Funeral insurance, also called burial insurance or final expense insurance, can be a valuable tool that allows family members to prepare in advance for their own funerals. These insurance policies require no exam, and they typically provide a death benefit that offers enough income to pay for memorial services, headstones, urns, cremations, and other common final expenses.
Although funeral insurance plans do offer similar benefits to life insurance policies, the plans are not entirely the same. The maximum death benefit for life insurance plans is typically far greater than that of funeral insurance plans, and life insurance policies require a full medical exam during the application process.
Funeral insurance plans are positioned as an easily accessible option designed for people who may not be able to qualify for traditional life insurance plans due to their current health status. Therefore, if you think you can benefit from a final expense insurance policy, you should learn more about your options. Choosing coverage now can help you prepare for the worst-case scenario, providing you and your family with peace of mind at the end of your life.
What Is Funeral Insurance
Life insurance is the most commonly used means of covering funeral expenses, but sometimes you just aren’t able to qualify for traditional forms of life coverage. Don’t worry, though. Funeral insurance options can allow you to get the coverage you need.
Funeral insurance is a type of life insurance that is specifically designed to take care of final expenses. They function much like whole life insurance policies, except they are only sold in small amounts. A typical funeral insurance policy will offer death benefits ranging between $5,000 and $25,000.
In order to maintain your benefit, you must pay monthly premiums to the insurer. As long as you keep your policy intact, your beneficiaries will receive the death benefit when you pass. It can be used however they like, but most people use funeral insurance to pay for final expenses, like cremations, burials, and memorial services.
Who Needs Funeral Insurance
You need funeral insurance if you expect you may pass away soon and you don’t have the assets available to pay for your own burial or cremation. Funeral insurance death benefits can also be used to pay for other final expenses, such as medical bills. Depending on your exact circumstances, there are many reasons to buy funeral insurance.
Keep in mind that funeral insurance death benefits are not that large. This means they aren’t the best option for covering bigger financial obligations, like housing, college tuition, or income replacement.
How Does Funeral Insurance Work?
Funeral insurance works much like any whole life insurance policy. Though, funeral insurance policies do not require a medical exam like traditional life insurance policies do. Funeral insurance rates are primarily based on your age and gender, though you will be asked some medical questions in most cases.
It’s also good to know that once you’ve locked in your rates for a funeral insurance policy, they won’t change. Your coverage is also guaranteed, so you can trust that your death benefit will never decrease. Final expense policies don’t expire either, so this coverage lasts for life.
Types Of Funeral Insurance
Just like traditional life insurance plans, there are several different types of funeral insurance plans currently available to Americans. The rates you will be offered often depend on the type of plan you apply for.
These are the different types of funeral insurance.
Level/Preferred
When you qualify for the lowest prices offered by your preferred insurer, you have been accepted to their level/preferred plan. If you are in this category of coverage, there is no waiting period before your coverage kicks in. That means you get the lowest rates they offer and your benefits are available immediately.
In most cases, you can only qualify for the level/preferred plan if you answer no to all of the health questions that are included in the application process. This doesn’t typically include the tobacco question, but some insurers may require you to answer no on that one too. The level plan is best for people who want to save as much as possible on their policy and get coverage immediately.
Standard
The standard funeral insurance plan is a type of coverage that has no waiting period but has a higher price than the level/preferred plans. Standard plans are suited for people who have some health issues that require them to answer yes on some of the health questions featured in the application.
Whether you can qualify for standard funeral insurance plans will depend on the severity of your health conditions. While some health issues are accepted, if you are in very poor health, you may be unable to access this level of coverage. Even if you can, you may be subject to lower death benefits than other, healthier applicants.
Partial
Partial coverage, which is also known as graded coverage, will pay out a portion of your listed death benefit if you die within the first two years of being covered by the plan. The payout is normally between 30 percent and 40 percent for the first year and 50 percent to 70 percent during the second year.
Once the two-year waiting period passes, the entire death benefit will become activated. This makes partial funeral insurance plans best for people who are confident that they will be living for at least a few more years. Though, if you have poor health, partial coverage may be one of your only options.
