Burial insurance can help individuals ensure that the financial burden of their death is minimized and final expenses are covered. Usually, these policies are smaller and less extensive than typical life insurance policies. However, like other life insurance policies, participants are required to pay premiums to maintain the policy. Before determining what life insurance policy is best for you, including burial insurance, we’ll explain what a premium is, and how it might be determined for each policy.
What Are Premiums?
Premiums are payments that policyholders are required to make to pay for their portion and costs related to the insurance policy. Such payments can usually be made monthly, quarterly, semi-annually, or annually. As long as the participant pays the required premiums and the insurance company has the funds to issue a death benefit, designated beneficiaries would receive this death benefit — assuming the policy is still active at the time of the policyholder’s death.
How Are Burial Insurance Premiums Determined?
Burial insurance premiums are determined using a much simpler process than most other types of life insurance. Other types of life insurance use a variety of factors to determine what the premium is, which allows the amount to accurately reflect a person’s circumstances.
Burial insurance, however, uses a fraction of these factors, which can affect what the premiums are compared to what they would be under a different option. Every company that offers a burial insurance policy may have a slightly different process for determining what the premium and costs would be. Most commonly, companies will use factors like your:
- Age
- Gender
- Health status
- State where you live
- The size of the policy/coverage
Obviously, if the policy is larger then the premium will correlate, but each of these factors will have a slight impact on how the premium is determined. By taking fewer factors into consideration, the premiums can be higher than they typically would be for a healthy person under a different type of life insurance.
In Summary
Burial insurance is a type of life insurance that offers smaller benefit amounts. With life insurance, there’s generally an application and review process to determine a person’s eligibility for the policy, and what the estimated costs of the plan would be. These costs are in the form of premiums, which are payments that are usually paid by policyholders monthly, quarterly, semi-annually, or annually.
Premiums can be determined using a variety of factors, but burial insurance generally includes less factors than other insurance policies. In other words, your health conditions may require you to pay more because of your risk, but you’re almost guaranteed to be accepted. Other life insurance policies are harder to qualify for. Again, the factors that usually determine what you’ll pay are your age, sex, health, and the size of the policy you buy.
Reach Out to an Agent
When determining which life insurance policy — including burial insurance — is best for you, the premiums should be taken into account because each company may vary in how their cost process works. If you need help navigating your options, give us a call at 800-548-3249.
