There are many types of life insurance available, including burial insurance.
Burial insurance, also referred to as funeral insurance, is typically a permanent policy which offers death benefits between $5,000 and $25,000.
They’re designed to provide funds for families to pay for funeral and burial services.
This guide was developed for people who are seeking coverage to finance their end-of-life needs without putting an undue burden on their families.
First, How Much Does A Funeral Cost?
According to the National Funeral Directors Association, the median cost of a funeral is approximately $7,000 to $8,000. The price depends on the options you choose, as well as your geographic region.
This cost also doesn’t include cemetery or cremation costs, flowers or obituaries.
The Federal Trade Commission explains you have the right to obtain an itemized list of costs from a funeral home, and you can purchase products and services, such as caskets and memorial services, separately.
You can ask for prices by telephone, or you may get a written, itemized list when you inquire at a funeral home.
You can even get price lists for caskets before viewing them so that you have a sense of the options available even if they’re not on display.
A funeral fee typically covers the basic costs related to services that are common to all funerals.
This may include:
- Funeral planning
- Permits and death certificates
- Care of the remains
- Arrangements made with third parties
Optional items you may add to the funeral fee include:
- Transportation of the remains
- Embalming or preparation
- Use of the funeral home for services
- Cremation or interment
So, What Are Your Options For Burial Insurance?
You may not always have time to think ahead and plan your funeral.
In fact, many people are unaware of the costs of funeral arrangements and neglect to think of them until they become older.
This can cause financial hardship for families who must then shoulder the costs. It may also prevent families from being able to properly grieve, leading to mental health problems like depression and anxiety in the future.
There are two methods people generally use to cover their funeral arrangements.
Some people select their options for funeral and burial arrangements with a particular funeral home or cremation service. They lock in their selections and rates by paying into the program regularly.
This is more of a prepaid, layaway type of plan.
It is sometimes referred to as pre-need funeral insurance and can protect you from inflation by securing today’s prices for a future funeral.
Pre-need funeral insurance is usually paid directly to the funeral service provider instead of to your beneficiary when you die.
In addition to providing the funds for your funeral, this type of arrangement can prevent your family members from having to deduce your last wishes.
It provides peace of mind and can help you and your loved ones start the conversation about your end-of-life plans.
This is particularly helpful when someone has a terminal illness and is preparing for the inevitable.
Pre-paid or pre-need funeral insurance may not be transferrable if you move or choose a different funeral service provider. This is a drawback that prevents some people from choosing this option.
Burial, or final expense, insurance works a little differently.
Burial insurance pays a benefit directly to your beneficiary. The money can be used to cover your funeral expenses.
However, if the death benefit exceeds the cost of the funeral arrangements, the remainder can be used for other final expenses, such as outstanding debts that you owe, medical bills and legal fees.
Some burial insurance policies have no requirements for how the beneficiary can use the funds.
Why Choose Burial Insurance Over Another Type Of Life Insurance?
As you get older, premiums on traditional life insurance policies rise.
To get whole or term life insurance with a large benefit, you usually have to undergo a medical exam.
For many seniors, this could tip the scales to the point of being completely unaffordable.
At the same time, the pressure to keep your family financially sound may increase with every birthday.
According to Investopedia, the best time to get life insurance is right after birth. This will result in the lowest premiums and larger investment opportunities.
However, although experts recommend that you buy life insurance before you turn 35, most people don’t do that.
Only about 57 percent of Americans own life insurance, and the majority of those consumers are older than 45.
By the time you’ve reached the middle of your life, you may have developed medical conditions that you didn’t have when you were younger.
If you have a problem that seriously impacts your physical health, you might not be able to get life insurance coverage at all.
Burial insurance is a more affordable option than some other life insurance policies for people who haven’t secured coverage while they were younger. It saves you from moving on without a policy in place at all.
Even if you have a different type of life insurance policy, burial life insurance can take care of the funeral costs.
This covers your family more comprehensively than a single policy would.
It ensures that the payout from another type of life insurance isn’t sucked dry by the funeral arrangements, offering the loved ones whom you leave behind more flexibility and peace of mind.
Benefits Of Burial Insurance
There are several reasons to choose burial insurance over another type of life insurance if you’re a senior.
1. It’s Easy To Obtain
Burial insurance is easier to get than other types of life insurance. You can usually do it online or over the phone. Some policies guarantee acceptance.
You’re not often required to undergo an exam to secure burial insurance, but you will be asked some questions about your age, medical conditions and smoking history.
