Burial Insurance vs. Life Insurance
Burial insurance, also known as final expense insurance, offers no-hassle coverage with a low death benefit for burial expenses. Life insurance offers a variety of policies, with options for high death benefits and opportunity to build wealth. Depending on your health and coverage needs, one type of insurance will likely benefit you over the other.
- Written by Lindsey Crossmier
Lindsey Crossmier
Financial Writer
Lindsey Crossmier is an accomplished writer with experience working for The Florida Review and Bookstar PR. As a financial writer, she covers Medicare, life insurance and dental insurance topics for RetireGuide. Research-based data drives her work.
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Lamia Chowdhury
Lamia Chowdhury
Financial Editor
Lamia Chowdhury is a financial content editor for RetireGuide and has over three years of marketing experience in the finance industry. She has written copy for both digital and print pieces ranging from blogs, radio scripts and search ads to billboards, brochures, mailers and more.
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Eric Estevez
Eric Estevez
Owner of HLC Insurance Broker, LLC
Eric Estevez is a duly licensed independent insurance broker and a former financial institution auditor with more than a decade of professional experience. He has specialized in federal, state and local compliance for both large and small businesses.
Read More- Published: September 8, 2022
- Updated: June 22, 2023
- 8 min read time
- This page features 11 Cited Research Articles
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Comparing Burial Insurance to Life Insurance
When trying to decide between burial insurance and life insurance, you should consider how much coverage you need and your overall health condition. On average, burial insurance’s death benefit doesn’t exceed $50,000. With life insurance policies, your death benefit coverage could be millions.
According to Lincoln Heritage, the average funeral costs between $7,000 and $12,000. Even with a smaller death benefit, burial insurance would still cover a funeral.
As for your health, most burial insurances don’t require a medical exam. This means, you can get coverage quickly. Life insurance typically requires a medical exam. If you’re found to be in poor health, then you may be at risk for costly premiums or even denied coverage.
| Burial Insurance | Life Insurance |
|---|---|
| A specific type of life insurance intended to cover a person’s burial costs | Offers a variety of policies |
| Can only be paid out as a lump sum | Death benefit can be paid out as installments and annuities, lump-sum payments or a retained asset account |
| Payout timing will be a case by case basis | Payout timing will be a case by case basis |
| Policies don’t typically exceed $50,000 | Policies may cover millions of dollars |
| Medical exams will be carrier specific | Medical exams will be carrier specific |
| Policy remains active until the policyholder passes | Insurance coverage could expire before you pass away, providing no benefit |
| Two main types are simplified issue and guaranteed issue burial insurance | Two main types are term life and permanent life insurance |
Similarities
Burial and life insurance both offer a death benefit with lifelong options. With each type of policy, the death benefit can be used towards funeral costs or any other necessary expenses. Examples of funeral costs include the viewing service, burial costs, cremation, medical bills, outstanding debt or any legal costs.
Burial and life insurance death benefits can both be paid out in a lump sum. A lump-sum payment is when the beneficiary receives the entire death benefit in one payment.
Many burial insurance policies and some life insurance policies have a cash value component. In most cases, you can access your cash value while you’re still alive.
- Death benefit can be used for funeral costs
- Lifelong coverage options
- Can be paid out in lump sum
- Offers cash value component
Differences
Burial insurance offers a singular type of insurance with one purpose — to cover end-of-life expenses. This isn’t to say you can only use the death benefit from burial insurance on end-of-life expenses. You can choose what you want to spend the death benefit on. However, since the death benefit for burial insurance is typically small, most policies only offer enough to fund funeral costs.
With a life insurance policy, the death benefit amount is substantially larger, allowing your beneficiary to use the death benefit for more than just end-of-life expenses.
- Pay off mortgage
- Send kids to college
- Leave an inheritance
- Fund wedding costs for their kids
- Cover debt
Life insurance offers two main types of insurance — term and permanent. Permanent life insurance policies offer a cash value component to build your wealth with lifelong coverage. Term policies offer limited coverage, typically up to 30 years, with affordable premiums.
There are also different age requirements for life and burial insurance. With a term life insurance policy from Mutual of Omaha, the issue age range is between 18 to 80 years old. But other types of life insurance policies require different age limits.
According to Progressive Casualty Insurance Company, typical qualifying ages for burial insurance is between 50 to 85 years old. The age restrictions could vary, depending on which insurance company you choose.
Cost
The average cost of burial insurance is $50 to $100 per month, according to Choice Mutual. Your age is the biggest factor in the price of burial insurance. The younger you are, the cheaper your premiums will be.
There is a wide range in life insurance policy costs. Premiums for permanent policies can cost hundreds, if not thousands of dollars a month. Term policies are more affordable. If you’re healthy and young, your premium for a term policy is typically under $50 a month.
| Type of Policy and Policyholder Age | Burial Insurance for a 65-Year-Old With a $15,000 Death Benefit | 10-Year Term Life Insurance for a 65-Year-Old With $100,000 Death Benefit |
| Cost Estimate | $47 to $74 | $38.35 |
As you can see in the table above, there is a large difference in the coverage amount for a similar premium cost. On average, burial insurance premiums are more costly than traditional life insurance, with a lower death benefit.
