Burial insurance is a small life insurance policy that can help cover funeral and burial expenses after a person passes. Specifically, it provides peace of mind and lessens the financial burden on surviving loved ones. Before purchasing burial insurance, you should know exactly what it is, if it can be canceled, the possible implications of doing so, and other options that may be available to rid someone of the policy.
What Is Burial Insurance?
Burial insurance is typically purchased from a life insurance company and considered a whole life policy, offering smaller benefit amounts. This type of insurance requires a basic review process to determine the costs, which can typically be done online or over the phone — without any extensive medical review or information.
Burial insurance can be a suitable option for people that are interested in simply covering costs related to their final arrangements (who may not have adequate savings), although the funds can be used by beneficiaries for whatever needs arise.
The costs for burial insurance, or premiums, can be higher than other options because there aren’t many qualifications, and the average is around $45 a month for a $10,000 policy, which depends primarily on age and gender.
Can Burial Insurance Be Cancelled?
People who buy a burial insurance policy are generally seniors on a tight budget and may not be “healthy.” Let’s say, though, that you purchase a policy and your health improves. You expect to live longer now. In that case, can you cancel your policy because you changed your mind?
While we’d hate to see you do this, you generally have the option to surrender or cancel your policy. Some carriers sell burial policies that include a “surrender period” — allowing you to cancel the policy with minimal impact. Canceling burial insurance could come with financial implications, and there may be other options available. Consider the money you paid in premiums that would basically go to waste…
Implications of Canceling Burial Insurance
Canceling burial insurance can come with some minor consequences that you should be aware of before purchasing a policy. Based on how the insurance works and is funded (i.e. with premiums, investing the premiums, etc.), insurance companies are often not able to return 100% of the funds if the policy is canceled. Besides, companies may charge fees for canceling.
Overall, people could pay a certain amount and then get less back if they cancel. Besides canceling burial insurance, there could be other options available to get out of your policy. Sometimes you see people who are able to sell the insurance and turn it into a life settlement, which could offer more benefits than simply canceling.
Burial insurance is a type of whole life insurance that people cannot outlive — so funds should be available once the policy owner dies. It does not include as detailed of an application process as other options so most should be able to obtain a burial insurance policy, assuming they can pay. With that said, it’s not necessarily the cheapest option available for those trying to ensure their loved ones have less of a financial burden when they pass.