Burial Insurance

Burial insurance is one of the common life insurance terms you may have heard thrown around before. Life insurance payouts are often used to pay for funeral expenses, but not everyone can afford to pay for a major life insurance policy long-term. 

Burial insurance is a type of insurance for final expenses that pays out a smaller, pre-specified amount to cover funeral and burial costs. It is often marketed to those who don’t have major life insurance policies, as the payout is meant to cover funeral expenses, so the financial strain doesn’t fall onto loved ones. 

However, the monthly cost of burial insurance for funerals can be more expensive than other life insurance policy rates, so if you are wondering whether the cost of burial insurance is worth it, continue reading. 

We will go over how burial insurance works, the cost of burial insurance, alternatives to burial insurance, and more. 

Burial Insurance Explained 

Many people looking for answers to burial insurance questions try to compare term life insurance vs. whole life insurance. Technically, burial insurance is a simple type of whole life insurance. Like a whole life insurance policy, burial insurance doesn’t expire as long as premiums are paid and will last the duration of the insured’s life. It provides a guaranteed cash amount to the beneficiary after the insured’s death. 

Generally, most insurance companies require that applicants be at least 50 years of age in order to apply for burial insurance. 

The payout for burial insurance is smaller than a regular whole insurance policy, usually ranging from $5,000 to $25,000. Therefore, burial insurance is best for people who can’t afford to pay for life insurance over a long period of time. 

It is also good for people who are in poor health and may be disqualified from regular life insurance policies. Basically, if someone doesn’t have savings to give to their family for funeral costs, burial insurance might be a good option. 

Read more:

• How much do funerals cost?
• The Cost of End of Life Care: 48 Facts for Families and Caregivers

This is because burial insurance is easier to apply for because it is intended simply for funeral costs and any final expenses, not for things such as mortgages or college tuition that more extensive life insurance policies are for. (For more information, read our “Is Tuition Insurance Worth It?“).

Read on to learn more about how burial insurance works and whether you can be denied burial insurance. 

How Burial Insurance Works 

Because burial insurance is intended as more straightforward end-of-life insurance for those who can’t afford fuller life insurance policies, purchasing burial insurance usually doesn’t require a medical exam and has a more simplified application process. 

This makes it a great option for those who want a quick application process that doesn’t use health as the main factor when calculating insurance rates. 

However, burial insurance rates can be expensive due to the simplified process. 

The majority of insurance companies’ burial insurance rates will be based on the following: 

• Gender and age. The older a person is, the less money insurance companies will receive in premiums before making a payout, so they will likely charge more.  
• Chosen policy amount. If you choose a higher policy payout amount, your premiums will be higher.  

When comparing life insurance rates by gender and age, you’ll discover how critical these factors are in cacluting premiums.

When you pass away, your beneficiary will receive the insurance payout and can use it for funeral arrangements, burial or cremation costs, outstanding debt, and more. However, how much the beneficiary will receive will depend upon the amount of burial insurance the insured chooses. 

Besides age and your chosen policy amount, your rates will also depend on which type of burial insurance issue you select. 

There are two types of burial insurance issues, as follows: 

• Simplified issue. You won’t need a medical exam to qualify for simplified issue insurance, but you will be asked questions about your overall health and may be disqualified based on factors like smoking. 
• Guaranteed issue. With guaranteed issue burial insurance, you can’t be denied coverage and don’t have to answer any health questions. However, the rates will be higher because insurance companies take on more risk by insuring people with unknown histories. 

The majority of burial insurance policies, both simplified and guaranteed issue policies, are on a graded death benefit scale. This simply means that if you pass away suddenly from natural causes shortly after purchasing a burial insurance policy, your beneficiary may not receive your full payout. 

Instead, the beneficiary will receive a refund of the burial insurance premiums or only a partial payout of the death benefits. 

Generally, however, there is a clause in the majority of simplified issue and guaranteed universal life insurance burial insurance policies that allows for the full payout of burial insurance if a person passes away from an accidental death. In this case, it doesn’t matter how soon they pass away after signing up for burial insurance. 