These plans are generally less expensive than standard plans, but they don’t beat the extremely low rates available through preferred plans.
Modified
If you have been diagnosed with a severe recent health condition, modified coverage may be the best option for you. These plans are the most expensive plan possible, and they also have a 2 to 3 year waiting period in most cases. The waiting period varies across insurers, so shop around to find a company that requires a waiting period that you find reasonable.
These plans are best for people who currently face severe medical issues. When you have such a condition, standard, level, and partial plans are unlikely to accept you. Therefore, this may be one of your last options for life insurance.
Guaranteed Issue
Guaranteed issue funeral insurance is just as the name implies; these are funeral insurance plans that you are guaranteed to get, regardless of your health condition. These plans don’t require you to answer any health questions or lifestyle questions, so you are certain to be approved.
The only downside to guaranteed issue funeral insurance is that these plans normally have higher rates than other life insurance plans. They also have a two to three-year waiting period which can lead to issues if you have an immediate need for final expense coverage.
The reason these plans cost more is clear. It costs more to provide coverage to everyone that applies. The insurers know nothing about your health, therefore they have no idea whether you will collect your death benefit or not. This gamble demands that plan participants pay much more for their funeral insurance coverage.
Find The Best Funeral Insurance
Comparing multiple plans is the best way to get the best end-of-life coverage. If you compare quotes or offers from a variety of funeral insurance carriers, you will have the chance to see exactly which one is best. You can also do online research to find out if the plans you’ve been offered are suitable for your specific needs.
Though, only a licensed insurance agent can help you find out exactly what level of funeral insurance coverage you are qualified for. They can also tell you what exact price you can expect to pay every month. With their help, you’ll be able to compare policies from dozens of different companies all at once.
You can also engage with them with certainty that their goal is to help you find the best coverage possible. Most insurance agents’ services are free too, so you can trust them to put their best foot forward every time. At Senior Life Services, we do just this! We are dedicated to helping you get the coverage you need and deserve, so give us a call today to learn more about your burial insurance options.
How Is Final Expense Insurance Sold
Final expense insurance is not a product that is easy to find on your own. More than 90% of all final expense insurance companies do not sell their products directly through their own channels. Instead, they rely on insurance agencies to broker deals with consumers. The insurer provides top-notch service, while the agent does all of the marketing. With this arrangement in place, insurance customers can access quality coverage at affordable prices. The savings that insurance companies get on marketing can be passed right on to the consumers.
This may seem confusing, but it makes sense when you think about how many life insurance companies there are in the U.S. According to a 2018 report, there were 773 life insurance companies in the country at the time. Less than 1% of these companies advertise on mass media, so it is unlikely that you’ve heard of many.
With that in mind, you can assume that there is a chance the best coverage will be found through a company you have never heard of. You may not believe us, but just because a company hasn’t been advertised a lot, that doesn’t mean it isn’t a good company. They can be equally reputable and financially stable without doing these forms of marketing. This is because independent insurance agents do all of their marketing for them, making it easy for people like you to find their products.
Finding A Good Insurer
You don’t want to depend on a bad insurance company for coverage. If you don’t work with a financially stable company, there is a chance they could go out of business, voiding your policy. When working with an unreputable company, you also risk running into a situation where the insurer is unable to pay your claim. We suggest you only work with insurance companies that have a strong rating, such as a B or higher.
Also, consider the waiting period required for your plan of choice. It is always best to get a plan with no waiting period because this allows your beneficiaries to access your full death benefit in the case of your untimely death. Though, sometimes you have no choice in this decision. If you have health issues that require you to answer yes to some of the health questions in the application, you may only be able to access partial coverage. These plans have long waiting periods, meaning you won’t be able to activate your benefits for up to 3 years.
Get Funeral Insurance
Senior Life Services is here to help you find funeral insurance that fits your needs. We’ll help you find out what level of coverage you qualify for, then guide you through the process of comparing quotes and selecting the best plan.
To get in touch with a licensed insurance agent, give us a call at (800) 548-3249.
