Best Texas State Regulated Burial Insurance Plans

Written by Jeff Root

Texas has pre-need burial plans, regulated by state law, that offer funeral goods and services that can be paid on a payment schedule and fully funded at the time the insured passes away.

In this type of plan, a prepaid amount is held in trust for a funeral set up to the insured’s desire according to what options the plan offers.

The money is held in an escrow account or funded through a life insurance policy designated for the purpose of paying all or part of the final costs for the insured.

The funeral is pre-funded and the options chosen in advance, so there is no question of what is being purchased or how it will be paid for when the time comes to use the insurance. If this is all a new idea for you, let’s look at the nuts and bolts of burial insurance in Texas.

In Texas, funeral services are overseen by the Texas Funeral Services Commision (TFSC). The TFSC licenses individuals as funeral directors or embalmers. This governing body, while not enforcing the law, does maintain standards and investigates regulations governing PreNeed Funeral Plans – including Insurance funded programs and plans.

What is Burial Life Insurance?

Burial insurance is a low face value whole life insurance plan specifically designed for people who cannot afford or qualify for, other types of insurance.

Maybe there’s a health issue or an age issue, but whatever the reason, burial insurance fills the gap in the insured’s needs. The requirements are only a few health questions, which most people can answer, and the application is approved.

Usually, burial insurance policies have face values anywhere from $2,000 to $25,000 sometimes as high as $50,000. Sometimes it is known as final expense insurance and is used mainly to cover the cost of a burial or a cremation.

Remember this type of policy does not require the beneficiary to spend the death benefit in any particular way. It doesn’t have to be for the cost of the burial, it could be for a cremation or even non-burial costs.

Why is Burial Insurance Important?

The price of the average funeral is $12,000 and is rising steadily over time. That means, in order to keep your family from going into debt for your funeral, you need some type of life insurance.

Although, it may vary according to where you live (Seattle funerals average $6,000) the cost of a burial, with some type of plot or headstone is not cheap.

Many people find that burial insurance is important because they haven’t figured the cost of burial into their life insurance estimates.

Their original life insurance lapsed, or the term has ended and now the insured needs some kind of coverage for their final expenses. Texas has prepaid funeral plans both in life insurance funded plans and directly through funeral organizations.

Should You Prepay Your Funeral?

This type of insurance policy pays a funeral home directly or indirectly for a planned funeral. The cost is spread out over time and through payments of up to 10 years.

Once the payments have been paid in full the insurance policy is fully funded and the funeral is locked in. The policy is effective for the entire life of the insured.

The services that are paid in advance differ according to individual needs, funeral home services and products centered on funerals (caskets, urns, chapel time).

The preneed funeral plan takes much of the guesswork out of planning and executing a funeral, which can be daunting at a very difficult time in the beneficiary’s life.

All states have regulated plans that allow a second party or a contracted party pay for a funeral in advance. These plans are called preneed funeral plans and come with their own regulations according to the state laws governing such plans.

Preneed Funeral Plans are a form of Term Life Insurance, where the face value is expressly designed to pay for a certain (pre-decided) goods and services.

Advantages of a Texas Preneed Funeral Expense Life Insurance Policy

Here are some of the advantaged of having a Texas State Regulated Burial Insurance Plan:

  • With the arrangements all made in advance, there can be less pressure and peace of mind.
  • During a very stressful time, those who are most vulnerable are not burdened with needing to make heavy decisions and choices, that could translate into thousands of dollars.
  • Choosing all the services and options ahead of time assures the insured will have exactly what they wanted for their last testament.
  • On the whole, the family won’t need to borrow, finance, spending savings, or sell the family heirlooms, for a large sum of money just to pay for a burial or funeral.
  • For many contracts, there is a guarantee that like goods and services will be provided if the original ones are no longer available.
  • The price for the services that were purchased is locked in for the insured’s lifetime. (some contracts)
  • If chosen, the accounts can allow for inflation over time, with interest-bearing accounts, or life insurance with a face value that grows incrementally over a period of time.
  • Some policies allow for a transfer to a different funeral home, or a refund (partial or full) depending on circumstances.