Can I be denied burial insurance? 

You can be denied burial insurance coverage if you apply for the simplified issue of burial insurance. However, it is rare to be rejected, and you can’t be rejected if you apply for a guaranteed issue burial insurance policy. 

However, if you are applying for a simplified issue burial insurance policy, the insurance company may deny you coverage for some of the following reasons: 

• Serious preexisting conditions. If your life expectancy is short due to a serious health issue, you may be rejected. Some examples would include cancer or heart failure. 
• Smoking. Because smoking is linked to serious health issues, insurance companies may be more reluctant to insure smokers. 

It is rare to be denied burial insurance by a company, even if you are in hospice, as there is usually no medical exam required and only a brief medical history is taken. However, if you are denied simplified issue burial insurance, you can always purchase a guaranteed issue burial insurance policy, although it will be slightly more expensive. 

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Cost of Burial Insurance 

Cost is one of the biggest deterrents to the majority of people looking for burial insurance for seniors. With burial insurance, the cost is often high because insurance companies don’t ask for medical information, therefore raising the risk of insurers having to make a payout before receiving much money in premiums. 

Because life insurance can be very expensive to pay for over time if you have serious health issues, it is often cheaper to pay short term for burial insurance, even if the initial cost of burial insurance is slightly higher. 

If you can afford a longer-term insurance policy, compare the costs of burial insurance with life insurance policies and whole vs. universal life insurance to see if one option is better for you. 

How much burial insurance should I buy? 

Funeral costs can range drastically in price. How much burial insurance you should buy depends upon the type of funeral you want. 

For example, if you wish to have live music at your funeral or an expensive venue for a luncheon after, it will cost more and you should purchase a higher amount of burial insurance than just a standard $5,000 policy. 

You should also consider if you want some of the money from the payout to help go toward things beyond just funeral costs. For example, you may want some of the money to be used for paying off any outstanding debts, such as medical bills or mortgage payments. 

If you have debts that will need to be paid off after you pass away, purchasing a higher amount is recommended if you don’t have enough money saved to handle all of the costs because often, beneficiaries are responsible for debts of the deceased.

What is the cost of an average funeral?

Part of knowing how much burial insurance to purchase is calculating how much your funeral will cost. According to the National Funeral Directors Association (NFDA), the median funeral cost is just under $8,000. The cost of a funeral with a vault is over $1,000 more than the average funeral cost. 

So how much money should you estimate you’ll need for your funeral? 

Prices vary widely depending on whether you want a casket or urn, your chosen memorial packets, and more. It is good to go through the list and add up all the expected costs, as well as calculate any extras not on the list that you want, such as live music, and then purchase the amount of burial insurance that will cover the total funeral costs. 

Burial Insurance Pros and Cons

Naturally, there are a number of pros and cons to burial insurance, just as with any type of life insurance. If you are on the fence about purchasing burial insurance, we’ve listed the pros and cons to help you make a decision. 

Some of the pros of burial insurance include the following: 

• Application is basic and straightforward. Unlike other life insurance policies, signing up for burial insurance is usually straightforward and less time-consuming. 
• Good choice for those who can’t afford life insurance policies long term. If you can’t afford to keep paying a long-term life insurance policy over time, paying for burial insurance over a shorter period of time may be more affordable. 
• Health exam usually isn’t required. Because you don’t need a medical exam and can get a guaranteed issue policy, it is a good choice if you aren’t eligible for other types of life insurance because of major medical issues. It’s challenging or impossible to find no medical exam term life insurance.
• Reduces the financial stress on your family. If your family would struggle to pay for your funeral, having a burial insurance policy can help them to avoid financial hardship after you pass. 

However, there are naturally some cons that go along with the pros of burial insurance and can be a major deterrent for some people shopping for burial insurance for seniors. 

Some of the main cons that may discourage people from choosing a burial insurance policy are as follows: 

• Burial insurance is more expensive. Burial insurance’s average monthly payments are more expensive than for regular term or permanent life insurance policies. While you may end up paying less over time, you pay more monthly in the short run.  
• Graded death benefit on most policies. Most policies have a clause that if you pass away naturally within a year or two of getting the policy, your beneficiary won’t receive the full payout of burial insurance. 
• No discounts for being in good health. Because burial insurance usually doesn’t require a medical exam and asks limited medical questions, there are no discounts if you are in good health. 

