What is Burial Insurance? How Does Burial Insurance Work?

What is Burial Insurance?

Burial insurance stands as a variant of life insurance designed to address the expenses associated with funeral services and related expenditures following a person's demise. This type of policy can be procured through online platforms or telephone services, eliminating the necessity for a medical evaluation conducted by an insurance-affiliated doctor.

Notably, burial insurance dispenses with the requirement for a medical examination altogether. Applicants are generally inquired about their age, history of smoking, and the presence of any severe medical conditions. While some policies assure automatic acceptance, others mandate a biennial premium-paying phase before claims can be made. Additionally, the coverage often extends only up to 100 years of age.

Functioning as a cash policy, burial insurance accrues a cash value as time progresses. It is feasible to acquire burial insurance for smaller amounts, such as $5,000 or $10,000, which contrasts with the considerably larger minimum coverage prerequisites of term or whole life insurance policies.

The premiums attached to burial insurance policies tend to be more economical compared to those linked with policies offering larger benefits. These premiums remain fixed, ensuring enduring coverage throughout the policy's duration. Encompassing an enduring nature, this policy encompasses various costs, including funeral services, cemetery plots, headstones, caskets, funeral processions, and sundry additional expenses.

How Does Burial Insurance Work?

When seeking burial insurance coverage, you have the autonomy to select the desired coverage amount and designate a beneficiary or beneficiaries for the life insurance payout. Burial and funeral insurance policies typically don't necessitate a medical examination for life insurance purposes. The application process may entail a limited set of health-related inquiries or even none at all.

The premium rates are predominantly determined by factors like age and gender. Upon your demise, your designated beneficiary initiates the claims process with the life insurance company, typically requiring the submission of an authenticated copy of the death certificate. 

In the event of your passing within the initial two or three years after purchasing the policy, your beneficiaries would generally receive a reimbursement of the premiums paid along with accrued interest, or a portion of the policy's coverage amount. However, accidental deaths are frequently covered in full right from the policy's inception, including scenarios like fatalities resulting from plane crashes.

What Are the Features of Burial Insurance?

Final expense insurance is strategically crafted to address the financial obligations that your family might encounter in the unfortunate event of your passing. Remarkably, the utilization of the payout from this insurance is not bound by any restrictions. The beneficiaries, in this regard, hold the flexibility to allocate the received funds from your final expense insurance for various purposes, which may include:

• Arrangements for the funeral, encompassing both the viewing and the service.
• Burial expenses, covering the costs associated with interment.
• Cremation expenses.
• Settlement of medical bills.
• Resolution of outstanding debts.
• Management of legal expenses.

Due to the relatively modest coverage amount, it is plausible that a substantial portion, or potentially all, of the death benefit might be utilized by your beneficiaries to settle the financial obligations related to your end-of-life necessities. Should your intention be to leave behind a more substantial financial provision, it might be prudent to consider a policy with a higher value, such as a conventional whole life policy.

By planning ahead, you can significantly alleviate the stress surrounding your end-of-life arrangements for both yourself and your loved ones. Our burial and final expense calculator can serve as a valuable tool in estimating the financial implications of your funeral and burial services.

How Much Does Burial Insurance Cost?

 Here's the table summarizing the average burial insurance cost by age for $10,000 in coverage:

What is the Role of Funeral Insurance?

Funeral insurance represents a specific category of life insurance that individuals acquire to address the financial obligations associated with their funeral or cremation upon their passing. Insurance providers typically offer this coverage in the formats of term life or whole life policies. These policies aim to alleviate the burden of funeral expenses from loved ones.

In its essence, funeral insurance furnishes a safety net to ensure that funeral and cremation costs are adequately covered, thereby offering peace of mind to the policyholder and their family. Such policies often feature death benefits, which are the sums of money designated to be paid out to beneficiaries upon the policyholder's demise.

In the realm of funeral insurance, the death benefits tend to be relatively modest, encompassing a range from $5,000 to $25,000. These amounts are specifically earmarked to address the financial aspects of the funeral process, ranging from memorial services and caskets to cremation costs. However, it's essential to highlight that once the policyholder passes away, the death benefits are directly disbursed to the designated beneficiary.

The versatility of funeral insurance is a noteworthy aspect. The beneficiary holds the discretion to employ the received funds in a manner that best suits the financial needs at hand. This might encompass not only funeral-related expenses but also a spectrum of other financial responsibilities. Medical bills, legal fees, outstanding debts, or any financial obligations that the deceased might have had can be managed with the proceeds from the funeral insurance policy.

Burial Insurance With No Waiting Period

Whether the intended use is to cover funeral expenses or other financial needs, a life insurance policy devoid of a waiting period ensures that the entire designated death benefit is paid out, even if the unfortunate event occurs within the initial two years of policy activation.