Although it’s much easier to get burial insurance than whole life insurance if you have health issues, coverage isn’t guaranteed.
You can usually only get burial insurance when you’re past a certain age. Many policies have a minimum age of 45 or 50.
2. It’s Inexpensive
The death benefits for burial insurance generally range from $5,000 to $25,000. B
ecause the limits are low, the premiums also tend to be affordable. You can usually choose to pay monthly or annually, and the cash value accumulates tax-deferred.
This is one area in which you’ll have to do the math.
Although the premiums may appear more affordable than those for policies with larger benefits, you might end up deciding to pay more for premiums for a different type of life insurance that offers a larger death benefit.
It just depends on your plans and your budget.
People who may not have 10 healthy years ahead of them may save money on burial insurance compared to a fully underwritten whole life policy, especially if they already have medical issues that would bump up premiums on a traditional plan.
If you’re only 45, you might want to look into a whole life policy with a greater death benefit.
3. It Doesn’t Expire
Term life insurance only covers you for a specified amount of time. If you pass away within the term, it will pay you a death benefit. If not, it expires.
Burial life insurance doesn’t expire.
It is meant to be there for you when you die, and you can’t age out of it. That said, some policies stop covering you at age 100.
How To Decide How Much Burial Insurance You’ll Need
Although you may be tempted to look into a more traditional life insurance policy with a larger death benefit just in case, you may not need it.
Start by deciding how much you’ll need from a policy before you begin looking into the best burial insurance.
Some things to consider include:
- Whether you want to be buried or cremated
- Where you want to be buried
- What type of funeral or memorial service you’d like
- What type of casket is important for you to have
- Whether you need to arrange for additional expenses, such as flowers and a hearse
You may have strong feelings about your end-of-life wishes. Your family may also want to have a say in these decisions.
Having a candid discussion with your loved ones about these desires is important.
When you know that everyone is on the same page, you may have better luck determining the coverage that you need.
You can also use the FTC’s checklist to learn which costs you might need to look into when planning a funeral.
This can help you start the conversation with your loved ones, estimate the level of coverage that you may require and even get actual quotes from funeral service providers.
Unless you’re locking in funeral fees with pre-paid burial coverage, you’ll need to take inflation into account.
Add about three percent per year to the quotes that you get from funeral service providers today.
Use that calculation when you’re adding up your expenses to make sure that you buy a policy that provides you with enough coverage to give your beneficiary peace of mind.
What Types Of Coverage Are Available For Burial Insurance?
Most final expense insurance falls under a permanent, whole life insurance plan.
The fact that it is permanent means the benefit will be paid no matter how old you get (unless there are any age limits) or how your health deteriorates.
Therefore, you purchase it once and continue to pay your premiums. Your beneficiary gets the death benefit in a lump sum when you pass.
Beneficiaries usually don’t have to pay income taxes on the payouts from burial insurance policies.
Your insurance might accrue dividends.
If it does, you may be able to pull out the cash value before you pass away and use it to pay premiums or for other expenses.
In some cases, you may be able to take out a loan using the equity from your burial insurance policy.
Doing this will reduce the amount paid out in the death benefit until you pay back the loan.
Wh0 Are The Best Burial Insurance Companies?
There are several companies who provide life insurance, but how do you know which ones offer burial insurance?
Just like with any type of insurance, there are a variety of options for consumers.
Choosing the best option really depends on your age, health, funeral plans, budget and wishes.
The following companies have excellent burial insurance that may be ideally suited for your needs.
One of the reasons that we’re including this review is because some life insurance companies don’t have an option that’s specifically called “burial insurance.”
However, the details and plans work similarly to burial insurance and are great options for seniors.
AIG Direct offers guaranteed issue whole life insurance.
It’s offered to people between the ages of 50 and 85 and is designed to cover expenses such as funeral costs and medical bills.
Like most burial insurance, qualification isn’t based on your health status or medical history. In fact, AIG guarantees that you won’t be turned down for permanent coverage.
The company claims that no medical exams or health questions are required to qualify for this policy. Benefits range from $5,000 and $25,000. Premiums are guaranteed not to increase during the life of the policy.
One of the factors that makes this plan versatile is the living benefits that it offers.
If you have a chronic ailment and become unable to perform two out of six daily activities, such as eating or getting dressed, you may receive a benefit that includes all premiums paid until that point.
