The loss of a loved one is emotional and traumatic. Making funeral preparations — and finding a way to pay for them — while grieving adds another layer of stress.
This is where having burial insurance, also known as final expense insurance, comes in handy. Your beneficiaries can use the funeral policy to handle all the funeral expenses in addition to the death benefit of your other life insurance policy to cover bills and necessities. If you already have life insurance, consider adding funeral or burial insurance.
What is burial insurance?
Burial insurance covers end-of-life expenses like the funeral service, body preparation, cremation, and the casket or urn. Burial insurance usually comes in the form of guaranteed issue or simplified issue life insurance.
Burial insurance is different from traditional life insurance in three ways:
- A lower death benefit makes it less expensive and a good option if you're on a fixed income.
- It's easier to get this policy because there are fewer health requirements.
- As a result, it is often purchased by people who are middle-aged or older.
Benefits of burial insurance
Financial protection for loved ones
Burial insurance ensures your loved ones don't have to worry about funeral costs or outstanding debts. Instead, they can focus on celebrating your life and bidding you farewell.
Fewer health requirements
Because the death benefit is so low, the burial insurance approval process isn't as rigorous as traditional life insurance. Both guaranteed and simplified issue life insurance, most commonly associated with burial insurance, don't require a medical exam. However, simplified issue life insurance requires a health assessment.
If your health status disqualifies you from traditional life insurance, burial insurance may be an option.
Accelerated approvals
In addition to fewer health exam requirements, burial insurance has a quick turnaround time for approvals. You can get coverage within days or even the same day you apply. If a terminal illness means you might pass away soon, this could be helpful.
Lower premiums
Burial insurance has a lower death benefit because it only covers funeral, burial, and final expense costs. The median price for a funeral is around $8,500 and death benefits for funeral insurance are often between $5,000 and $25,000.
Since you get less coverage, your premiums will likely be lower than a traditional insurance policy. It's worth noting that some burial insurance plans offer a higher death benefit.
Types of burial insurance policies policies
Besides term and permanent life insurance, burial insurance comes in several forms. Take a look at your coverage options for funeral expenses.
Guaranteed issue life insurance
Guaranteed-issue life insurance has no health requirements and offers quick approval for coverage, which can be helpful if you have severe, terminal, or multiple health conditions.
Because there are no medical exams or health questions, life insurance providers consider these applicants a higher risk and premiums are usually more expensive for less coverage compared to traditional life insurance that requires a medical exam.
Simplified issue life insurance
Simplified issue life insurance doesn't require a medical exam, but it does require a health questionnaire. So, this policy is best for those with mild to moderate health conditions, like high blood pressure, diabetes, or asthma. If you don't want a medical exam but can qualify for a simplified issue policy, it is generally a better deal than a guaranteed issue policy because you can get more coverage for a cheaper premium.
Pre-need life insurance
When a person works with a funeral home to decide exactly what they want, and they pay for those services in advance, that coverage is called pre-need life insurance.
Pre-need insurance is risky because the beneficiary is the funeral home and coverage is specific to the chosen funeral home. Should the funeral home go out of business or you move out of state, you may not have coverage, and that defeats the purpose of pre-planning. Additionally, according to the AARP, the Funeral Consumers Alliance (FCA) advises against buying pre-need.
How much does burial insurance cost?
You have probably received mailers from Colonial Penn or Mutual of Omaha offering guaranteed life insurance. Those are essentially burial insurance policies.
For guaranteed life insurance, premium calculations depend on your age, gender, where you live, and coverage amount. Understand that coverage amounts are limited and vary by insurance provider.
We found sample quotes for a 51-year-woman for $25,000 in coverage living in Illinois:
| Insurance type | Coverage amount | Monthly insurance premium |
| AARP Easy Life Insurance (Guaranteed issue) | $25,000 | $108 |
| Mutual of Omaha Guaranteed Plus Whole Life (Guaranteed Issue) | $25,000 | $73.50 |
| AARP Level Term (Simplified issue) | $25,000 | $18 |
| AARP Level Term (Simplified issue) | $100,000 | $52 |
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Alternatives to burial insurance
You may decide to opt out of burial insurance if you can or have saved up enough funds to pay off your funeral and any outstanding debt. You can either work with the funeral home to pre-pay for end-of-life services, or you can set up an interest-bearing savings or investment account, establish a trust, and transfer ownership to a trusted beneficiary who will take care of the planned expenses.
Applying for burial insurance
Burial insurance offers a simplified application for end-of-life coverage. Most insurance companies require you to speak to an insurance agent to apply for a policy and obtain a quote. The insurance agents will ask for your personal information, contact information, financial information, and coverage preferences.
If you decide to purchase a guaranteed issue life policy, you won't have to undergo a medical exam or questionnaire. If you qualify for coverage, you'll likely hear back quickly. If you decide to purchase a simplified issue life insurance policy, you won't have to undergo a medical exam, but you'll have to complete a health questionnaire. You may have to wait a bit longer while the insurer underwrites your policy.
Is burial insurance right for you?
Burial insurance is for those who might be in poor health and can't qualify for traditional life insurance. It is usually marketed for those over 50 because the coverage amount is limited. It is more expensive than other no-medical-exam life insurance policies.
If you are on a fixed income or are older, funeral insurance offers some coverage. If you qualify for a simplified issue no medical exam life insurance policy, it is generally better to apply for that instead, as you should be able to get more coverage and a cheaper premium. However, a simplified issue policy has a health questionnaire.
The advantage of funeral insurance as a supplemental policy is that it does not tie up funds available to your beneficiaries. A traditional life insurance policy will make beneficiaries wait until after the funeral home, cemetery, or crematory is paid before disbursing funds. This can take weeks before your beneficiary receives funds to manage regular household expenses. This could be a financial burden on your beneficiary, especially if you were the sole provider.
The goal of having life insurance is to ease the burden on your loved ones after your loss. If you have a supplemental funeral policy, your loved ones can use the funeral policy to deal with final expenses and get an immediate disbursement from your life insurance to handle the mortgage and education costs.
Talk to your financial advisor, financial planner, and life insurance provider about adding funeral insurance to your coverage.
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FAQs
Who should consider burial insurance?
People who are middle-aged or older with medical conditions may consider burial insurance, as they might not qualify for traditional policies with stricter approval standards. Additionally, burial insurance can be helpful to those without extensive savings or traditional life insurance coverage.
How does burial insurance differ from other types of insurance?
Burial insurance differs from other types of insurance in that it offers a lower death benefit, usually only enough to cover expenses for a funeral and other associated costs. It's also far easier to qualify for burial insurance.
What does burial insurance cover?
Burial insurance covers end-of-life expenses, such as caskets, urns, burial plots, headstones, and funeral home services.
What is the difference between burial insurance and traditional life insurance?
The difference between burial insurance and traditional life insurance is that burial insurance is easier to qualify for and offers lower coverage amounts. Additionally, traditional life insurance covers a broad range of expenses after your death (e.g. day-to-day expenses, your mortgage, your dependent's education, etc.), while burial insurance just covers end-of-life expenses.
Does burial insurance require medical exams?
Most burial insurance does not require a medical exam. Typically, burial insurance policies are guaranteed or simplified issue policies, meaning no medical exam is required. However, simplified issue life insurance requires a health questionnaire and providers may look at your medical records, which will influence your eligibility and rates.
