Funerals may be expensive for families, which is something we don’t like to think about. If you are in your 50s, 60s, 70s, or 80s and do not have life insurance, a burial policy can help cover the costs. According to a recent ReliableInsurance survey, the most common reason Americans acquire life insurance is to cover final expenses.
Burial insurance is a type of life insurance that pays for funeral and burial costs, as well as other end-of-life expenses including medical bills. These plans typically start at $1,000 and go up to $25,000, however a few insurers offer coverage of up to $50,000. When you die, your beneficiaries are free to use the money anyway they want.
Burial insurance, often known as final expense insurance, is typically available to those over the age of 50. To obtain life insurance coverage, you will usually not be required to take a medical exam.
Types of burial insurance
Burial insurance is not a policy; it is a marketing word. Essentially, it’s a tiny whole life insurance coverage that is frequently sold to elderly people.
There are two types of policies: simplified issues and guaranteed issue.
Simplified issue policies offer life insurance without a medical exam, but you must complete a health questionnaire. There are a few issues that can rule you out, so if you use a wheelchair, live in a nursing home, or have a significant health condition like cancer, diabetes, or heart disease, you may be denied coverage. Otherwise, there’s a good possibility you’ll be approved for simplified issue life insurance, even as a senior.
Guaranteed issue policies skip the medical exam and health questionnaire, and offer coverage with no questions asked. However, because the insurers have no information about the individual they are insuring, guaranteed issue life insurance is often more expensive to compensate for the increased risk.
While you can purchase a term life insurance policy to cover final expenses, it may not be the best option. It only lasts for the insurance period, which is often 10 or 20 years, and you may live longer than that. Term life insurance is great for covering certain financial responsibilities, such as the length of a mortgage, the expense of raising children, or the number of years you want to retire.
Pros and cons of burial insurance
A final expenditure policy can provide peace of mind and alleviate the financial load on your family while they are grieving. Furthermore, because it usually does not require a medical exam, it is an excellent choice if you have a pre-existing condition that precludes you from obtaining a traditional term or whole life policy.
However, burial insurance is expensive, and many policies include a two-year waiting period in the fine print. This means that if you die from natural causes during the first two years of purchasing the policy, your beneficiaries would not receive the full benefit. Instead, the insurer will repay your loved ones for the premiums you paid, or pay a reduced sum.
If this concerns you, compare burial insurance policies and select one with no waiting period. Some large insurers waive the waiting period for certain policies, so you’re fully protected as soon as the policy takes effect.
How much does burial insurance cost?
Burial insurance is often more expensive because it is sold to the elderly and does not need a medical checkup, which means insurers do not have a clear picture of the person they are covering.
Burial insurance costs rise with age, so acquire it as soon as you realize you need it.
Average monthly premiums for guaranteed issue policies – male
| Coverage amount | |||
| Age | $10,000 | $15,000 | $20,000 |
| 50 | $40 | $60 | $79 |
| 60 | $57 | $85 | $113 |
| 70 | $87 | $130 | $172 |
| 80 | $157 | $235 | $313 |
| Source for monthly rates: Choice Mutual. Data reflects the lowest three rates for each age averaged, and is valid as of April 10, 2024. | |||
Average monthly premiums for guaranteed issue policies – female
| Coverage amount | |||
| Age | $10,000 | $15,000 | $20,000 |
| 50 | $30 | $45 | $60 |
| 60 | $43 | $64 | $84 |
| 70 | $64 | $95 | $127 |
| 80 | $127 | $190 | $253 |
| Source for monthly rates: Choice Mutual. Data reflects the lowest three rates for each age averaged, and is valid as of April 10, 2024. | |||
Average monthly premiums for simplified issue policies – male
| Coverage amount | |||
| Age | $10,000 | $15,000 | $20,000 |
| 50 | $31 | $44 | $57 |
| 60 | $43 | $63 | $83 |
| 70 | $70 | $103 | $136 |
| 80 | $134 | $200 | $265 |
| Source for monthly rates: Choice Mutual. Data reflects the lowest three rates for each age averaged, and is valid as of April 10, 2024. | |||
Average monthly premiums for simplified issue policies – female
| Coverage amount | |||
| Age | $10,000 | $15,000 | $20,000 |
| 50 | $24 | $35 | $45 |
| 60 | $33 | $47 | $62 |
| 70 | $53 | $78 | $102 |
| 80 | $98 | $145 | $192 |
| Source for monthly rates: Choice Mutual. Data reflects the lowest three rates for each age averaged, and is valid as of April 10, 2024. | |||
How much burial insurance do you need?
When deciding how much funeral insurance to buy, consider the precise costs you want the policy to cover.
According to the National Funeral Directors Association’s 2023 data, the median cost of a funeral including viewing and burial is approximately $8,300. The median cremation cost is approximately $6,280. The cost will vary depending on the region.
Ideally, your burial insurance policy will cover all of the costs you anticipate, including a grandiose production with flowers, limousines, and catered food, so your family does not have to delve into savings to pay for them.
Burial insurance vs. funeral insurance
Although they may sound similar, burial insurance and funeral insurance are not the same. In brief, the money from burial insurance goes to your beneficiary, whereas the payout from funeral insurance typically goes directly to the funeral home.
Burial insurance operates similarly to a traditional whole life policy. When your beneficiaries get the payoff from the life insurance claim, they have no limits on how to use it. Of course, you can express your wishes, but nothing in the policy stipulates how the money would be spent. These plans are useful if you want your beneficiaries to have complete flexibility and control over how the proceeds are used.
Funeral insurance (or “pre-need life insurance”), in contrast, has a payout that is directly linked to the costs of a prearranged funeral, burial or cremation.
Typically, you choose a funeral home, specify the funeral specifics, then purchase the policy from the funeral director. In some situations, the funeral home will lock in the funeral price so that the policy covers the expense regardless of when you die. A pre-need life insurance payout is often made directly to the funeral home.
Pre-need life insurance is beneficial if you want to ensure that your ultimate desires are fulfilled and that your family is not burdened with funeral arrangements and costs. If this intrigues you, check with your preferred funeral home to see if they offer pre-need plans.
What are the alternatives to burial insurance?
A burial insurance policy is ideal if you only require a limited amount of coverage or want to avoid the medical test. However, there are other methods to pay end-of-life expenses, especially if you’re quite healthy:
- Term life insurance provides brief coverage and may be a less expensive option if you are in your 50s or 60s, healthy, and willing to undergo a medical test. Term life insurance policies often offer lower average premiums than other types of coverage.
- Funeral insurance allows you to be prepaid for funeral and burial costs, making it an attractive option for people who have no other debts or obligations to deal with after they die.
- Make provisions in your will for your funeral or burial, but keep in mind that the monies may not be distributed to your family in a timely manner.
