Burial insurance is considered a whole life, permanent policy. This means it will not cover you for only a limited time, but rather until you (the policyholder) pass away.
Whole Life Insurance
Whole life insurance is a permanent plan that also includes a savings component that may earn you more money over time. This savings component is included alongside the death benefit that will be paid out to your beneficiaries. However, this savings component is only available to you, just as the death benefit is only available to your chosen beneficiaries to access.
Do keep in mind that you can borrow against this savings component as it will continue to build cash value. But, withdrawing a portion of the cash as a loan and then not paying it back into the cash value will lower the death benefit.
So, what does this mean when compared to a burial insurance policy? Well, burial insurance is actually a form of whole life insurance. The differences lie in the death benefit amount.
Burial insurance policies have a maximum benefit of around $50,000, while whole life policies can have a benefit of up to $1 million.
Both policies, however, last the remainder of your lifetime from the moment you purchase it. And both provide a set death benefit to your named beneficiaries at the given time.
Term Life
Term life plans are not permanent, like burial and whole life insurance. You set the length of which your plan lasts—if you do not pass away during this term, you must either renew it for another term, let the plan expire, or convert it to a permanent policy.
If you must renew the term, your premium will increase accordingly. This is unlike burial insurance, where the premium will remain the same throughout the duration of the plan.
Because burial insurance is a type of permanent life insurance, how does it compare to term life? Similar to a traditional whole life policy, term plans are harder to qualify for than burial insurance. If you are ineligible for term life, you could qualify for a burial insurance plan.
Why Is Burial Insurance Permanent?
But why is burial insurance a permanent plan? Firstly, like what was said previously, it shares key features with a traditional whole life plan. These include:
- Lasting a lifetime. From the moment you purchase a burial or whole life plan, they will remain in effect (so long as you keep up with your monthly premium payments) until you pass away.
- They both are not term life insurance. This simply means that you purchase them intending to keep them active for the remainder of your life rather than establish a set period of time for reevaluation and potential renewal.
- They both function on the premium-to-benefit model, in which a payout is issued upon your (the policyholder’s) death. Standard whole life policies have the option to build cash value to access over time, but they both serve this essential function.
- Both also allow you to choose your own beneficiary(s) to receive said death benefit.
Other than these important similarities, burial insurance is permanent simply because of the potential uses of the death benefit. Its death benefits are primarily used for funeral planning, which, of course, does not become necessary until the end of one’s life. You may also use it for a variety of other final expenses.
Will the Cost of Burial Insurance Change As You Age?
Because burial policies are permanent, you may be wondering, will my burial insurance premiums increase over time? The answer is no—one of the unique features of a burial insurance policy is that its premiums stay the same from the moment you purchase and enroll in the policy.
The older you are when you enroll, however, the more you will end up paying. Say, for instance, two women, both non-smokers with a fairly sparse medical history, decide to enroll in a $15,000 simplified issue policy. The only notable difference between the two is their age—one is 40 years old while the other is 85 years old.
40 is typically the youngest age individuals choose to enroll in a burial policy. Any younger, and most will opt for a whole or term life policy instead. Most who enroll in a burial policy are between 60 and 90 years old, but for the sake of our comparison, we have chosen the youngest possible candidate. For a 40-year-old with a simplified issue policy, she will pay, on average, $27.77 per month for a $15,000 death benefit.
On the other hand, the 85-year-old woman is a bit more limited in her options. Some insurance companies have a cutoff eligibility age for their policies at age 85. However, there are many guaranteed issue policies that accept older individuals.
Many companies, however, will still allow a healthy 85-year-old to purchase a $15,000 policy. Comparative to the 40-year-old, she will pay roughly $202.25 per month. This, of course, is a substantial difference. However, keep in mind that a younger individual will be paying premiums longer than an 85-year-old. Because these policies are permanent, and because their premiums are permanent as well, no one’s premiums will increase even as they age or decline in health.
When Your Policy Does End…
Although burial insurance policies are permanent, we are not. Eventually, you as the policyholder will pass away, and the set death benefit will be issued to your beneficiaries. Not all things last forever, but you can rest assured that when things do end, those around you are taken care of.
Take Control of Your Life—Call Us!
Deciding on the right policy for your needs and budget requires careful planning and expert insight. If you want to see what Senior Life Services can do for you, give us a call today at 800-548-3249.
