Burial insurance is a more affordable option compared to whole life insurance. However, there are still ways you can save money on your monthly premium. If you understand the basics of burial insurance, anticipate your costs based on your demographics, and use agents and internet resources to compare companies and plans, you will find the best plan for you and your budget. Read our five tips on how to save money on your burial insurance policy below.
Understand the Basics of Burial Insurance
To understand how to save money on your monthly premium, you first need to know the basics of burial insurance. Burial insurance, also called final expense insurance, is sold by private insurance companies, much like other insurance policies. It’s a type of life insurance policy that is meant to cover costs the family incurs at the end of the policyholder’s life. Unlike other life insurance policies, burial insurance policies have lower death benefits, the amount that your policy is worth.
For example, burial insurance policies have a death benefit ranging from $2,000 to $50,000. Life insurance policies have a minimum death benefit of $50,000 and range upwards of $1,000,000. Because burial policies have much lower death benefits, they are more affordable.
Anticipate the Cost of Burial Insurance
The bottom line of burial insurance pricing is this: the more months the insurance companies anticipate you will be paying for insurance, the cheaper your monthly premium is. These policies are priced using multiple factors that assess risk. These factors include your age at the time of purchase, your gender, health, and what type of plan you want. For example, men pay a higher monthly premium than women.
This is because, on average, men are likely to pass away sooner than women, meaning they pay for fewer months. Insurance companies offset this by having men pay more every month. Likewise, smokers pay a much higher premium per month because smoking significantly decreases your life expectancy, therefore reducing the number of months you can expect to pay for burial insurance.
Additionally, if you have such severe health conditions that you may be rejected from standard plans, you will have to apply for a guaranteed issue plan. Because these plans are guaranteed even for people with serious conditions, these premiums are higher than standard payments.
Types of Burial Insurance Policies
Another way you can better anticipate your costs is to understand the different types of policies. There are five types: level, graded, modified, and guaranteed acceptance. Each type of plan is based on the health of the applicant. Burial insurance plans are generally more lenient than whole life insurance plans, but they still consider health when determining what type of plan you are eligible for. Level, graded, and modified refers to how your death benefit will be paid to your loved ones. Take a low below to understand which plan type you will most likely qualify for.
- Level
- Applicant Health: Excellent
- When You Are Eligible for Benefits: Immediately after the death
- Cost of Plan: Low
- Death Benefit Payout: Full death benefit payment from issue date
- Graded
- Applicant Health: Minor Health Problems
- When You Are Eligible for Benefits: 2-year waiting period
- Cost of Plan: Medium
Death Benefit Payout: A certain percentage of the face amount within the first year of purchase, more in the second year, and 100% after
- Modified
- Applicant Health: Serious Health Problems
- When You Are Eligible for Benefits: 2-year waiting period
- Cost of Plan: High
Death Benefit Payout: Return of premiums plus interest within the first two years, full death benefit after two years of purchase
- Guaranteed Issue
- Applicant Health: Non-specific, but generally the most severe problems
- When You Are Eligible for Benefits: 2-year waiting period
- Cost of Plan: Very High
Death Benefit Payout: Return of premiums plus interest within the first two years, full death benefit after two years of purchase
Essentially, the level plan is the cheapest option and only accepts the healthiest people. It’s also the only one in which your death benefit is paid even if you pass away during the first two years after purchasing the plan. The graded, modified, and guaranteed issue plans will not pay your family members the full death benefit if you die within the first two years following your purchase.
Use a Price Quote Comparison Tool
If you’d prefer a more individualized quote instead of one based on demographics and plan types, you can use an online price quote tool. You can find a third party website that compares multiple plans and companies against each other. However, the validity of these websites is more difficult to verify. You may get more reliable results if you use quotes directly from companies’ websites. This requires more on your part but guarantees more reliable results. However, this also requires you to know which companies are most reputable.
You can contact an agent for fast, FREE burial insurance quotes.
Use Reputable Companies
Thankfully, there are a number of ways to know which companies are the most reputable. One way is to use ratings of independent agencies. The A.M. Best Rating designates the following companies as among the top companies for burial insurance, accompanied by their rating:
- Mutual of Omaha: A+
- Foresters Financial: A
- Transamerica: A+
- Royal Neighbors of America: A-
- Prosperity Life Insurance Group: A
- American Amicable: A
- AIG: A+
- Americo: A
- Gerber Life: A
Find an Agent
It can still be difficult to wade through the sheer amount of information when trying to find the best plan for the best price. This is where an agent can come in. Agents know the industry and competitive rates in your area. Their only job is to help you get the plan you need according to your individual goals. To get started, call us at Senior Life Services today.
