home.
- Payments are offered for a fixed period where you make installment payments.
- The death benefit is tied to the cost of particular services offered by the funeral home.
- If you come to a decision that you no longer want the plan and ask for cancellation, you may either receive a part of your premiums paid or nothing at all.
Considering buying a prepaid funeral plan? Bear in mind that it’s not legal in every state to assign the funeral home as your beneficiary.
You must also consider the financial strength of the funeral home. There is a possibility that they may go out of business before you pass away.
WHO NEEDS BURIAL INSURANCE?
People in the following situations should consider burial insurance:
- Those who have no life insurance coverage.
- Those who want a separate insurance policy to cover his final expenses
- Those who don’t want to burden his family when he passes away
- Those whose savings are not enough to cover the cost of a funeral
- Those who have cash but would prefer not to use it for final expenses
- Those whose family and friends do not have the financial capacity to cover the cost of funeral and burial expense
- Those who are paying off medical bills
- Those who have an outstanding debt
- Those who want to leave a charitable donation to an organization or person important to him
DIFFERENT TYPES OF BURIAL INSURANCE
You can apply for a life insurance plan that has underwriting (health questions), or you can choose a no health questions policy. Burial insurance, funeral insurance, and final expense insurance with underwriting have three different plans you can qualify for depending on your health.
It’s a “simplified issue” burial insurance with health questions. You will qualify for a level benefit plan if you answer “NO” to all the health questions on the application.
You will get first-day coverage, and your beneficiary will receive 100% of the death benefit when you pass away. You will have no waiting period if you’re approved for this plan.
A level benefit is your best option because it offers the lowest possible rate. Some insurance providers use the word “preferred” instead of a level benefit to describe their plan with the best rating.
If you can’t qualify for the level benefit because of some health condition(s), a graded benefit plan is your next best option.
You will get this plan if you answer “YES” to any of the health questions. The insurer will consider your health profile as riskier. They will charge from 15 to 40% more for your policy.
Graded benefit plan provides immediate coverage with partial benefit during the first two years of the policy.
For example: If you have a $20,000 face amount, the company will payout 30% of the $20,000 if you pass away on the first day. 70% benefit in the second year and 100% in the third year and beyond.
Different insurance providers have different payout schedules. It is important to read the fine print to understand the plan before making a purchase.
People with many health issues will qualify for this plan. They will offer you a modified plan if you answer “YES” to the health issues in the modified section of the application.
Health issues like heart attack, cancer, or stroke within the previous year will put you in the modified benefit plan. The company will charge 15-50% more on your premiums.
There is a two-year waiting period on a modified plan. If you die during the waiting period, the company will return all the premiums you paid plus 10% interest. However, if you had an accidental death during the waiting period, they would pay out 100% death benefit.
GUARANTEED ISSUE BURIAL INSURANCE
Final expense insurance generally has lenient underwriting, but some health conditions are so severe they are considered uninsurable. If you have a severe medical condition or terminal illness, this is your best option for coverage.
Guaranteed issue whole insurance does not require a medical exam or any health question. You will be approved regardless of your medical condition if you satisfy the age requirement.
A guaranteed issue plan has a two-year waiting period. If you pass away during the first two years, the company will refund all your premiums plus 7-10% interest.
When you live beyond the waiting period, the company will pay the 100% death benefit. However, the full cash benefit will be paid for accidental death, even during the waiting period.
Guaranteed issue insurance is your only option for coverage if you have any of the following medical conditions:
- Terminal illness
- Alzheimer’s disease or dementia
- End-stage renal failure requiring dialysis
- You are in a hospital or nursing facility
- Organ transplant
- Using oxygen because of respiratory disorder
- HIV or AIDS
WHAT IS COVERED BY BURIAL INSURANCE?
Burial insurance generally covers the insured person’s life. Cash benefit will be given to the beneficiary when the insured dies. You can buy burial insurance to cover your funeral, burial, and final expenses especially if you don’t have a funeral budget.
Burial insurance can cover the cost of the following:
- Embalming or cremation
- Funeral services
- Casket or urn
- Headstone or grave marker
- Burial plot
- Hearse flowers
- Other final expenses
Your beneficiary will receive a cash benefit upon your death. Since the funeral home is not your beneficiary, there is no rule how the money will be used.
The death benefit can be used for your final expenses or on anything your beneficiary sees fit. There is no restriction on how the benefit payout will be spent.
WHAT IS THE AVERAGE COST OF BURIAL INSURANCE?
Your burial insurance cost will depend upon the following factors:
- Face amount
- Health conditions
- Tobacco usage
- State of residence
Tobacco product users will pay more than nonsmokers.
Burial insurance has a “locked-in” premium, so you don’t need to worry about price increase if you keep your policy in force.
The exact cost of your burial insurance coverage will depend on your age and other factors.
Generally, the younger your age, the less your premium will be. The reason is that insurance companies take more risk insuring older folks who are statistically closer to death.
If you buy burial insurance when you are 50, you’ll pay less each month than if wait to purchase a policy when you are 70 years old.
If you want to get an accurate cost, fill in the instant QUOTE box on this page.
DETERMINING THE AMOUNT OF COVERAGE, YOU NEED
The amount of burial insurance coverage to buy can vary depending on your needs. To determine the amount you need to buy, you must first calculate how much you need to pay for your funeral and final expenses.
According to NFDA, $8,755 is the average cost of a funeral today. This figure doesn’t include additional costs like obituary and flowers.
You may need to allot $12,000 to $15,000 to cover your funeral cost. Other final expenses you need to factor in your computation include credit card bills, medical bills, and legal fees.
$12,000 funeral cost
$5,000 medical bills
$3,000 credit card bills
$20,000 burial insurance coverage
In this case, you would need to buy a minimum of $20,000 in insurance coverage.
WHO CAN APPLY FOR BURIAL INSURANCE POLICY?
Burial insurance eligibility depends on several factors:
- Age: 50-85 years old
- State of Residence: Some burial insurance plans are not licensed in every state
- Health: Your health will determine what plan you will qualify for. If you have a terminal illness or severe medical condition, there is a guaranteed issue burial insurance you can be eligible for.
- Ability to enter into a legal contract: You must possess a mental capacity to enter into a legal contract to qualify.
APPLYING FOR A BURIAL INSURANCE POLICY
A medical exam is not required to apply for burial insurance. You don’t need to submit a blood and urine sample. They will only ask you some basic questions on the application.
You will also need to provide your:
- Tobacco usage
HOW TO APPLY FOR BURIAL INSURANCE?
Step 1: Look for an Independent Life Insurance Agency like Funeral Funds
Independent life insurance agency like Funeral Funds can walk you through the whole application process and shop the market to get you the best plan with the cheapest premium.
Step 2: Choose your burial insurance plan from A-rated Companies
A-rated companies are financially stable and have a history of paying beneficiaries on time.
Step 3: Answer the health questions and complete the phone interview
Fill out the application with your agent and answer the phone interview. Some companies do not require a phone interview.
Step 4: Choose how to pay your premiums
You can pay your premiums in different ways, monthly, semi-annual, or annual. You can also opt to pay via direct withdrawal from your bank or credit or debit card.
Step 5: Receive the policy
Burial insurance companies typically deliver your policy to your home and don’t require an agent to complete the delivery.
HOW CAN FUNERAL FUNDS HELP ME?
Trying to find a policy if you have a pre-existing condition 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.