Burial Insurance vs. Life Insurance (Find What Fits You Best)

We all get to a point in our life where we have to think about final expenses. It’s tough, isn’t it?

If you’ve been through the death of a loved you, you understand the pain. Especially if you were the administrator of all the final arrangements.

Were you shocked at the funeral costs?

It wasn’t just the cost of the funeral plot either. It was the headstone, the flowers, transportation, the printing of bulletins. It was all the unexpected medical expenses you incur at the end of life as well.

How Much Does A Funeral Cost?

The average funeral costs in the United States is approximately $7,000. Once you add another $12,000 of medical expenses associated with dying, you are pushing $20K in end of life costs.

There are a lot of Americans who don’t have $20K+ available for their family to use for burial expenses. Families will often go into debt by charging large sums of money with credit cards to fund their loved ones funeral expenses.

You don’t want your memory tainted by burdening your family under a mountain of debt, do you?

There is a simple solution to this problem….Burial Insurance.

What Is Burial Insurance?

Burial insurance is a unique life policy that covers final expenses. You may have heard it called by other names such as funeral insurance or final expense insurance. The product is designed to cover all the end of life expenses associated with a funeral.

Unlike most life policies that force you into more coverage than you might need as you age, burial insurance is a smaller policy with coverages from $5,000 to $25,000. Some companies even offer up to $50,000.

At that coverage level, you can see that even by overestimating funeral expense, you family is able to cover the cost. They may even have some cash left to be distributed among loved ones as a parting gift.

Burial Insurance is permanent life insurance, unlike term life policies that expire. Burial Insurance will stay in force until the end of your life. Also like a permanent life policy, some burial policies accrue cash value. The cash value benefit allows the policyholder to borrow or withdraw a portion of the cash.

What Is Covered Under Burial Insurance?

The beneficiary of the burial policy can use all the benefit to pay for all funeral expenses including medical expense incurred at the end of life.

How Is Burial Insurance Different From Life Insurance?

Life Insurance can function as burial coverage. However, there are several drawbacks:

Life insurance policies have much more expensive coverage beyond what you need to pay for funeral expenses. With large coverage comes a larger cost as well.

Another drawback to a traditional life policy is the speed at when funds become available to you. It may take several weeks or months for a family to receive any life insurance funds. At this point, someone had to pay for the final expenses, which may have created a hardship for families while waiting for the funds.

Also, a traditional life policy may deny coverage if death was caused by an apparent suicide or any criminal involvement. At that point, all premiums paid by the deceased had no benefit for his family and created a financial struggle for any dependents or loved ones.

Another major drawback of a traditional life policy is the direction of funds. A traditional life policy disperses fund to a beneficiary which is usually a family member. While you may have bought and paid for a policy to help your family, they can spend at their discretion. You’ve probably heard stories of funds squandered and monies misdirected by greedy descendants.

As we explore the details of burial insurance, you’ll see the options available to you to safeguard the direction of the insurance funds.

How Does Burial Insurance Work?

Coverage available for burial policies range from $5,000 – $50,000. If you determine that you need more than the 50k, most agents can write a guaranteed issue life policy supplementing the burial plan.

Among burial policies there are three benefit levels available:

Graded Benefit

Graded benefit policies provide only a partial benefit to the policyholder within the first couple years. Most graded policies require a 2 – year waiting period before full policy benefits are given. For example: If you purchased a policy at 60 years of age, but died within the first year of the policy inception, the beneficiary would only receive a % of the coverage amount. (It may not sound like a great deal, but there are people who can benefit from this type of coverage).

Modified Plans

Modified plans are similar to graded benefit in that the full coverage amount is limited in the beginning of the policy period. The difference is the amount paid. If you died within the first two years of a modified plan, the beneficiaries would only receive the premiums paid plus any interest accrued on the policy.

Level Benefit

Level Benefit policies provide protection from day 1. The full coverage amount is available as soon as the policy is approved and issued.

Graded & Modified plans are reserved for those with severe medical issues. They are guaranteed issue without the need for a medical exam. You can not be turned down for a graded plan or modified plan. If you have a history of medical impairments, this is the best policy for you.

Level benefit plans have more medical requirements and are not necessarily guaranteed issue. However, they are much easier to qualify for than a traditional life policy. Also, even though there are medical questions, no medical exam is needed.

Burial Insurance plans also have unique beneficiary options. Rather than making a dependent or family member beneficiary, you are able to assign a funeral director or funeral home as the beneficiary. The benefit of this strategy is that you will be confident that the money will be used for the purpose you bought the policy.

Timing of disbursements of funds is much quicker than a life policy. When the funeral director is the beneficiary, there is no worry of waiting for a life policy coverage to be decided.

Can You Have Both A Life Policy And A Burial Insurance Policy?

Yes. There is no conflict of coverage, and you can direct the burial policy for final expenses, and a life policy to settle debts or taxes. Be careful though. If the life policy is a term policy, it may expire before you need it.

Also, you should consider whether you are over-insured by having both policies. You may be paying for more than you need, and some of that monthly premium could be going toward your monthly expenses.

Reasons To Consider A Burial Life Insurance Policy

Here are a handful of reasons you should consider a burial policy:

Health Issues

If you’ve had cancer or other serious medical issues, finding life insurance is almost impossible. There are very view health issues that would exclude you from burial insurance. There are no medical exams like there are in life insurance as well. You can be diabetic, diagnosed with COPD, or suffered from a stroke, and still be eligible. Cancer survivors are ideal. Most life insurance policy will not cover cancer survivors. If you’ve been cancer free for more than 2 years, you qualify for burial insurance.

Caregivers of Elderly Parents

Many children of elderly parents must become caregivers as their parents age, and develop health issues. Because of caregiving costs, you or your parents may not have the funds necessary for final arrangements. Children may purchase policies on behalf of their parents and assign a funeral home as beneficiary.

Age

The perfect candidate for burial insurance is anyone age 50-85. Perhaps you don’t have a need for a large life policy, but aren’t certain your retirement funds will be enough for final expenses. Burial Insurance allows you to provide for funeral expenses without the need to buy a large, expensive life policy. If you are over 85 seeking life insurance, the options are more limited, but there are a handful of companies that will provide coverage.

What Is The Cost Of Burial Insurance?

Burial Insurance is very affordable, especially compared to other life coverages available to those over 50. If you’ve had medical issues, it may be the most affordable way to protect your family from financial issues.

The table below outlines some typical rates you can expect to see for burial insurance policies:

Age/Gender Coverage Monthly Premium
50 yr old Female $10,000 $25/mo.
65 yr old Female $10,000 $41/mo.
80 yr old Female $10,000 $100/mo.
50 yr old Male $10,000 $30/mo.
65 yr old Male $10,000 $55/mo.
80 yr old Male $10,000 $130/mo.

As you can see, burial insurance is an affordable decision. Our agents are experts in the various policy options available. We represent a wide variety of companies which allows us to design a product around your needs.

Contact one of our agents today to discuss the wide of options we have for you and your loved ones. We are committed to protecting your memory and financial lives of your family.

Purchasing Burial Insurance

When it comes to finding the best burial insurance policy for you, there are many tools available that can help find the best rates quickly and easily.

While the internet allows us to get a broad overview of what some typical pricing for burial insurance policies, it is important when applying for any life insurance policy to speak with an insurance agent.

Insurance agents are almost always free to consult with, and they can provide valuable industry knowledge in order to help you find the absolute best burial insurance rates for you. In order to maximize the value of your policy, it is always recommended that you speak with an insurance agent.

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