When Is Burial Insurance the Right Solution Instead of Life Insurance?
Life insurance typically requires a medical exam and has a waiting period. If you think you’d be denied due to a health condition or are likely to pass away in the next two years — traditional life insurance would not be a good option.
If you’re choosing burial insurance, make sure your death benefit will cover all your expenses. Currently, cremation is more affordable than a traditional funeral. On average, cremation costs between $4,000 to $7,000, according to Lincoln Heritage Funeral Advantage. In comparison, the average funeral can cost up to $12,000.
Remember that you should only consider burial insurance if you have a small amount of debt or mortgage to cover. If you want your death benefit to provide ample coverage for years to come, life insurance might be a better fit.
What Is the Waiting Period on Life or Burial Insurance?
Your waiting period for life or burial insurance varies depending on what type you have.
According to American International Group (AIG), an average waiting period for life insurance is two years. If you pass away within the first two years that your policy is active, there could be difficulties in getting your entire death benefit.
With some life insurance policies, you may only have to wait a few weeks for the underwriting process to be completed. After you’ve been approved, you could have immediate coverage.
With burial insurance, there are two main types — simplified issue and guaranteed issue. Depending on which you choose, you could have anywhere from immediate coverage to a three-year waiting period.
- Simplified Issue Burial Insurance
- There is no waiting period with simplified issue burial insurance. You have immediate coverage after you’ve been accepted.
- Guaranteed Issue Burial Insurance
- The waiting period for guaranteed issue could be 24 to 36 months. If you were to pass away during the waiting period, your beneficiary would only receive a portion of the death benefit.
Alternatives to Burial Insurance
If burial insurance doesn’t fit your needs, there are other options. A payable-on-death (POD) account, veterans’ benefits, or a term life insurance policy could cover burial costs instead.
- Payable-on-death (POD) Account
- A POD is an account where you can build funds for funeral or cremation services. Your beneficiary can only access the funds once you’ve passed away. Your beneficiary will need to show your death certificate before accessing the funds.
- Veterans’ benefits
- If you are a veteran, you can be buried in a national cemetery with no charge for the gravesite or marker. Your loved ones will need to cover the preparation services, like embalming. However, the U.S. Department of Veterans Affairs can help cover preparation costs with their additional burial benefits.
- Term life insurance
- If burial insurance doesn’t provide enough coverage, you could consider term life insurance. Term is the most affordable type of life insurance, and there could be options to skip a medical exam.
Burial and Life Insurance FAQs
- Special focus on content about life insurance, Social Security, Medicare and certificates of deposits (CDs)
- Research-based data drives her work
- Bachelor’s degree in English from the University of Central Florida
11 Cited Research Articles
- Martin, A. (2022, August 13). How Much Does Burial Insurance (Also Known As) Final Expense Insurance Cost? Retrieved from https://choicemutual.com/burial-insurance-costs-age/
- Martin, A. (2022, August 9). How To Qualify for Final Expense Life Insurance With No Waiting Period. Retrieved from https://choicemutual.com/burial-insurance-with-no-waiting-period/
- American International Group. (2022, January 21). Life Insurance with No Waiting Period and No Medical Exam. Retrieved from https://web.archive.org/web/20220704111101/https://www.lifeandretirement.aig.com/articles/knowledge-insights/life-insurance-articles/life-insurance-with-no-waiting-period-and-no-medical-exam
- Potts, L. (2021, October 22.) Smart Ways to Cover the Costs of a Funeral. Retrieved from https://www.aarp.org/home-family/friends-family/info-2020/paying-for-cost-of-funeral.html
- National Funeral Directors Association. (2020, July 6). 2020 Cremation & Burial Projects Cremation Rate of 87% by 2040. Retrieved from https://nfda.org/news/in-the-news/nfda-news/id/5223/2020-cremation-burial-projects-cremation-rate-of-87-by-2040
- Progressive Casualty Insurance Company. (n.d.). What Is Burial Insurance? Retrieved from https://www.progressive.com/answers/burial-insurance/
- Lincoln Heritage Funeral Advantage. (n.d.). How Much Does a Funeral Cost? Retrieved from https://www.lhlic.com/consumer-resources/average-funeral-cost/
- Lincoln Heritage Funeral Advantage. (n.d.). How Much Does Cremation Cost? Retrieved from https://www.lhlic.com/consumer-resources/cremation-costs/
- Lincoln Heritage Funeral Advantage. (n.d.). What’s the Difference Between Burial Insurance, Life Insurance, and Funeral Insurance? Retrieved from https://www.lhlic.com/consumer-resources/burial-insurance-vs-life-insurance/
- ProFam. (n.d.). Average Cost of Life Insurance for Men and Women 65 And Over. Retrieved from https://www.profam.com/life-insurance-over-65/
- Mutual of Omaha. (n.d.). Term Life Insurance. Retrieved from https://www.mutualofomaha.com/life-insurance/term-life-insurance
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