Burial insurance, sometimes called funeral insurance, is a type of life insurance policy that pays a cash balance to cover the costs of an individual’s final expenses such as their funeral service, burial or cremation.
The most basic form of burial insurance is a life insurance policy with a cash value that pays out to your loved ones, who can then use it to pay any final expenses related to your death.
There are also preneed funeral insurance policies you can get through some life insurance brokers or directly through funeral homes that pay directly to the funeral home or crematory rather than to the family members.
How Is Burial Insurance Different From Life Insurance?
Burial insurance is a specific type of life insurance that is designed to cover an individual’s funeral and burial expenses. The difference lies in how much a burial policy is worth and what it is meant to be used for as well as the value of the policy. Most burial policies have a value of between $1,000 and $50,000.
You can purchase regular life insurance for almost any amount and there generally isn’t a cap on how much coverage you can get. This is because it is meant to protect your family financially after you’re gone. Life insurance should provide sufficient funds to cover your lost income and your family’s needs long after you’re gone.
When you buy a typical life insurance policy, you may have to get a physical or have your doctor complete a form outlining your health, any risk factors, and other information. Your premiums will be based on a variety of factors, including age, health, how risky your job is and a multitude of other factors. You can purchase a life insurance policy at any stage in your life, but the older you are, the more expensive it will be.
Because this is a specific kind of life insurance, there are some differences between life insurance and burial insurance. The payout on a burial policy is limited, with $50,000 typically being the most a beneficiary can receive.
This is because it is supposed to be used to pay for funeral and final expenses. Although a beneficiary can use some of the funds for other, incidental expenses or to cover some bills, most of it is meant to pay for funeral needs.
How Burial Insurance Is Different From Other Life Insurance Plans:
Types Of Burial Insurance
Burial insurance policies are available as either level benefit policies or graded benefit policies. A level benefits policy pays the full death benefit immediately after the policy is approved whether you’ve had the policy for six weeks or six years.
A graded policy will pay only limited benefits for the first two years. Some graded plans will return the premiums paid plus interest for the first two years; others will pay a partial death benefit based on a percentage of the full value for the first two years.
There are also preneed funeral insurance policies available directly through funeral homes or brokers who sell the policies for funeral homes. These differ from other burial insurance policies because they are tied directly to a specific funeral services provider. The beneficiary is not a family member, but the funeral home or crematorium providing final services for the deceased.
Preneed funeral insurance ensures that the funeral expenses are paid immediately, but the policy amount covers only what has been specifically designated in the policy. There will be no leftover funds for the family and the money can not be used for anything other than the final service, burial, and funeral expenses.
How Much Burial Insurance Do I Need?
Standard burial insurance will pay a specific amount, usually between $5,000 and $25,000, to a beneficiary who is most often a surviving relative. These policies are designed to eliminate the financial burden of a funeral, memorial, burial, cremation and other final expenses.
The cost of a funeral and burial in the United States can run anywhere between $5,000 and $50,000 or more, although the average funeral cost is currently between $7,000 and $10,000. That’s a lot of money to come up with, particularly if there are also bills from an individual’s final illness and other expenses.
If you want to ensure that your burial or final expenses insurance will be enough to cover the cost of your funeral, take the time to talk to funeral parlors in your area to determine how much it might cost for the type of burial and service you would like.
The cost will be higher in major metropolitan areas and if you desire a specific type of service, casket, burial plot, flowers or other items. The average cost of some of these items in the United States may surprise you.
The average cost of a funeral in 2017:
Talk to your family before you purchase burial insurance; discuss the final arrangements for your death and let them know how you would like it to be handled, then opt for funeral insurance that will provide enough money to cover all the expenses with a bit of a cushion for inflation and any unexpected expenses that might come up after you’ve passed away.
Most burial policies pay directly to a family beneficiary who can use the funds to pay for the funeral and other final expenses, but there are no strict guidelines stating that the funds have to be used only for the funeral expenses.
If there are outstanding medical bills or other debts left by the person who passed away, some of the funds can be used to pay these expenses. In fact, although the policy is called burial insurance, the beneficiary can use these funds in any way he or she sees fit.
What Is the Typical Death Benefit Amount On Burial Coverage?
