Burial Insurance for Funerals and Final Expenses

Learn how burial insurance can save time and money for a family event

Burying a loved one is expensive. Life insurance can be used for burials, but those funds may be needed elsewhere. In most cases, life insurance is intended to provide support to beneficiaries after their loved one is gone.

If some of these funds are used for the funeral and burial, there is less support leftover. Instead, it may be a good idea for those planning for the inevitable to consider purchasing burial insurance that can be used to cover the funeral and burial when they’re gone.

Burial insurance can help reduce the financial strain on loved ones as well as to make sure there are the funds available for a funeral and burial when they’re needed.

What is Burial Insurance?

Burial insurance is a specific type of life insurance intended to provide beneficiaries with the funds needed to cover their loved one’s funeral and burial.

It can also be called final expense insurance or funeral insurance. This type of insurance is generally much smaller than typical life insurance policies, so it is less expensive to purchase, but it only covers the funeral and burial, not any other expenses the beneficiaries may have.

For this reason, it’s often marketed to those who don’t need a full life insurance policy or those who want to make sure there are funds available for their funeral.

Why is Burial Insurance Needed?

Funerals and burials are expensive. Many of those who plan a funeral for the first time are surprised at how much they can cost. While the goal is often just to say goodbye to a loved one, with the various types of expenses, all of it can add up quickly.

Burial insurance isn’t required for anyone, but it is a good way to make sure there are sufficient funds available once they have passed on. Burial insurance can cover the funeral with a viewing, the burial, the cost of a vault, cremation and an urn, and more if there are sufficient funds purchased.

Those who are interested in burial insurance will want to take a look at average prices to determine how much they should purchase.

How Burial Insurance Works

Obtaining burial insurance is generally easy. Most insurance companies do not require a health exam and the application is short. There will be a few health questions, if any, as well as questions about age and gender. It takes only minutes to apply and receive information about the policy’s cost. The rates are often based only on the person’s age and gender, so their current health status isn’t taken into account.

This can be positive or negative, depending on the person purchasing the policy. Most policies will not pay out in full for a period of time after the policy is purchased. Generally, this is two to three years. If the person dies during this period, their beneficiary will receive a refund of all premiums paid to that point. After two to three years, however, the beneficiary will be able to receive the full amount of the policy. There are usually exceptions to this if the person dies as a result of an accident instead of their age or health.

Cost of Burial Insurance

Insurance rates can vary based on location as well as the age and gender of the person applying. They can also vary based on the amount of insurance being purchased. Expect larger policies to cost significantly more. When comparing burial insurance with other types of insurance, burial insurance is expensive. However, while term life insurance is only good for a certain period, burial insurance will be available until the person dies.

If the person outlives their term life insurance, there will not be funds available to cover the funeral. Though the average cost for burial insurance can be high compared to term life insurance, it is generally considered good to have just in case it’s needed after the term life insurance ends or to avoid having to use the term life insurance for funeral costs. If term life insurance is not needed, burial insurance can still be purchased to make sure the costs of the funeral and burial are covered.

What Does Burial Insurance Cover?

The burial insurance covers any of the above-mentioned funeral expenses as well as other expenses that may be needed.

The coverage depends on how much burial insurance is purchased. Those planning for average expenses may purchase $5,000 to $10,000 in burial insurance. Those who are planning for a more elaborate funeral or who wish to have more funds set aside in case funeral costs rise may want to purchase more than $10,000, depending on the expected costs.

Since the cost of a funeral can vary, it’s important to carefully consider all of the costs involved before purchasing any policy to ensure the policy will cover everything.

Benefits of Burial Insurance

Those who are interested in obtaining insurance to cover their funeral will find this type of insurance offers a number of benefits. Burial insurance does not require any health exam in most cases. When a health exam is required, it typically only consists of a few basic questions. It’s not a thorough health exam.

The application is not long and is easy to complete. It’s also not the type of policy that someone can be denied in most cases. This means that those who apply and make the premium payments will have burial insurance their loved ones can use if they pass away.

Downsides

Though burial insurance can be beneficial, there are some cons as well. There are no discounts for those who are in good health. The payments are the same no matter how healthy someone might be since there are no health exams required. The cost can be high compared to other types of insurance because of the low requirements for applicants. On top of this, the policy may not pay in full if the person dies before a certain period of time. If this does happen, that may mean that loved ones will not have all of the funds needed to cover the cost of the funeral.

