Burial Insurance Policies

How Do Burial Insurance Policies Work?

Most people have heard of life insurance, but not as many people have heard of burial insurance. Burial insurance, also called final expense insurance, is kind of like a more affordable life insurance policy. It’s meant to cover end-of-life expenses. Burial insurance is typically easier to qualify and easier to afford than a full life insurance policy. Read more below to understand how burial policies work.  

General Information About Burial Policies

As stated above, burial insurance is a smaller type of life insurance policy. The consumer chooses a plan, pays a monthly premium based on their age, sex, health, and policy amount. They pay this monthly premium for the rest of their life. After the policyholder passes away, their beneficiaries receive the death benefit. The death benefit is the amount of money that the policy was worth. Burial insurance policies have smaller death benefits than regular life insurance. 

Burial insurance policies range from $2,000 to $50,000 at the maximum. This means that after the policyholder passes away, their beneficiaries will receive between $2,000 and $50,000 depending on their policy amount. The more modest death benefit means that the monthly premiums are more affordable for the average person.  

What Burial Insurance Covers

While it was meant to cover costs associated with end-of-life, burial insurance is highly flexible. The policy can cover whatever cost the beneficiaries feel is necessary. These can include the policyholder’s health expenses, funeral costs, outstanding bills like mortgages or credit card debt, etc. The beneficiaries can also choose to spend the money on more exciting options, like vacations or shopping. People normally purchase a burial policy to take care of their loved ones after their death. Therefore, burial insurance policies rarely have restrictions.

Cost of Burial Insurance

The cost of burial insurance varies significantly depending on a few factors. Typically, anyone who is expected to live longer will pay less per month because they are predicted to pay for more months. For example, younger people, women, and nonsmokers will pay less per month than men, older people, and smokers. Of course, the policy amount also changes how much people are expected to pay. The average cost of burial insurance can vary between $50-$400 per month. 

We can break it down by policy amount, gender, and age to make it a little clearer. For example, a 55-year-old nonsmoker woman who wants a $5,000 policy can pay about $16 per month. If she wanted a $20,000 policy, she would pay $53 per month. If she were a smoker, she would pay about $75 for this policy. This is in contrast to the 85-year-old nonsmoker woman who wants a $20,000 policy. She would have to pay about $270 per month. If she smoked, she would pay about $375 per month. Men overall pay more per month. For example, a 55-year-old nonsmoking man who wanted a $20,000 policy would pay $66 a month, a $10 monthly increase compared to his female counterpart. 

Burial Insurance vs. Life Insurance

Burial insurance is less well-known than life insurance. Since it is similar in many ways, it can be confusing to tell the two types of insurances apart. The purpose of burial insurance is to cover the policyholder’s end of life expenses, like a funeral or outstanding bills. As stated above, its death benefit is generally modest, in the $2,000 to $50,000 range. A life insurance policy, in contrast, typically has a much more robust death benefit. A life insurance policy’s death benefit is typically $50,000 to $1 million or more. This means that people who purchase a life insurance policy will pay much more per month than people who purchase a burial insurance policy.  

Do I Need Burial Insurance If I Already Have Life Insurance?

If you already have life insurance, the short answer is that you don’t need burial insurance. Burial insurance is like life insurance, but with a smaller death benefit. Therefore, you don’t need both a life insurance policy and a burial insurance policy.

However, there are a few situations in which you might benefit from burial insurance rather than a life insurance policy. First, some life insurance policies have a term limit. For example, the life insurance policy may only last for a certain time period, like for 25 years. If you pass away after that 25 year term, your beneficiaries will not receive the life insurance policy. Burial insurance policies do not have term limits. 

Another reason that people may prefer burial insurance over life insurance is the ease of securing a policy. Many life insurance policies have stringent health requirements. Some people with worse health are excluded from those policies. A burial insurance policy is typically easier to qualify for. It’s also often easier to pay for since the death benefit is lower, making the monthly payments cheaper.  

What to Know Before Purchasing

There are special considerations you should take into account before purchasing a policy. Typically, burial insurance policies are more lenient than life insurance policies. Even people with serious medical conditions like heart attacks, strokes, or diabetes are accepted by most final expense insurance policies. However, some people have health issues that are so serious that they are considered very high risk. Some insurance companies will not offer them policies because of their high-risk status. 

Guaranteed acceptance policies are certain types of burial insurance policies that do exactly what they sound like — they guarantee that your family member will be accepted into that burial insurance policy. It’s important to note that guaranteed acceptance options are more expensive per month. However, some people find this added expense to be worth the peace of mind knowing that their loved ones will be taken care of after their death. 

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Talk to Senior Life Services to learn more about burial insurance and how we can help protect you and your loved ones.