This cash benefit is also triggered if you are diagnosed with a serious cognitive impairment.
If a terminal illness is accelerated to the point where the insured person’s death is imminent within the next 24 months, 50 percent of the death benefit may be paid out.
Foresters offers PlanRight whole life insurance that provide coverage up to age 121. The premiums are guaranteed to be fixed as long as you keep the coverage, which means that you can work it into your budget today.
Coverage options range from $2,000 to $35,000. Because this is a whole life insurance plan, it provides cash value that will grow over time.
There are three levels to the Foresters PlanRight whole life insurance that may be of interest to seniors.
The level benefit policy offers traditional whole life insurance and can be issued to individuals between the ages of 50 and 85.
Recipients can expect to get the full death benefit from the first day that the policy is in place. The maximum benefit for people ages 50 to 80 is $35,000, and it’s $15,000 for people ages 81 to 85.
You must be in good health to qualify for this plan.
The graded benefit policy is arranged for those with health issues that may prevent them from qualifying for the level benefit policy.
The issue ages are 50 to 85, and the maximum face amount is $20,000 for those ages 50 to 80 and $10,000 for those ages 81 to 85.
Only 30 percent of the face amount purchased will be paid out if the covered individual dies in the first year, and 70 percent is paid out if death occurs in year two.
In the third year and beyond, the maximum face amount will be paid out upon death.
If you are between the ages of 50 and 80 and don’t qualify for either of the other PlanRight options, you may be eligible for the modified benefit plan. This has a maximum face amount of $15,000 and also provides graded benefits during the first two years that the plan is held.
We like that this company offers a variety of options that are specifically designed for people who have waited until they’re seniors to obtain life insurance.
Settlers Life Insurance Co.
Unlike many life insurance companies, Settlers Life is dedicated to solely providing final expense insurance.
Although your greatest final expense is likely your funeral, Settlers life provides benefits for nursing care, medical bills, probate costs and past due accounts.
It’s designed for people who don’t want to use their existing life insurance benefits for final expenses, those with chronic or recent illnesses, seniors who did not buy life insurance at a younger age and parents and grandparents who want to take out life insurance policies on their dependents.
There are various levels of plans that provide between $1,000 and $50,000 in death benefits.
People in excellent health may qualify for the Gold plan, which is an immediate benefit whole life policy with face amounts between $2,500 and $50,000 and level premiums. Anyone between the ages of 15 days and 85 years may be eligible to apply.
The Silver plan is designed for people who have experienced good health for the past two years. It’s similar to the Gold plan, but the maximum death benefit is $25,000, and the eligible ages are 6 months to 85 years.
The Bronze plan offers a reduced death benefit for the first two years.
This modified whole life policy is available to people between the ages of 40 and 80 and offers benefits up to $15,000.
The Bronze plan may be the best option for a senior who has some health issues and only needs to cover end-of-life expenses, such as a funeral. Other plans may be offered in your state.
The upside is that you can get affordable coverage up to $100,000.
You’ll have to provide health information, but no medical exam is necessary. The online application is simple, and most people who apply are accepted.
This type of coverage is available to AARP members who are between the ages of 50 to 74.
A spouse between the ages of 45 and 74 may also be eligible.
Colonial Penn offers guaranteed acceptance life insurance for individuals between the ages of 50 and 85.
The company doesn’t require you to undergo a medical exam. It also doesn’t ask any health questions that may prevent you from getting burial insurance as a senior.
This permanent, whole life insurance offers graded benefits within the first two years of coverage.
However, your premiums will remain the same no matter how old you get or how your health changes.
You can also take out a loan if you’re current on your payments and your policy has a cash value. Any money that has not been repaid at the time of your death will be deducted from your benefit.
State Farm Life
State Farm offers final expense insurance to offer relief for beneficiaries who have experienced a loss. It can be issued to people between the ages of 50 and 80 (50 and 75 in New York).
This burial insurance is simple and straightforward.
It offers $10,000 of coverage, and the premiums are level up to age 100. Coverage may extend past age 100, but the price may go up at that point.
Unlike some burial insurance policies, this one may earn dividends.
Those can earn interest as they accumulate and be used to pay premiums or be cashed out. Your beneficiary may choose to apply the death benefit to funeral or end-of-life expenses but isn’t required to.
This allows for plenty of flexibility in the way that the payout is used.
Burial insurance for seniors varies depending on the individual seeking coverage and the company that offers it.