Most insurance companies offer policies ranging from $10,000 to $50,000. There is no “typical” coverage because the costs of a funeral vary from place to place and final expenses vary depending on what kind of arrangements are made.
Take into consideration the costs in your area and how elaborate you want your funeral to be when purchasing a burial policy. If you believe you need more than $50,000 in funeral coverage, you may want to talk to a few companies to see if they can tailor a policy to your needs.
Which Burial Insurance Companies Offer The Best Policies?
There are many insurance providers who offer burial policies. To help you choose the one that’s right for you and your family’s needs, we’ve put together a list of some of the top performing providers who are known for their quality and dependability.
Before we take a deeper dive into the products each of our top companies offer, here is a quick look at the 10 Best Burial Insurance Companies:
|Company||A.M. Best Rating||Customer Reviews|
|Mutual of Omaha||A+||4.2 / 5|
|Transamerica||A+||4.0 / 5|
|Baltimore Life||B++||3.9 / 5|
|Americo||A||3.7 / 5|
|Sagicor||A-||4.3 / 5|
|United Home Life||A-||4.0 / 5|
|Amnico||A||4.1 / 5|
|Gerber||A||4.3 / 5|
|Foresters||A+||4.0 / 5|
|Assurity||A-||3.9 / 5|
1. Mutual of Omaha
A perennial favorite, Mutual of Omaha offers excellent burial policies for anyone ages 45 to 85. You’ll need to pass a medical background check, but most people do. This involves them having access to medical and prescription records, but they process these quickly.
We like their burial insurance because they offer a rider for accelerated death benefits. This means you can receive the full benefits early if you’re diagnosed with a terminal disease. Because serious illnesses are so expensive, having access to these funds before you pass away can help you pay medical and other bills during a stressful time.
3. Baltimore Life
Not everyone will recognize the name, but Baltimore Life offers outstanding burial insurance coverage and a generous menu of plan options under the name Silver Guard. For Silver Guard coverage, which is a level benefit plan, you’ll need to answer a brief health survey.
If you can’t pass the survey, there are graded plans available under the names Silver Guard II and III, with a benefit payout of 25% the first year, 50% the second year and the full 100% thereafter. Another feature is the ability to write an immediate draft for up to $1,000 of the full benefit if needed. If you die accidentally, the coverage is 100 percent on all policies.
This relatively unknown insurance company has great plans for anyone looking for simplified burial insurance. For anyone under 65 years old, a simple set of medical questions is all it takes to qualify. If you’re over 65, Sagicor offers an underwritten plan or a No Lapse Universal Life policy for up to $25,000.
If you are relatively healthy, Sagicor is a great option because they have several health classes with premiums scaled to your health level. You can save significantly on premiums with Sagicor, and they will write a policy starting with benefits starting at $25,000 and going as high as you want them.
Their accelerated death benefit option applies to both terminal and critical illnesses, giving you the option to claim your benefit if you have a critical illness and need funds.
7. Amnico (American National Insurance Company)
This company offers burial insurance with no medical exams and they consistently rank high with AM Best and Standard & Poor’s.
They offer a guaranteed burial policy for anyone ages 50 to 80, even if you have a pre-existing condition. Although it offers a graded death benefit for the first two years, it can be very helpful if you’ve been turned down elsewhere.
There is a very easy health survey to complete for burial insurance from Foresters, but it’s just a few simple questions. If you meet their criteria, you can get some excellent rates for your funeral insurance coverage. In many cases, they offer the lowest premium rates available.
If you’re less than 80 years old, you can get as much as $35,000 in coverage with their PlanRight Whole Life. From 81 to 85, the amount drops to $15,000, so buy early to get the best deal.
How Did We Determine The Best Burial Insurance Companies?
We looked at five key features when looking for good burial insurance:
Best Burial Insurance Rates – Wrapping It Up
Now that you have a better understanding of what burial insurance is, who it is right for, what coverage is available to you, and who the best burial insurance companies are, you are ready to move forward and find the right policy for your needs.
While comparing rates on the internet is now easier than ever before, and you can have dozens of rates available to you in just seconds, we still always recommend working with an insurance agent.
While many sites may claim to offer you the best rates, this is just after a quick process and does not include some of the finer details that really determine what the best coverage for you is. That being said, an insurance agent is free to speak with, and can give you valuable insight into the types of life insurance available to you, and which one best fits your needs.