What Is Burial Insurance
Burial insurance is a type of life insuranceused to pay for funeral services and merchandise costs after a death. The policy can be bought online or by telephone without waiting for an insurance-company doctor exam. In fact, burial insurance does not require a medical exam at all. Applicants are asked about age, smoking history, and whether they have serious conditions. For some policies, acceptance is guaranteed. Others require a two-year premium-paying period before collection is possible and only provide coverage to 100 years of age.
Burial insurance is a cash policy, which means it builds a cash value over time. Burial insurance can be purchased for small amounts, such as $5,000 and $10,000, while other termor whole life insurancemay require substantially larger minimum coverage. The premiums for burial insurance may therefore seem more affordable than bigger benefits policies.Premiums for this type of insurance do not change, and this policy provides permanent coverage. Some of the costs covered by this insurance include funeral service, cemetery plot and headstone, casket, funeral procession, and other miscellaneous costs.
Life Insurance: Similar Cost, More Benefits
Consumer advocates have raised red flags about burial insurance. Some consider it a predatory type of insurance targeted to people who tend to be less educated, minority, and low-income. That a medical exam is not required andacceptance is guaranteedmeans the pool of insured people is high risk. In order for the insurer to make a profit, the premiums have to be high relative to the benefit.Yet most people, even with severe health issues, qualify for policies many times better than burial insurance. If the pressing issue is to make sure there are sufficient funds available to survivors to pay for a funeral and settle bills, a termor permanent life insurance policycan be purchased. If the main concern is to ensure that the individual’s wishes for burial, cremation or memorial service will be funded and followed, and the demise is expected in the next few years, it may also pay to make pre-paid pre-needarrangements with a funeral provider.
Another strategy for making suresurvivors have money to pay for final costs is to contribute regularly to a savings accountfor that purpose, set up either as a trust or simply as a joint account with adesignated survivor. This money could be withdrawn immediately if needed after you die; survivors won’t have to wait for the insurance check or probate.
FAQs
Burial insurance, also called final expense or funeral insurance, is a whole life policy that helps cover the costs of an individual's final arrangements. It pays for expenses such as the memorial service, casket or urn, and burial or cremation.
How does the burial insurance work? ›
How does burial insurance work? You simply choose the amount of coverage you want and determine who will be the beneficiary upon your death. As long as you pay your premium, your coverage will last your entire lifetime. Premium payment schedules vary by insurer, but you can typically pay either monthly or annually.
Is burial insurance worth buying? ›
Purchasing a burial insurance policy (or a small life insurance policy designed to cover final expenses) can help prevent the passing of any substantial debt to surviving family members. In addition, a more robust whole or term life insurance policy can help you provide financial support to aging parents or siblings.
What does burial insurance not cover? ›
Unlike traditional term, whole life, and universal life policies, burial insurance is specifically designed to cover one-time and short-term expenses. It isn't meant to replace income or cover large expenses like purchasing a home or paying for college. It isn't a type of retirement plan or investment either.
How much is a $10,000 burial policy? ›
The average cost for a burial insurance policy is approximately $50-$100 monthly for roughly $10,000 in coverage. Multiple factors determine the net price, including your exact age, health, tobacco usage (if any), the type of policy, state of residence, and how much coverage you buy.
What are the disadvantages of funeral insurance? ›
Potential Disadvantages of Burial Insurance
Limited Coverage: Burial insurance policies typically have lower coverage amounts than traditional life insurance, which may not be sufficient for other financial obligations or to provide ongoing support for your dependents.
What happens to money left over from a burial insurance? ›
You can assign any beneficiary you want, and they can use the payout for your funeral expenses, medical bills, final utility payments, and other outstanding bills. And if there is money left over, your beneficiary can do with it as they please.
How long does it take for burial insurance to pay out? ›
One of the primary differences between burial insurance and traditional life insurance is the expedited claims payout. Most conventional life policies take 14-60 days to pay a claim, whereas burial insurance plans can be paid in less than 72 hours. Read burial insurance vs life insurance for more details.
Can you be denied burial insurance? ›
Can you be denied burial insurance? Yes, it is possible to be denied coverage due to certain pre-existing medical conditions, however, you can get guaranteed acceptance to cover final expenses with a no medical exam life insurance policy.
What is the best burial insurance? ›
Top 5 Burial Insurance Companies
- Fidelity: Our top pick.
- Mutual of Omaha: Best for no-exam coverage.
- AAA: Best for coverage transparency.
- State Farm: Best for customer satisfaction.
- MassMutual: Our pick for permanent life coverage.
For example, burial insurance and most kinds of term insurance have no cash surrender value.
What type of death is not covered by insurance? ›
Life insurance pays beneficiaries upon the insured's death, covering expenses like mortgages, education, and future income. Life insurance policies cover most causes of death, but exclusions such as suicide, dangerous or illegal activities, substance abuse, and misrepresentation can apply.
Does burial insurance have a waiting period? ›
When you purchase guaranteed issue burial life insurance, you will have to wait 2 to 3 years before your beneficiaries will be eligible to receive a payout when you pass. States dictate how long waiting periods are, so yours will depend on the state where you reside.
What happens if someone can't afford a burial? ›
If you cannot afford a burial or cremation, you can sign a form with the county coroner's office and the state will bury or cremate the body for you. This will be at no cost, but you won't have any say in where or how.
What is the cheapest burial option? ›
Direct cremation is the least expensive way to bury your loves one. It is done respectfully, and gives your and your family time to find the most personal and affordable burial option.
Does Social Security give you money for burial? ›
Social Security offers a one-time, lump-sum payment of $255 to assist with funeral costs, including cremation costs. Social Security's death benefit program was established in 1935 and the payment was capped in 1954.
How fast does burial insurance pay out? ›
Final expense life insurance policies typically pay out within 24-72 hours once the claim is approved. Still, it can be delayed by weeks or even months, depending on the circ*mstances of the death and how long the policy was in force.
Does burial insurance have cash value? ›
Burial insurance is a cash policy, which means it builds a cash value over time. Burial insurance can be purchased for small amounts, such as $5,000 and $10,000, while other term or whole life insurance may require substantially larger minimum coverage.
Does an insurance policy pay for the funeral? ›
Yes. Depending on the terms of the policy and how it is set up, most life insurance policies can cover the cost of a funeral.