Because burial insurance’s monthly costs are more expensive, this can be a major deterrent for some people. However, keep in mind that you usually only pay for burial insurance for a few years, compared to paying for life insurance policies over decades. 

Is burial insurance worth it for me? 

So, is burial insurance really worth it for most people? It really depends upon your personal needs. If you just need a simple insurance policy that is easy to apply for and will pay out money for funeral costs, then burial insurance may be right for you. 

However, you should pick a different life insurance coverage if you need a higher death benefit to pay for things such as mortgages or lost incomes. 

While burial insurance may be quick and easy to apply for, in terms of payout, it isn’t nearly as good as other life insurance policies. Even though you pay higher rates for a shorter period of time, the amount your beneficiary receives will be just enough to cover funeral costs and maybe a few extras like live music or charity donations.

Other Options Besides Burial Insurance 

If you’ve decided burial insurance isn’t right for you after reading our guide, you’re probably wondering what other options you have that will help pay for your funeral. 

Besides burial insurance, some other options include the following:  

• Pre-need funeral insurance. Pre-need funeral insurance payouts go to the funeral home you have chosen to make your arrangements and are purchased from the funeral home, not an insurance company. 
• Term life insurance. Term life insurance will cover you for a specific length of time, such as 10 years, before expiring. There is usually no cash value payout with these policies. 
• Universal life insurance. Universal life insurance will cover you for the duration of your life. It is usually less expensive than whole life because most don’t have high cash values. 
• Whole life insurance. Whole life insurance will cover you for the duration of your life. There is a cash value, fixed premiums, and guaranteed death benefit. 

Learn more about the differences between whole life vs. universal life insurance.

All of the payouts from these life insurance policies can be used for funeral and burial expenses. They also will pay much more than a burial insurance policy, making them ideal for people who need to leave behind more funds than just for burial costs. 

Make sure to do your research and check out the FAQ on each type of life insurance to pick a policy that is right for you. 

Burial Insurance Compared to Pre-Need Funeral Insurance 

Pre-need funeral insurance is comparable to burial insurance, but they are not the same thing. Unlike burial insurance, you purchase pre-need funeral insurance from your chosen funeral home. You get to choose what funeral options you want from the funeral home. 

This means that your pre-need funeral insurance plan can’t be transferred to another funeral home, and it can be harder to make changes to your funeral plan once you’ve signed the contract. 

In contrast, burial insurance issues a payout to the beneficiary rather than the funeral home, so the beneficiary has flexibility in which funeral home to choose and different burial options. 

If you don’t want to have a loved one have to deal with end of life care costs, then you may wish to choose pre-need funeral insurance. However, if you may move around or want your loved ones to have flexibility in planning your funeral and how the money is spent, then you may want to choose burial insurance for final expenses. 

Other Ways to Pay for a Funeral

There are more options to pay for a funeral than just insurance payouts from policies like burial or pre-need funeral insurance. 

Some of the other options you can choose to pay for a funeral are as follows: 

• Funeral trusts. You can set aside money in a funeral trust and have the trust beneficiary withdraw the money for your funeral after you pass.  
• Payable on death (POD). You can withdraw or add money to a POD account, but your beneficiary can’t access the funds until after you pass. 
• Savings accounts. You can have the money in your savings used for the funeral, but you may have to add your beneficiary in a joint savings account to avoid your money being tied up in probate after you pass. 
• Trusts. You can have a portion of your trusts set aside for the beneficiary to use for your funeral by outlining your wishes in your documents. 

You can choose between multiple options besides life insurance for final expenses that will ensure your funeral is paid for. Trusts and PODs are some of the better options, but life insurance savings accounts can also be used. See what you need to know about life insurance savings accounts for more details.

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Tips to Save on Funeral Costs

If you can’t afford buying life insurance but don’t want to have your family financially struggle to pay for your funeral, you probably want to know how you can reduce your funeral costs besides final expenses life insurance. 

