What Is Burial Insurance?

Older couple hugging and smiling while sitting at their kitchen table.

The loss of a loved one is always an emotionally difficult time. For many families, the cost of final arrangements can add a financial strain as well.

By purchasing burial insurance, however, you can trust that those closest to you will receive a cash benefit they can use for the funeral and other related expenses. With those costs taken care of, your loved ones can provide the dignified farewell you deserve and focus on healing.

What Is Burial Insurance Used For?

Burial or final expense insurance is a form of whole life insurance—usually available to adults ages 50 to 85—that gives your beneficiaries a cash payment when you pass away. They can use this death benefit to offset your funeral costs and any other final arrangements they may incur. These policies are permanent, which means your coverage remains for as long as you pay the required premiums.

Because burial insurance provides a more modest payout than a typical life insurance policy, it’s usually more affordable. Your premium is typically based on the death benefit amount you purchase and your life expectancy. In general, the younger you are when you buy the policy, the lower your premiums. While some insurers evaluate your health history to determine your premiums, most don’t require a medical exam for burial insurance.

In addition to the death benefit, some burial policies have a savings component as well. That means the premiums you pay help build cash value you can access during your lifetime—though withdrawals generally reduce the amount your beneficiaries receive. Cash-value products offer greater financial flexibility than standard burial policies, but they also usually cost more than other policies with the same face value.

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How Does Burial Insurance Work?

Depending on your insurer, you may be able to pay your premiums monthly, quarterly, or annually. As long as you keep up with your payments, you keep your whole life policy in force. When you pass away, your beneficiary files a claim to receive the death benefit, which is generally tax-free.

While the cash payout from a burial policy can help pay for the funeral and burial or cremation, your loved ones may use the funds however they see fit. For example, they can use the money to help pay down debts your estate owes, such as:

  • Medical bills
  • Home and car loans
  • Tax liens
  • Credit card balances

When determining the death benefit amount to purchase, consider your family’s ability to pay for any outstanding debts, not just your final expenses.

Does Burial Insurance Require a Medical Exam?

Providers that sell burial insurance typically offer either simplified issue or guaranteed issue policies. Understanding the difference between these products can help ensure you qualify for coverage at the lowest possible cost.

Simplified Issue

After applying for this policy, the insurer evaluates your medical history to determine your eligibility for coverage and rates. They usually ask about your health history but don’t require a medical exam. If you have serious medical issues or engage in risky behaviors such as smoking, you may be denied coverage. Generally, simplified issue policies make the most sense if you’re in relatively good health and trying to receive affordable coverage.

Guaranteed Issue

As the name implies, guaranteed life insurance policies are issued regardless of your health status. Your premium is based on other factors, including your age, sex, and the amount of coverage you purchase. Because these policies are accessible to higher-risk individuals—for example, those with ongoing health issues—they generally cost more than simplified issue products.

Often, guaranteed issue policies pay modified benefits. That means they don’t pay your beneficiaries the full death benefit amount until a certain period has elapsed. That waiting period is typically 12 to 36 months after you take out coverage. If you pass away during the waiting period, they’ll receive a reduced death benefit.

Who Needs Burial Insurance?

Final expenses can vary widely depending on the service and where the ceremony takes place. In the US, the average cost of a funeral with a viewing and burial is $7,848. While cremations cost slightly less—they average $6,971—they, too, represent a significant cost for families.

You may not need burial coverage if your loved ones have immediate access to other sources of cash for your funeral and related costs. For example, you can save money in a joint bank account that a family member can quickly withdraw cash from. Or you may have a separate life insurance policy that can help offset funeral costs. If none of these scenarios apply to you, buying burial insurance can give your family peace of mind by easing their financial obligation.

Unlike term life insurance, burial insurance doesn’t expire after a certain number of years—you know it will be there for your family when they need it.

Keep in mind that it can take several months for your executor to settle your estate, which includes paying off outstanding debts, when you pass on. Consequently, your family may not be able to tap into your assets for a considerable amount of time. The death benefit from a burial policy provides a fast source of funds they can use to pay any remaining bills.

Is Your Family Prepared for Your Final Expenses?

Burial insurance can help safeguard your family’s finances when you pass on, allowing them to focus on healing and celebrating your life.

Curious to learn more about the guaranteed acceptance whole life options available to you? Get started with a free quote today.

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