What is Burial Insurance?

Funerals are expensive. Don’t leave your family with the extra cost. Learn about burial insurance and how it could take care of your final expenses.

Burial insurance is a whole life insurance policy or a term policy that has a death benefit ranging from $5,000 to $25,000. It is called burial insurance because this kind of policy is purchased to cover the funeral and burial expenses for the purchaser or his or her family members. Unlike it is with most traditional life insurance policies, it is possible to buy a burial insurance policy without medical questions or a medical exam. Some policies are available with just a few medical questions.  

The Cost of a Funeral

The average funeral costs anywhere from $7,000 to $10,000 and includes the embalming, viewing, burial, use of a hearse, transfer of the remains, and service fees. Those costs don’t include the gravestone or a catered lunch after the memorial service, which can add thousands of dollars to the funeral bill. The average cost for an adult funeral increased 28.6% from 2004 at $5,582 to $7,181 in 2014.

The National Funeral Directors Association (NFDA) reports that the average cost of a funeral with cremation is $6,078, which is slightly more than 15% cheaper than a burial. Of course, where the funeral is held, the kind of casket purchased, whether the decedent already owns a cemetery plot or if one must be purchased, the kind of headstone selected, and several other factors come into play and affect the cost of the funeral. A funeral could easily cost $15,000 to $20,000 depending on product selections and your wishes regarding funeral services.

What are the Pros and Cons of Burial Insurance?  

Before you purchase a burial insurance plan, you should be aware of the pros and cons. Many people purchase burial insurance because they don’t want to burden their family with the cost of the funeral or with making the funeral arrangements. Before you purchase a burial insurance policy, you should consider several things, including the cemetery location, the funeral arrangements and costs, the cost of cremation or the cost of a casket or urn, the headstone and any other expenses that you might want to include in the policy, such as flowers, medical expenses, and burial attire.

Some of the pros of burial insurance:

•    Cash to cover funeral arrangements – The insurance company will provide the beneficiary with a lump sum cash payment that can be used for the funeral expenses. The amount of the payout depends on the burial policy purchased.

•    Additional cash payout – If your policy is for a dollar amount that exceeds the cost of your funeral, those funds will be distributed to your beneficiary or beneficiaries as you indicated when you purchased the policy. This can help your family with living expenses while they mourn their loss.

Some of the cons of burial insurance:

•    You need to have adequate coverage. If you fail to get enough coverage, your family will be left paying the rest of the cost associated with your burial.

•    Some policies have a clause that says you must be insured for at least two years, or they will not pay the claim. Your family might just receive any premiums that you paid in back, but that might not be enough to cover the costs of your funeral.

What’s The Difference Between Burial Insurance, Final Expense Insurance, and Funeral Insurance?

Burial insurance is a life insurance policy for funeral expenses that covers the costs associated with your cremation or funeral at the time of your death. Many people don’t realize the cost associated with funerals, so they fail to properly plan ahead. Failure to properly plan can leave families facing a financial difficulty because they are forced to pay the costs of the burial. Burial insurance varies from one insurance company to another. Depending on the insurance company, it might be offered as what is called a permanent or a whole life policy or as a term life policy.

Burial insurance death benefits are usually low, ranging from $5,000 all the way to $25,000 – just enough to cover your final expenses in most instances. After your death, the burial insurance will pay the death benefit directly to the beneficiary who can use the funds in any way as he or she chooses. As an example, if you have $20,000 burial insurance coverage and your funeral costs $12,000, the beneficiary can use the remaining $8,000 for medical bills that you owe or toward basic living expenses. Final expense insurance is another term that is used for burial insurance.

Funeral insurance is created so you can set funds aside to pay toward your funeral. Using this approach, you have predetermined funeral expenses such as basic services from the funeral home, standard merchandise for the funeral, church, and funeral services. Sometimes the policy can protect from inflation as well as the rising costs associated with funerals by locking in the current prices for services and merchandise. You select your funeral products and services as part of the funeral insurance contract. It can be provided as a term policy or as a permanent policy. Once you have paid the policy in full, it will remain in effect until your death.

Sample Rates of Burial Insurance

The average cost of a burial insurance is about $50 per month. A policy with a face value of $10,000 being the most commonly purchased. An individual’s age, gender, health, and policy amount all come into play when determining the premiums. As an example, a 50-year-old female might pay about $24.67 per month if she responds to a few health questions or $28.14 per month with no health questions for $10,000 in coverage. A 50-year-old man might expect to pay $29.16 per month after a few health questions or $38.41 monthly with no health questions for that same $10,000 policy.

How To Get Coverage

To get coverage, you should consult with an independent life insurance agent that specializes in burial insurance and one who can help you decide which kind of policy and what coverage is best for your specific needs. While anyone is eligible to get burial insurance coverage, if you are 50 or older it is highly recommended to get this extra protection to save your family from facing financial challenges because they must pay for your funeral. With proper planning, you can make the loss of a loved one be less stressful on your family.