Burial Insurance: What Is It, And Should You Get It?

Burial Insurance: What Is It, And Should You Get It?

Burial Insurance: What Is It, And Should You Get It?

No one wants to think about it or talk about it, but we will all eventually pass away, and in doing so, we will incur expenses for any end-of-life celebrations and services. This may include the cost of preparing the body for burial or cremation, costs of renting out a facility for the funeral, and other relevant expenses. [1]

While it is uncomfortable to think about it now, what we do in the present can help protect our loved ones from incurring costs related to our deaths in the future. In fact, the average cost of end-of-life services is around $10,000, which is quite a lot for a grieving family member to have to take care of. Therefore, it is important to consider life insurance options, including burial insurance, so that loved ones will not have to worry about the financial aspects of having a funeral. [1]

What Is Burial Insurance Used For?

Most people buy life insurance because they want to cover the expenses of the funeral in addition to other responsibilities they want to uphold, such as taking care of the family or paying off a home. Burial insurance, which is also known as funeral insurance or final expense insurance, is meant to specifically cover any expenses related to the burial or cremation of an individual. [2-3]

Generally, burial insurance offers benefits ranging from $5,000 to $25,000 and can cover expenses such as a casket, an urn, and facility fees for hosting the funeral service. Most people opt for around $10,000 in coverage, which costs about $50 per month in premiums (although this is also dependent on factors such as age and gender). The policy holder must designate the person he or she would like to receive the money, and it is important to choose someone trustworthy, as the recipient will not be legally bound to using the money for funeral expenses. [1-3]

What Are Some Benefits Of Having Burial Insurance?

Burial insurance can be a useful benefit for individuals who have been unable to save for funeral expenses as well as those who have medical conditions that make it challenging to qualify for certain types of life insurance. Many policies will ask few, if any, questions related to your health status or comorbidities when you apply, which can be great for older adults or individuals living with chronic health conditions. Burial insurance can also be appropriate for individuals working in jobs that tend to increase their chances of passing away, such as firefighters and construction workers. [2-3]

Another benefit to having burial insurance is that the money from the policy will go straight to the beneficiary after you pass away (instead of to a particular funeral home). This is different from pre-need funeral insurance, which pays the funeral home directly. Pre-need funeral insurance policies are generally less flexible compared to burial insurance policies, as the pre-need insurance is bought from a particular funeral home. This can create an issue if you move to a different area or if your family needs to make some kind of change to the way the money is spent. In the case of burial insurance, the afterlife costs will be covered at any funeral home. [1-3].

Individuals in need of a policy to take care of their funeral expenses without being limited by current medical status (which can impact qualification for life insurance policies) may benefit from purchasing a burial insurance policy. It is important to remember that this type of insurance is only meant to cover expenses related to the actual service and burial, and it will not cover end-of-life care, such as hospice programs, or ongoing expenses, like a mortgage. [2-3]

What Are Some Disadvantages Of These Policies?

In addition to the limitations of burial insurance, there are other potential disadvantages to purchasing this type of insurance. Since most companies do not require a medical exam to qualify for coverage, burial insurance premiums tend to be high. Although most burial policies have very few stipulations for qualification, there may be stipulations within the policy. For example, some policies will not pay out the full insurance amount if the insured individual passes away within the first few years of paying into the policy. [2-3]

While not having to qualify via medical exam can be a great asset for people with chronic diseases or people with poor health, this can also be a drawback, as individuals who are in good health will not receive the discounts generally afforded with life insurance policies. Therefore, burial insurance tends to be pricy for the amount it covers in comparison to other types of insurance. As mentioned previously, there are no laws in place to protect this investment, so if your beneficiary decides not to spend the money on your funeral expenses, there will be no way to legally enforce your wishes for the money. [2-3]

What Are My Other Options?

Most people want to be able to pay for their own funeral expenses. Depending on your situation, burial life insurance may be a viable option; however, there are other options available that could result in more financial gain throughout the life of the policy. [2]

Term life insurance, a popular choice, is an effective way to ensure that certain financial responsibilities are taken care of after you pass away. These policies offer flexibility in the length of the term (often ranging from 5 years to 30 years) and are best suited for expenses that have a time constraint, such as a mortgage [2-3].

Another option available is whole life insurance, which offers lifelong coverage. With this type of insurance, the beneficiary receives the money after you pass away, regardless of whether this happens in 2 years or 50 years. While the premiums will not change, and the value of the investment will grow. Similarly, universal life insurance, which tends to be more cost-effective than whole life insurance, work in a similar manner but may not be as lucrative over time in terms of building the wealth of the account. [2]

Some individuals prefer not to utilize a formal insurance policy and use savings accounts to allocate money for after death expenses. While this method takes more self-discipline, it eliminates the middle man (so long as the beneficiary listed on the account) and allows for freedom and flexibility of use. [2-3]

While burial insurance certainly isn’t the best choice for all customers, it could work well for individuals who need coverage for these expenses who necessarily qualify for other types of insurance due to current medical status. Burial insurance can cover the expenses of the funeral and service so that your family can focus on grieving the loss. [1-2]


[1] https://checkanswers.co/2020/09/15/why-seniors-are-rushing-to-get-burial-insurance/

[2] https://www.forbes.com/advisor/life-insurance/burial-insurance/

[3] https://lendedu.com/blog/funeral-and-burial-insurance/

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