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Thanks to modern medicine, we’re living longer and healthier lives than ever, but we haven’t reached immortality just yet. Burial insurance can help cover the cost of funeral and burial expenses when we’re gone so our loved ones don’t have to shoulder the financial burden.
How does burial insurance work — and which are the best burial insurance companies? Read on to learn more.
The Best Burial Insurance
What is Burial Insurance?
The average cost of a funeral is about $9,000, and it’s common for funeral costs to be even higher. Burial insurance is a whole life insurance policy with a specific purpose.
This type of insurance is designed to pay for burial expenses and related funeral costs. Because it’s limited in scope and usually has a relatively low coverage benefit, the cost of a burial insurance policy is usually affordable and coverage costs less than other types of life insurance policies.
In most cases, your burial insurance policy pays a tax-free death benefit to the beneficiary you choose and a deductible does not apply to life insurance claims.
What Burial Insurance Covers
You might be surprised to learn of all the expenses that come as a result of a death. A funeral is a time when family and friends come together to pay respects and we want the goodbye to be a loving tribute. That often means that costs can rise as we pay for upgrades, like a better casket or the special flowers that the deceased loved so much.
Here are some of the expenses you can expect, all of which a burial insurance policy can cover.
Funeral home services. In many cases, there is a viewing, which is what many of us associate with funeral homes, but that’s not all a funeral home does. Often, the funeral home also obtains copies of the death certificate, gets permits if needed, cares for the remains, arranges transportation and coordinates services.
Embalming. In some cases, embalming is required. In other cases, cold storage can be used to preserve the remains until burial. In either case, these services can cost several hundred dollars.
Burial or cremation. Cremation is less costly, but both options are available and burial insurance can cover the cost.
Floral arrangements. Flowers and wreaths can add up quickly. It isn’t uncommon to spend several hundred dollars on flowers and other arrangements. Fortunately, burial insurance can help with the flower bill.
Funeral plot. A burial plot, sometimes called a grave or funeral plot, can be among the costliest of burial expenses. Expect to spend up to $4,000 for a plot.
Grave marker or headstone. A flat grave marker can cost about $1,000 and upright headstones can range up to $5,000.
Casket or urn. You can spend over $10,000 on a casket, but even a less-expensive casket can cost a couple thousand dollars.
Many families aren’t in a financial position to buy the best options for each service, but even mid-range choices can add up quickly when it’s time to lay a loved one to rest. Burial insurance can cover these costs either in full or in part, depending on your coverage amount.
How Much It Costs
All types of life insurance use age and gender as underwriting criteria to determine a premium. In addition to these factors, the amount of coverage you choose also drives the monthly premium. Tobacco use may be considered as well, along with other basic health questions.
One advantage of burial insurance when compared to other types of life insurance is that underwriting is much less intensive than some other types of coverage. It’s unlikely that you’ll have to get a physical or request detailed medical records like you might with a larger life insurance policy.
Expect to pay about $40 per month for $15,000 in coverage if you’re in your early 50s, with premiums for females being slightly less than those for males. Premiums are usually fixed once you’ve purchased a policy. However, if you purchase a policy later in life, premiums are higher. For example, the same $15,000 in coverage for a male at age 75 can cost well over $100 per month.
Is Burial Insurance Worth It?
Deciding if burial insurance is a good value is partly just simple math — but you also have to consider how much you’ve saved and whether that money needs to be used for something else.
Who Should Consider It
If you don’t have permanent life insurance already or if you think your life insurance may be needed for other living expenses for your family, burial insurance is worth considering. A closely-related alternative, called final expense insurance, is also an option. Both types of policies are whole life insurance and designed to pay for burial expenses. However, a final expense policy may have a higher coverage limit that can cover additional expenses such as residual medical bills.
For example, if you purchase a $15,000 policy in your early 50s, you might expect to pay about $40 per month, or $480 per year. Let’s round up to $500. At $500 per year, after 30 years, you’ll be about 80, just short of the average life expectancy, and you’ll have paid about $15,000, which is also the benefit amount for the policy. In this example, it’s much like putting the money aside yourself (assuming no interest). No money was lost or gained.
If you don’t have much in savings or are concerned you may not have much saved later in life, a burial insurance or final expense insurance policy can make a lot of sense. Also, be aware that a term life insurance policy isn’t a good replacement for burial insurance because the coverage term for the policy isn’t likely to last into your golden years.
However, you don’t know when you’re going to die. If it’s next week, a burial insurance policy would be a great value. If it’s later — you’ll just pay more in premiums.
As you examine the value of a policy, consider using the average life expectancy and multiply your annual premium by the number of years you expect to pay into the policy before the policy pays out.
When it May Not Be Worth it
Review your goals for the policy with your agent or financial advisor if you already have a permanent life insurance policy in place. Ideally, your policy will cover both your final expenses and provide funds for your family’s ongoing expenses. If that’s the case, you don’t need burial insurance as well. Your existing policy can pay for funeral expenses.
