underwriting is a process used to determine a policyholder's level of risk

Do Burial Insurance Policies Have Underwriting?

Burial insurance policies offer a way for participants to gain peace of mind that their loved ones will receive a benefit to assist in paying for their final expenses after they die. Participants are required to pay predetermined premiums for the remaining years of their life in order for the benefit to be available after they pass.  

It’s one of the simplest options to qualify for because it doesn’t have an extensive review and application process like other options may have — which can ultimately make it a more expensive choice depending on a person’s circumstances. Before considering if this review and application process used in burial insurance is considered underwriting, it’s important to understand what underwriting is.

What Is Underwriting?

Underwriting is a process that financial institutions or individuals use to assess the financial risk of a monetary product (e.g. for loans, insurance plans, or investments), but usually is done so at a fee. Through the process of underwriting, an underwriter is responsible for assessing and researching various factors relating to the applicant to determine the following:

  • Their level of risk
  • How likely they’ll make their payments, and
  • Live up to their end of the bargain

For these individuals and institutions, it’s also used to determine what options may be available to recoup money if it isn’t paid and establish fair-priced premiums (in the case of insurance). There are various types of underwriting, including loan, security, and life insurance underwriting.  Through the process of life insurance underwriting, different factors are used to assess a policyholder’s risk, but does this take place with burial insurance?  

Is There Underwriting Involved in Burial Insurance?

Burial insurance, as with most financial products, includes an application process and some level of review, but is underwriting involved? Generally, underwriting could dictate the price of the premiums and offer lower prices for lower-risk people. Common factors used in life insurance underwriting include age, gender, health, lifestyle, medical history, and driving record.  Considering that the burial application process includes a review of some of these factors, it could be considered as having a low-level underwriting process.  

As a result of this low-level review process, burial insurance may not have a premium price that most accurately reflects the person’s risk, and a person that may have otherwise been considered lower risk may be billed a similar premium to those that are higher risk, and vice versa.

Key Takeaways

  • Burial insurance involves an application and review process that accesses minimal factors as compared to other life insurance options, which could be considered low-level underwriting.  
  • Depending on your circumstances, you may end up paying more or less than you otherwise would with other options that may involve a more extensive review and underwriting process. 
  • These factors should be considered when reviewing and determining what option might be best. 

If you have any questions or need guidance with your burial insurance options, give us a call at 800-548-3249.