But purchasing a life insurance policy for someone is a big deal—What is burial insurance? How does it work? How can you be sure that this is their best option?
You’re asking the right questions. Let’s start with this: burial insurance is one of the best types of insurance for older people, can cover many overlooked costs, and is very easy to enroll in.
So don’t worry—you’re on the right track.
What Is Burial Insurance and How Does it Work?
Funerals cost a lot of money—according to the National Funeral Directors Association, the national median cost of a funeral with a viewing and burial cost is $7,640, $6,645 for cremation.
Burial insurance can cover all of these expenses. The policyholder (i.e., your parents, in this case) will choose a beneficiary (more than likely you) to receive the policy’s payout once they pass away.
From that point, you can choose what to do with these funds, including, more often than not, funeral costs. Typically, beneficiaries use the remaining funds to cover other costs such as medical fees, outstanding credit card debt, and other unpaid bills.
However, keep in mind that burial insurance cannot cover bigger expenses such as remaining mortgages or inheritances—we will discuss this more later on.
Are Your Parents Eligible for This Coverage?
One of the greatest benefits of burial insurance is that it is incredibly easy to qualify for and enroll in. No matter your parents’ age, health, and lifestyle habits, they will almost certainly be eligible for a burial insurance plan.
Unlike other types of insurance, your parents will not be required to have a medical exam to qualify for coverage. This does not mean that certain factors (such as age and smoking/drinking habits) won’t raise your costs—all insurance plans (not just burial policies) account for these factors when setting the monthly premium payments.
How Much Does Burial Insurance Cost?
The cost of your parent’s burial insurance will depend on a few factors. Firstly, they get to set their payout. The higher it is, the higher the monthly payments. Policies can range anywhere from $5,000 to $50,000.
The way you pay these premiums can vary depending on the provider you choose and what your parents are eligible for. Stepped and leveled premiums are the most common methods of payment.
Stepped premiums are renewed annually based on your age and the size of your benefit. This means that your parents’ premium will increase over time.
Leveled premiums are the exact opposite. Once they sign onto a plan, the premium is set for the duration of the plan. Rates are locked in as long as payments are consistently made.
Capped and payout guarantee premiums are less common. Once you meet a certain monetary or age limit with a capped premium, your parents can maintain their coverage without having to pay monthly on it.
Payout guarantee premiums arrange the death benefit to where, if the amount of money paid in monthly premiums is higher than the payout, you will receive the amount equivalent to the premium instead. In other words, the beneficiary (you) will receive a payout equal to whichever is more—the amount paid in premiums or the set payout.
How Burial Insurance Stacks Up Against Other Options
For many older individuals, burial insurance is a great option. There are, however, other options out there that you may want to consider for your parents as well.
First of all, you should know that burial plans are fairly small. Compared to other life insurance policies, the payout can reach a maximum of $50,000, while most larger policies can be in the millions of dollars. This, however, isn’t automatically a negative—you don’t, after all, want your parents to pay for coverage they don’t need.
The biggest difference between burial and other policies is eligibility. To enroll in a larger policy (such as term or whole life), you must be fairly young and in good health. Burial plans, however, do not have these requirements, making them more accessible.
Choosing the Right Policy for Your Parents
When making the final call on your parents’ insurance, there are many things to keep in mind. Firstly, you must all consider what final costs you will have to worry about. The more items on this list, the more coverage you will need.
And, before signing up for any policy, review its terms and conditions very carefully. Unfortunately, many carriers will try and take advantage of people—if you’re looking on behalf of your parents, it’s essential to know exactly what they are signing up for.
If you’re purchasing a plan on behalf of your parents, you should get their full consent before doing so. From there, you can decide who will own and pay for the policy. The final step, then, would be to submit the application.
Above all, be sure to consider the insurance company you’re signing up with carefully. This is a life insurance policy, something that will hopefully serve you and your parents well for a long time. If you go with a bad company, you may meet some bumps in the road later on.
You and Your Parents Deserve Great Insurance Coverage. Call Us!
There are few things in life more frustrating and scary than purchasing insurance, especially for your own parents. Companies seem to only be after your wallet, not your best interests or budget.
That’s why Senior Life Services stands out. We’re BBB accredited with an A+ rating, providing our customers with 15+ insurance carriers to choose from. Our goal is to see you and your family safe and secure with an insurance plan you can trust.
For a free quote from one of our licensed agents, give us a call at (800) 548-3249.