Although these plans may seem fairly similar, you should do your research to determine the differences and learn which one is the best option for you and your family.
How Much Does Burial Insurance Cost (On Average)?
The cost of burial insurance depends on the plan and the provider.
In general, burial insurance tends to be more expensive than whole life insurance that is purchased when someone is younger.
However, if you’re a senior who has missed the window for buying cheap life insurance, final expense insurance may be all that’s available.
Policies that don’t require you to answer medical questions or take a physical may be more expensive than those that do.
That’s because you’re automatically put into a pool of higher-risk applicants by avoiding those questions altogether.
If you’re in excellent health, you might want to look for a plan that does take your wellness into account. Those types of plans may be cheaper. However, they may be hard to find. Many burial insurance plans for seniors don’t even give you the option of undergoing a medical exam.
Guaranteed-issue insurance policies don’t reject applicants for health reasons.
Simplified issue policies may overlook many medical conditions, but they might still ask questions about them in the application.
You could be denied a simplified issue policy if you have certain ailments.
Therefore, a senior whose health suffers may be better off looking for a guaranteed-issue burial insurance policy. Just know that guaranteed-issue insurance is usually the most expensive option.
Another way to make your insurance premiums more affordable is to pay annually. Most companies offer a discount if you pay more at once.
However, they also tend to offer flexible payment options. It might be more feasible for you to pay weekly, monthly or quarterly if those options are available.
Even though the regular payments will seem more manageable, you’ll probably end up paying more in total, though.
The best burial insurance companies for seniors don’t increase their premiums as time goes on.
However, some still do that. Make sure you find out if and how your premiums will change over time when you sign on with your insurer.
Do You Have To Wait To Get Your Benefits?
If you have truly waited until the last minute to buy burial insurance, you might wonder how quickly your benefits will kick in. The time frame depends on the type of insurance that you purchased.
Usually, guaranteed benefits plans take longer to provide maximum benefits than policies that require a medical exam or health questions. The better your health is, the sooner your burial insurance may kick in.
A level benefit plan pays out benefits immediately after the individual is confirmed on the policy.
However, because the underwriters are willing to pay out funds so quickly, these types of plans are usually offered only to those who are in excellent health.
A graded benefit burial policy limits the benefits that you can get if you die within the first two years of acceptance.
For example, if you pass away within the first year after signing up, you may only get 30 percent of the total death benefit.
That number may be bumped up to 70 percent if you die within the second year. You will usually get the maximum death benefit that you are owed if you die within or after the third year.
If you pass away before your death benefits become active, your beneficiary will typically get back the premiums that you’ve paid into the policy. S
ome insurance companies add a percentage to that. This protects the insurance company from high-risk individuals who buy into a plan knowing that they don’t have much longer to live.
Should You Be Worried About Pre-Existing Conditions?
Because burial insurance is designed for people above a certain age, underwriters expect that individuals’ health is not going to be perfect.
That’s why many burial insurance policies are guaranteed.
If you’re looking to save money by choosing a policy that requires a physical exam, you may be worried about general health issues.
Even if you don’t have to undergo an examination in person, you might be asked questions about your health, and insurance companies may want to look at your recent medical records and prescription history.
In most cases, the following types of conditions won’t affect your policy:
- High cholesterol
- Diabetes that is managed with minimal insulin
- Non-recent heart attack
- Cancer in remission
More serious diseases, such as cardiovascular disease, Alzheimer’s disease or cancer, might prevent you from being able to choose a level benefits option.
These medical conditions may also inflate your premiums.
What Does Burial Insurance Pay For?
Most general whole life insurance policies that provide for final expenses have open-ended death benefits.
The beneficiary may be able to use the funds as he or she wishes. Others have specific regulations regarding what can be paid for with the benefit.
Some final expenses that are commonly accepted by burial insurance companies include:
- Costs charged by funeral homes
- Burial plots
- Grave liners
Where To Buy Senior Burial Insurance
If you’re at least 45 or 50 years old and are ready to start looking for burial insurance, you might be overwhelmed by the options when you do a quick internet search.
However, getting quotes is often quicker and easier than you might expect. Some insurance companies provide instant acceptance.
Others may take up to three days to get back to you, especially if they require a medical exam.
Many companies don’t use the exact term “burial insurance” to describe their offerings, which can make your search confusing.
Look for policies that offer coverage from about $1,000 to $50,000 to seniors or people age 45/50 and older. Those are usually intended to provide for end-of-life expenses.