Also, if you have significant savings or liquid assets, you may not need burial insurance. Think about where your assets are or are likely to be when you pass away. If your money is tied up in illiquid investments or in investments that can trigger tax events if your family has to sell them to cover burial expenses, an insurance policy is probably a sound choice.
The Best Burial Insurance Companies
If you decide that burial insurance is right for you, make sure you pick the best insurance company that suits your needs.
Features of great burial insurance companies
Like most products, burial insurance policies come with different pros and cons. Not all policies are created equal. Consider the following when shopping for coverage.
- Living benefits. Some policies offer the option of living benefits. These benefits may grant access to part of your policy’s funds if you develop a chronic illness, severe cognitive impairment or terminal illness.
- Options for coverage amounts. Look for a policy that offers a range of coverage amounts. Plans that only offer a small death benefit may not provide enough coverage.
- Guaranteed acceptance. As we get older, we tend to develop more medical issues. A guaranteed acceptance policy can help you get coverage but expect to pay a bit more.
- Leveled or capped premiums. Leveled premiums don’t go up and capped premiums are only paid until you’ve paid a certain amount or reach a target age. A third option, stepped premiums, has premiums that adjust each year based on your age and gender. This structure can make premiums unaffordable as you get older when you may be on a fixed income.
- Financial strength. Choose a company that has good financial ratings with Standard & Poor’s or A.M. Best. Financial ratings speak to the company’s expected ability to pay claims and to remain in business when you need your policy, which may be decades away.
Best Burial Insurance
Including both final expense insurance and burial insurance, there are dozens of insurers from which to choose. Here are some of our favorite picks.
Available for people between age 50 and age 85, AIG’s guaranteed issue life insurance ensures you can get coverage even if you have medical conditions. Helping to ease the process of getting coverage, there’s no medical exam for AIG’s guaranteed issue policy.
Coverage options range from $5,000 up to $25,000, which helps you choose a coverage amount to fit your budget and guaranteed level payments guarantee that your premiums won’t go up as you get older. Another unique feature that makes AIG’s policy worth a closer look is living benefits at no extra cost.
Living benefits give you access to all or part of your death benefit if you develop a chronic illness or terminal illness.
2. Mutual of Omaha
Living Promise from Mutual of Omaha offers a level benefit plan for people between the ages of 45 and 85 with coverage amounts ranging from $2,000 up to $40,000. In most states, an accelerated death benefit rider is provided at no extra charge and can give you access to part of your policy coverage if you are confined to a nursing home or suffer a terminal illness.
Mutual of Omaha’s policy isn’t guaranteed issue but the application is hassle-free with no medical exam required and just a short medical questionnaire.
Premiums never increase after your coverage is in place and your benefit amount stays at the same level no matter how long you own your policy.
One of the best known final expense insurance providers, Transamerica offers 3 policies: Immediate Solution, 10-Pay Solution and Easy Solution. Eligibility for each plan can vary based on a health-related questionnaire.
All final expense policies are level premium, which means your costs won’t increase as you get older. Coverage is available for people between ages 45 and 85 and is available with no waiting period. Choose a coverage amount of up to $50,000, which gives your policy the power to cover more than just burial expenses.
4. Gerber Life
You may know Gerber for its baby food or its Grow-Up Plan life insurance for children, but Gerber also offers life insurance for adults.
The Gerber Life Guaranteed Life Insurance Plan is a whole life policy for people between age 50 and 80 that accepts all applicants regardless of medical history.
Applying for coverage is a breeze; no medical exams are required and you can complete the process online in minutes. Coverage amounts are flexible and allow you to choose coverage ranging from $5,000 up to $25,000. Premiums are level to help ensure affordability as you get older.
5. Lincoln Heritage
With coverage options of up to $20,000 and a simple 1-page application, Lincoln Heritage is one of America’s leading final expense insurance providers.
No medical exam is required and most people are accepted. Lincoln Heritage pays claims fas, too. Expect claim payment within 24 hours and Lincoln’s team can even assist with funeral arrangements to help ensure your loved ones don’t overpay for services.
Lincoln Heritage is rated A- with A.M. Best for financial strength and boasts an A+ rating with the BBB.
Choose the Best Burial Insurance
Generally, burial insurance or final expense insurance plans are available beginning at age 45 to 50 and people up to age 80 to 85 are eligible to start coverage. Once in place, coverage usually lasts until age 121. In most cases, the death benefit is equal to the amount of coverage you choose, which may not be enough to cover all final expenses. Choose with care.
Also, be sure to answer all medical questions honestly to help ensure that your coverage remains in force and can protect your family against the rising costs of burial, as intended.
Frequently Asked Questions
Questions & Answers
Burial insurance is a type of small life insurance policy specifically meant to cover the expenses associated with end of life costs like funerals, services, memorials and more. So in essence, burial insurance is a type of life insurance, but not all life insurance is burial insurance.
Burial insurance and funeral insurance are the same thing. This type of coverage may also be referred to as final expenses coverage. All of these policies are a type of life insurance coverage that helps assist with the final expenses that come with the end of one’s life.
Some people may be eligible for government funeral assistance, like those affected by the COVID-19 pandemic. Visit FEMA.gov to learn more.
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