Burial Insurance

Burial insurance, also known as final expense insurance, is a whole life insurance policy that provides your loved ones with a death benefit to cover end-of-life expenses. According to the Insurance Information Institute, the death benefit typically ranges between $5,000 to $25,000.

While you can use the death benefit for any needs, it’s often used for funeral or cremation services, along with covering bills or remaining debts.

There are several different types of burial insurance, with different rules for each policy. For example, some require a medical exam while others don’t.

Common types of burial insurance are simplified issue, guaranteed issue and pre-need insurance. Simplified issue and guaranteed issue policies are offered by a life insurance broker or agent, while pre-need insurance is typically supplied by a funeral service provider.

Simplified issue policies don’t require a medical exam, but you’ll likely be asked several health questions. Your premium could increase — or you could be declined coverage — based on your responses. There is no waiting period for simplified issue policies.

Guaranteed issue doesn’t require a medical exam or health questions. Since the insurer is taking a higher risk by potentially providing coverage for someone critically ill, the premiums are typically more expensive. According to Progressive, there is a waiting period before the full death benefit is provided, typically 24 to 36 months.

With pre-need burial insurance, you can select the funeral services you want while you’re still alive. Your death benefit will go to your funeral service provider, not your beneficiary. If you think your loved ones may not honor your burial wishes, this could be a good option for you.

An article from Office of the Insurance Commissioner states that costs for end-of-life services are set at the time you purchase the policy, meaning, your funeral cost will not rise with inflation.

When you pass away, burial insurance provides a death benefit to your beneficiary or your funeral service provider. Since burial insurance is a permanent whole life policy, it provides lifelong coverage. As long as you pay your premiums, there is likely no concern for a lapse of coverage.

Your beneficiary can use the death benefit for your end-of-life expenses or other everyday costs. Your funeral service provider will have a preset plan for how to use your death benefit.

The rules and limitations vary depending on your insurer and the burial insurance policy you choose. The age limits, for example, will likely vary.

For example, Mutual of Omaha has a guaranteed acceptance age of 45 to 85 for their burial policies, whereas Progressive has an age limit of 50 to 85 years old.

*In WA, your death benefit limit is $5,000 to $25,000.
**In NY, the age limits are 50 to 75.

Alongside age limits, burial insurance policies also have different coverage limits and medical exam requirements.

Your cost for burial insurance will likely be affordable if you purchase the policy while you’re young. As you age, the premium could be too expensive for a low death benefit.

For example, a burial policy with $10,000 of coverage could be as low as $36 for a 50-year-old woman. The same policy for an 80-year-old woman could cost over $100.

Make sure your death benefit will cover funeral costs. According to Forbes, the average cost of a funeral with a viewing and burial is $7,848, and the average cost of a funeral with cremation is $6,971. If you choose a burial policy with a death benefit of $5,000, you’ll likely cover end-of-life expenses out of your own pocket.

Burial insurance would be worth it if your intention is to cover end of life expenses. You may want to consider other options if you want to send your kids to college, cover a mortgage or leave a legacy.

Term life insurance, for example, provides temporary coverage with a much higher death benefit at a lower premium. Compare traditional life insurance and burial insurance if you’re not certain which best  suits your needs.

*Quotes are from Mutual of Omaha for a healthy 50-year-old woman.

If your goal is a higher death benefit to cover many expenses, a term policy would suit your needs better.

“Burial insurance can be extremely valuable for both financial and emotional reasons. The payment for burial expenses alleviates a financial burden and a potentially difficult decision for loved ones during a time of bereavement.” Patricia Born, Ph.D., Midyette Eminent Scholar in Risk Management and Insurance, told RetireGuide.

If you’ve determined that a small death benefit is your main goal, you should still consider premium costs based on your age.

For example, if you’re an 80-year-old man, your premiums will likely be over $100 a month for a guaranteed issue burial insurance policy. If you cannot afford the premiums, burial insurance wouldn’t be worth it for you.

If you’re a 60-year-old woman, your premiums could be as low as $42.70 for the same amount of coverage. If you can afford your premiums — and they provide you with peace of mind — you could benefit from burial insurance.