This coverage encompasses both natural and accidental causes of death, guaranteeing that the beneficiaries will receive the complete predetermined death benefit without any deductions, regardless of the cause of death.

Despite having experienced prior health-related challenges, a majority of individuals are eligible for a type of life insurance plan referred to as "first-day coverage." This kind of policy offers immediate coverage without limiting coverage solely to accidental deaths.

Securing such coverage usually revolves around conducting thorough research to identify life insurance companies that are willing to extend policies covering all existing health conditions. Once such a company is found, individuals can gain the advantage of immediate coverage, even if they have experienced health issues in the past.

Burial Insurance For Seniors

Burial insurance tailored for seniors offers a cost-effective solution to prevent the potential weight of funeral expenses from falling upon your loved ones. This type of insurance serves as a dependable means to safeguard against the financial strain that funerals might impose. The appeal of these policies lies in their permanence, providing coverage throughout one's lifetime, and they are available irrespective of any preexisting health conditions.

By opting for burial insurance, seniors can proactively address the financial concerns tied to their end-of-life arrangements. The insurance functions as a safety net, reassuring both policyholders and their families that the financial burden of funeral costs will be mitigated. This is particularly pertinent considering that funeral expenses can be substantial.

One noteworthy aspect of burial insurance is its accessibility regardless of the policyholder's health history. This inclusivity underscores the value of the coverage, making it available to individuals who might have encountered health issues in the past. This inclusive approach ensures that seniors can secure this form of protection without being excluded due to their health background.

In essence, burial insurance serves as a practical and affordable investment for seniors, relieving them of the worry about imposing funeral expenses on their loved ones. It grants peace of mind by offering a permanent solution that doesn't discriminate based on prior health circumstances. This makes it an attractive choice for those seeking a dependable financial cushion for their final arrangements.

What Are the Types of Burial Insurance?

Simplified Issue Life Insurance 

When opting for simplified issue life insurance, applicants are required to answer a set of health-related questions. However, they are exempt from undergoing a medical examination. The insurance company gathers supplementary information about the applicant from external sources, often involving details like driving records and prescribed medications.

An advantage of choosing simplified issue life insurance to cover funeral expenses is its typically lower cost compared to guaranteed issue life insurance. Furthermore, these policies usually offer higher death benefits in comparison to guaranteed issue policies. It's important to note that simplified issue policies often come with a graded death benefit feature, meaning that if the policyholder passes away within the initial years after policy purchase, the beneficiaries might not receive the full payout.

In terms of approval, applicants for simplified issue life insurance can usually obtain a response within minutes of submitting their application, adding to the convenience of this option.

Guaranteed Issue Life Insurance 

For those considering guaranteed issue life insurance to cover burial costs, there's a distinct advantage: applicants are not required to answer any health-related questions or undergo a medical exam. Furthermore, coverage cannot be denied, providing a straightforward approach to obtaining insurance.

Despite its simplicity, guaranteed issue life insurance comes with noteworthy downsides. It tends to be considerably more expensive than other life insurance options. Additionally, such policies often have relatively low maximum coverage amounts, frequently capped at $25,000 or less. Eligibility for guaranteed issue life insurance generally starts at age 50, and similar to simplified issue policies, it commonly features a graded death benefit structure.

Pre-Need Insurance

 Pre-need insurance is an alternative that some individuals might consider, available through the funeral home where they plan to have their services. This involves contracting with the funeral home to specify desired services. If the funeral director is also a licensed life insurance agent, they can offer pre-need insurance.

Upon the policyholder's passing, the payout is directly allocated to the funeral home to cover the predetermined arrangements. In essence, the various options for funeral insurance cater to different needs and preferences, each with distinct features and considerations to keep in mind.

What Are the Pros and Cons of Burial Insurance?

If your primary objective in obtaining life insurance is to cover funeral expenses, burial insurance presents itself as a viable choice. However, it's important to acknowledge that there are both advantages and disadvantages associated with this option. Here's an overview of the pros and cons of burial insurance:

Pros:

• No Health Exam Requirement: Burial insurance policies typically do not mandate a medical examination as part of the application process.
• Limited Health-Related Questions: The application for burial insurance usually entails minimal or no inquiries related to your health history.
• Inclusion of Certain Policy Types: Some policy types, such as "guaranteed issue life insurance," are accessible under burial insurance without the possibility of being denied coverage.

Cons:

• Absence of Health Exam Discounts: While the absence of a health exam can expedite the application process, it might result in the lack of discounts for individuals in good health.
• Potential High Costs: Due to the limited health information required, burial insurance policies can potentially come with high costs, which could be a drawback for those seeking more economical coverage.
• Graded Death Benefit: Many burial insurance policies are structured with a "graded death benefit." This means that if the policyholder passes away within two to three years of policy initiation, the beneficiaries typically receive only a refund of the premiums paid, rather than the full death benefit.