Some of the ways you can work to reduce your funeral costs beforehand or have your family members reduce costs afterward include the following: 

• Ask for price information. You can call around and ask different funeral homes for prices to find one that is more within your price range. 
• Buy only the necessities. You don’t have to choose a burial package with services you don’t want, such services as a burial or memorial services. Only buy the services that you absolutely need. 
• Purchase necessities elsewhere. It can sometimes be more expensive to purchase items such as urns and caskets from the funeral home. You can often purchase burial items from outside the funeral home for a cheaper price. 
• Skip buying a casket. Caskets are one of the more expensive items on a funeral list. You can use an alternative, rent a casket, or choose cremation. 

Shopping around for prices and choosing only the essentials can help reduce the costs of funerals. People may be able to also save on extras like funeral flowers by making flower arrangements themselves or printing their own memorial cards. 

What if the family can’t afford a funeral? 

In some cases, families may not be able to afford a funeral if the loved one doesn’t have funeral insurance. In this case, families have several options. 

Some of the common options available include: 

• Crowdsourcing. You can ask for public donations to help cover the funeral costs on sites like GoFundMe, at church, and similar public support systems. Asking friends and family to share your donation requests on social media can help raise funds. 
• Crime victim compensation. If the deceased loved one died due to a violent crime, some states have compensation programs that will help pay for funeral costs. 
• Federal government assistance. Some federal programs will help pay for funeral costs for qualifying members, such as the U.S. Department of Veterans Affairs for veterans or the Federal Emergency Management Agency (FEMA) for victims of major emergencies. There are resources for end of life planning for veterans and families.
• Personal loans. Families can always take out a personal loan to pay for the funeral costs. However, make sure to compare interest rates if you have more than one bank account to make sure you get the best personal loan rates possible. 
• State government assistance. In addition to the federal government programs, there may also be local state programs that can help assist you with funeral costs.

If you can’t afford a funeral and your loved one didn’t leave any funds for funeral costs or didn’t have final expense insurance, the above options will be your best bet to reduce funeral costs to a reasonable amount.  

Case Studies: Burial Insurance Scenarios and Considerations

Case Study 1: John’s Burial Insurance Decision

John, a 55-year-old individual with a pre-existing medical condition, was looking for a life insurance policy to cover his funeral expenses. Due to his health condition, he was concerned about being denied coverage by insurance companies.

After researching his options, John decided to explore burial insurance. He found that burial insurance offered a simplified application process without requiring a medical exam. John applied for burial insurance and was approved, providing him with peace of mind knowing that his funeral expenses would be covered.

Case Study 2: Sarah’s Cost Analysis

Sarah, a 65-year-old retiree, was evaluating different life insurance options to cover her final expenses. She compared the cost of burial insurance with other types of life insurance policies. Sarah found that burial insurance had higher monthly costs compared to traditional life insurance policies.

However, she realized that the shorter payment duration of burial insurance made it a more affordable choice for her. Considering her budget and needs, Sarah decided to purchase burial insurance to ensure her funeral costs would be taken care of.

Case Study 3: Mark’s Denied Coverage

Mark, a 60-year-old individual with a complicated medical history, applied for burial insurance but was denied coverage by an insurance company for a simplified issue policy. However, Mark was not deterred and explored other options. He discovered that guaranteed issue burial insurance policies were available, albeit at a slightly higher cost.

Mark decided to apply for a guaranteed issue burial insurance policy and was approved. Despite his medical history, he was able to secure coverage and provide financial protection for his funeral expenses.

The Final Word on Burial Insurance 

Burial insurance isn’t the right option for everyone, especially if someone already has a life insurance policy. However, if you are looking for life insurance for the terminally ill or a quick and simple insurance that will pay for funeral costs and your medical conditions exclude you from other life insurance policies, it may be the right choice for you. 

Because burial insurance can be expensive, it is important to shop around and compare rates before purchasing an insurance policy. To find the best rates from life insurance companies in your area, use our free rate comparison tool.

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