Post-Payout Requirements

Something important to know is that there is no requirement for how the money will be spent once it is paid out. After the policyholder dies, the beneficiary can use the funds to pay for the funeral and burial. They can also use the funds for anything else. This does mean that the funds won’t necessarily be used for the funeral, but it does have benefits as well.

The beneficiary won’t be required to use a specific funeral home, can choose the options they prefer for the funeral and burial, and they can use the leftover funds, if any, for anything else that may be needed.

Types of Final Expense Life Insurance

There are a variety of insurance policies for those who are concerned about what may happen after they die. Those who want to make sure loved ones have funds available to use can opt for term life insurance, whole life insurance, or universal life insurance on top of or instead of burial insurance.

Term Life Insurance

This type of life insurance is only valid for a set term. It’s generally inexpensive, but it does expire at the end of the term. If the policyholder outlives the term life insurance, their beneficiaries will not receive any funds.

Whole Life Insurance

Whole life insurance continues to grow and there is no term that ends the policy. This is typically far more expensive to purchase, but it does grow in value even with premiums remaining the same amount.

Universal Life Insurance

Universal life insurance is similar to whole life insurance, but it may not build a cash value over time. This is less expensive, however, and does not have a set term.

Other Options

Burial insurance isn’t the only way to make sure the costs of a funeral will be covered. Those planning ahead may want to consider a variety of other options that could fit their needs better.

The most common ways to pay are through a savings account payable on death, funeral trusts, general trusts, and a general savings account. Savings accounts payable on death provide access to funds without having to go through probate.

With a funeral trust, the trustee can use the funds to cover the funeral after the account holder passes away. Trusts are similar, but the funds can be used for more than just the funeral, as long as the funds are distributed according to the account holder’s interests.

If a funeral is unaffordable, burial insurance can help. However, there are other options, as well. Federal programs are available for veterans, those who pass as the result of a major disaster or emergency, or those who died as the result of a violent crime.

Other options include state assistance programs, personal loans, or obtaining money from friends and family to cover the full cost of the funeral and burial.

If you need to ensure mortgage payments for yourself or a loved one are covered, consider getting mortgage protection insurance. This type of mortgage insurance policy will cover any remaining mortgage payments in the event of a death for the mortgage holder. The policy amount decreases as the mortgage is paid off, and the proceeds go directly to the mortgage lender.

How to Reduce Funeral Costs

Funeral costs can vary and may rise over time, so the burial insurance may not cover everything. Yet, there are ways to save money to make sure the burial insurance funds will cover as much as possible after the buyer is deceased.

Funeral planners have the option to purchase items outside of a funeral home’s package, so they may want to shop around to find better prices. If there will be a cremation or an alternative burial such as a green burial, it’s possible to avoid buying a casket.

Caskets can be rented, as well, if there will be a viewing but burial is not needed. It’s also possible to negotiate prices with the funeral home, which can help reduce the overall costs some.

Funerals and burials can be incredibly expensive, depending on the specific details. However, those who are concerned about how loved ones are able to pay for the funeral do have options available to help cover the costs.

One of these that’s used often today is burial insurance. Intended to cover the full cost of the funeral and burial, this can be purchased by anyone and can be used by the beneficiary to make sure they can say goodbye to their loved one for the last time.

Those interested in burial insurance should take the time to look at the policies available to find the right fit for their needs.

Where to Find Burial Insurance

This type of insurance is available from many different life insurance companies. Due to the variety in rates, it is a good idea to shop around and see what is affordable to purchase.

When comparing policies, be sure to compare the full amount as well as the monthly cost. Look into any conditions on the policy, such as when it will pay out in full, to make sure the comparisons between policies are equal.

It is important to note that funeral homes do not offer burial insurance. They may offer pre-need insurance, which is similar. With pre-need insurance, the beneficiary is the funeral home, instead of someone the buyer chooses. This means that the funeral will need to go through that funeral home and that the funds are only available to be used for the funeral.

With burial insurance from an insurance company, any funeral home can be used and leftover funds can be used by the beneficiary for other expenses.