Burial Insurance

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Planning for your burial and funeral is an important part of any long-term plan – especially if you don’t want to burden your loved ones with the cost after you’re gone. That’s where burial insurance can come in. But what is it and what does it cover?

Simply put, burial insurance, also called end of life insurance or funeral insurance, is a whole life insurance policy that is intended to pay for the costs of your burial after you die. These costs may include a memorial service, cremation costs or a headstone for your grave.

What is burial insurance?

If you have your affairs in order, your loved ones already know what will happen when you die. You may have given instructions for how you would like your body to be treated, as well as notes on the organization of your memorial service or what you want written on a tombstone.

But all of these things cost money, sometimes many thousands of dollars. If you don’t want your survivors to be stuck paying those costs, you may want to consider a burial policy. This is a small permanent life insurance policy that pays out a death benefit — usually anywhere between $5,000 and $25,000 — intended to cover these costs, although there is no law saying they must be used for them.

Because the payout for burial insurance is small compared to many regular life insurance policies, the premiums can be quite small, too — a few dollars a month for a policy of $5,000 or $10,000 is common. The policies are easy to get and do not require a medical exam. You may even be able to purchase a policy if your health isn’t great, although there may be a wait of several years before it can be used.

What is covered by burial insurance?

Burial insurance policies cover all the normal costs incurred by someone’s death. Unless you have managed the estate of a loved one, you may not realize the number of costs involved in a death, or how quickly they can mount up. According to the Federal Trade Commission, costs may include:

  • Embalming or preserving the body
  • Casket
  • Flowers
  • Cremation costs
  • A burial plot
  • The cost of transporting the body and/or cremains
  • Headstone, with customized carving
  • Payment to minister or priest
  • Rental costs for the venue where the memorial service is held
  • Cost to open and close the grave
  • Grave vault and/or grave liners

How does burial insurance work?

Burial insurance can be purchased from most regular insurers or, in some U.S. states, through a funeral home, if they are licensed to carry it. To apply for a policy, you’ll fill out a form that may ask some simple health questions, but you will not be required to undergo an extensive medical exam like you might with a traditional life insurance policy. One type of burial policy, called a guaranteed issue life insurance policy, is available without any medical or health questions and is intended for those who are seriously ill and cannot get a policy any other way.

Sometimes it’s possible to purchase a policy online, but usually it will require a phone call to an agent or insurance broker. Working with a broker can be advantageous because they can show you products from different insurers to find the one that’s right for you.

Once you have purchased a policy, make sure that the person whom you’ve designated to handle your end-of-life matters is aware of the policy and knows the policy number and the agent who sold it to you.

If all the appropriate arrangements have been made, the process should look like this: let’s say John dies suddenly. His son, Ted, is his executor and beneficiary, and has all the paperwork for John’s burial insurance. Ted notifies the company, which processes a check for the amount specified, and hands it off to Ted within days. Ted is then able to make a down payment on a casket and begin making arrangements for a service and burial. He has the money he needs to pay for workers who will handle the details of John’s service and burial.

How much does burial insurance cost?

Your burial insurance premiums are determined by your gender, age, the size of the policy and other factors, so the amount you pay will be specific to your own situation. The National Funeral Directors Association states that the average cost of a funeral with a vault is $9,135, and with cremation is $5,150.

According to burial insurance company Lincoln Heritage, here are some standard rates for a $5,000 death benefit policy, both with and without a health questionnaire:

Man, age 50 $16, or $20 with no health questions
Man, age 75 $51, or $63 with no health questions
Woman, age 50 $14, or $15 with no health questions
Woman, age 75 $38, or $46 with no health questions

Who has the best burial insurance?

Although there are companies, such as Lincoln Heritage, that primarily sell burial insurance, many regular life insurance providers also sell burial insurance. Here are some options worth looking into.

AARP: The American Association of Retired Persons has a great deal of experience in meeting the needs of older people. In collaboration with New York Life, they offer burial policies and life insurance specifically geared toward seniors. There is no health questionnaire — your only requirement is to be a member of the organization and over the age of 50.

Mutual of Omaha: Mutual of Omaha offers guaranteed acceptance policies for those aged 45-85. There are no health questions to answer and rates are locked in. If you are looking for a smaller policy, their coverage amounts start at $2,000.

State Farm: The largest insurer in the U.S., State Farm’s policies may allow you to earn dividends, which can be paid to you in cash or used to pay premiums. The coverage limit is $10,000, and policies are available to those 50-80.

Colonial Penn: Colonial Penn sells only life insurance, including a guaranteed acceptance life policy that can be used for burial costs. You can borrow against the cash value of the policy, and there are flexible payment options available. Rates are guaranteed and prices are competitive.

Are burial insurance policies worth it?

A burial insurance policy may play a role in your financial strategy, but it pays to consider your options. Rates increase with age, of course, as is true of all life insurance policies, so the older you are, the less likely you are to want to spend significant resources on a policy. Burial insurance for seniors is quite popular, but another option would be to accumulate a nest egg of $10,000 or so and keep it in a moderately liquid investment so that your heirs can access it quickly after you die.

Another option to consider is prepaying your funeral expenses. Many funeral homes will allow you to choose a casket and will assist you in choosing and paying for the other expenses associated with a funeral. This allows you to retain control — you get to decide how you’d like your end-of-life affairs handled, rather than those who are grieving your loss. By locking in the rates at an earlier time, you may also save money in the long run.

Frequently asked questions

Do I need burial insurance if I’m younger?

Probably not, unless your health is seriously compromised and you are worried about your heirs having to pay your funeral expenses.

How is burial insurance different from regular whole life insurance?

Burial insurance is a type of whole life policy, but generally features a smaller death benefit and does not include the in-depth health questioning that goes with most whole life insurance policies.

If I purchase a burial policy and then shortly thereafter, will my loved ones be able to use the benefits?

You’ll want to check the fine print in your policy to be sure, but generally there is a waiting period before you can cash in on your policy’s benefits — possibly as long as two or three years.