Disadvantages of a Texas Preneed Funeral Expense Life Insurance Policy

Here are some of the advantaged of having a Texas State Regulated Burial Insurance Plan:

  • If the insured wants to cancel the policy there may be no refund of payments already made. This happens with some trust fund and life insurance policies.
  • If the insured moves to another state, there may be changes to regulations, terms or options and the policy may not transfer to the new state.
  • Some policies, where investments earn interest the owner of the policy may not receive these excess funds, and those funds may be kept by the funeral home or funeral director.
  • Installment interest may be charged but not applied to the policy or plan.
  • Ownership may be held by the contract-holder and not by the insured, taking away the insured rights to the plan or policy.
  • Sometimes an insurance funded preneed policy face value might grow, and the excess cash may not be applied back to the policy but retained by the contract-holder (funeral home).
  • The policy may only have enough funding for like goods and services, and in the future, those goods and services might cost more. It may fall on the beneficiary or family to meet this increased cost.

There may be a waiting period in an insurance policy terms that stipulates that if the insured dies within the early days and years of the policy then the funds are reduced or denied. Then the family may have to absorb the costs, or could even lose the premium payments that have been made already.

An intentional manipulation of the types and kinds of services and goods might occur, leaving the family to pay for those services and goods they thought they had already paid for.

This could take the form of a chapel large enough to hold 40 people is needed, but the size wasn’t stipulated in the contract, and thus funds only cover a chapel for 20 people.

This type of generalized costs can and does happen. Regulations in Texas provide for compensation in these cases, if the manipulation can be proven.

What Goods and Services Does a Preneed Policy Cover

All states in the USA have provisions for Preneed Funeral Plans, through both second parties and insurance policies. In Texas, the goods and services cover such goods as caskets, vaults, and plots, while services would be, embalming and restorative measures, as well as funeral religious services.

The actual merchandise and services are decided according to the options the insured chooses at the time the policy is purchased. There may be a provision for changing the options at some future time, but many times, unless otherwise noted in the contract, the funeral home (contract-holder) provides the goods and services as agreed upon in the original contract.

Pricing of Preneed Burial Insurance.

The most common vehicle for a preneed funeral plan is a trust. The trust can then purchase insurance that can be funded in one of two ways:

  • Full payment of the policy up front in a single payment
  • Payments over a specified time. Typically in Texas, the cost is $15 – $30 per month for up to 10 years.

The actual cost will vary according to the policy options chosen by the insured, but most cases will be $5,000 to 15,000

Because this is a life insurance policy the regulations governing a contract are enforced and the parties have the rights that all life insurance policies offer.

In those regulations are stipulations that govern all Texas funeral services organizations such as funeral homes and crematoriums.

Some of the provisions that should be in the contract are:

  • Set up a particular funeral home, or mortuary, that is paid for in full and is irrevocable.
  • Always get a guarantee without an increase in cost over time – or make sure the policy has an inflation increase built in.
  • Another condition should be a guarantee of services because funeral homes and other funeral service providers do go under from time to time. This is why a preneed plan should be funded through an insurance company.

Some extra costs associated with preneed funeral insurance in Texas:

  • There may be a maintenance fee of $50 – $100.
  • Administrative charges of $100 – $200 or more to set up the trust.
  • There could an extra fee for cosmetic recreation.
  • If the casketed body needs to be sent to another facility the price could be $900 – $3,000 and the receiving facility may charge up to $3,000 to take possession of the body.

What is a Preneed Burial Contract?

A Preneed burial contract is a contract between an individual and a funeral home or insurance company, where funeral services and merchandise are purchased in advance of a person’s final needs.

What is a Prepaid Funeral Contract

Although almost identical to a preneed contract, a prepaid funeral contract many times covers the funeral to a specific cost. While other forms of burial insurance can be held, a prepaid funeral is paid up in full before the insured dies and is guaranteed to pay for the funeral.

Is Embalming Required By Law in Texas?

Yes, all deaths of people are meant to be embalmed, by state statute, and the process is overseen by the Funeral Service Commission. Embalmers must also be licensed in the State of Texas.

Finding the Best Burial Insurance Plan In Texas

There are many options for burial insurance in Texas, but regulations require that there be certain stipulations within a Preneed Funeral Plan.

Those stipulations do not always guarantee a purchaser will get everything they want or desire, and the consumer must be careful as with any contract.

Because of the complex nature of State regulations combined with the multitude of burial insurance options on the market, we suggest that in order to find the best burial insurance rates in Texas, you work with an independent life insurance agent.

Our independent agents work with some of the best burial insurance companies in the country and have the knowledge to help you find the best burial insurance coverage for you and your family.

Give us a call today, or get started with our online quoting engine to instantly compare burial insurance rates in Texas.

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About Burial Insurance Coverage
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