Orlando Harmon
The death of a loved one is a traumatic event, and the high costs of funerals can add significant financial stress. Burial insurance, also known as funeral or final expense insurance, is a type of life insurance policy that can help cover these costs. It is designed to pay for funeral, burial, and other end-of-life expenses, including medical bills, probate costs, and legal fees. This type of insurance ensures that the financial burden is not left to family members or beneficiaries, and can provide peace of mind during difficult times.
| Characteristics | Values |
|---|---|
| Average funeral cost | $7,000 to $10,000 |
| Average funeral and burial cost | $7,848 |
| Average funeral and cremation cost | $6,971 |
| Average cost with a vault | $9,420 |
| Type of insurance | Burial insurance, funeral insurance, final expense insurance, pre-need insurance, whole life insurance |
| Who can be the beneficiary | Family member, funeral director |
| Requirements | Basic health questions, no medical exam, blood or urine samples, or medical history |
| Coverage | Memorial service, casket, urn, burial, cremation, headstone, outstanding loans, medical bills, legal bills |
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What You'll Learn
Burial insurance
There are generally three types of burial insurance: simplified issue, guaranteed issue, and pre-need insurance. Simplified issue policies involve an evaluation of the applicant's health based on a series of medical history questions, but a medical exam is not required. Certain factors may result in being denied a policy, such as pre-existing conditions, smoking, or risky activities. Guaranteed issue policies do not require a health evaluation, while pre-need insurance involves a contract with a funeral service provider, with the policy's payout going directly to them.
The beneficiary of a burial insurance policy should contact the insurance company as soon as possible following the death of the insured to begin the claims process. They may be required to provide identification, a claims form, and a certified copy of the death certificate. While burial insurance is designed to cover funeral and burial costs, there are no restrictions on how the payout is used, and beneficiaries may choose to use it for other expenses. If you wish to leave behind a more substantial sum, a traditional whole life insurance policy may be more suitable.
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Funeral insurance
The average funeral cost is more than $9,420 (including a vault), according to the National Funeral Directors Association 2021 data. However, this does not include the cost of a cemetery plot, vault (if required by the cemetery), headstone, flowers, or obituaries, which can push the total cost over $10,000. Given the high cost of funerals, having a burial insurance policy can help relieve any financial strain your loved ones may face due to your passing.
There is no standard type of funeral insurance. The term "funeral insurance" describes any insurance policy or other legal contract purchased with the intent of providing for final expenses. The amount of funeral insurance coverage depends on how much you want your final expenses to cost. In most states, the only people licensed to write a burial policy are life insurance agents and funeral directors.
There are several types of burial insurance policies to consider:
- Simplified issue: The insurer will evaluate your health based on a series of questions.
- Guaranteed issue: This type of policy does not require a medical exam or health questionnaire.
- Pre-need insurance: This type of policy is usually paid directly to a funeral home rather than any family members. A pre-need contract often covers the burial plot, grave marker, casket or urn, embalming or cremation, flowers, and funeral cars.
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Final expense insurance
There are several types of burial insurance policies to consider, including simplified issue, guaranteed issue, and pre-need insurance. Simplified issue policies involve an evaluation of the applicant's health, while guaranteed issue policies do not have health requirements. Pre-need insurance, also known as pre-need contracts, often covers specific burial-related expenses such as the burial plot, casket or urn, embalming or cremation, and funeral cars.
When considering final expense insurance, it is important to review existing coverage, discuss options with family and legal professionals, and research different companies and policies. Factors such as monthly expenses, immediate needs, and potential funeral expenses should be taken into account to determine the appropriate amount of coverage. Additionally, it is worth noting that final expense insurance policies can build cash value over time, which can be used to borrow against or as a non-forfeiture benefit.
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Pre-need insurance
However, pre-need insurance policies are often impossible to alter, and other types of life insurance may provide more flexibility for beneficiaries. Additionally, the cost of funerals may increase over time, and depending on the policy, the policyholder's family may have to pay the difference. Therefore, it is important to carefully consider the options and compare the General Price List (GPL) of several funeral homes before purchasing a pre-need insurance policy.
While pre-need insurance covers only funeral and burial expenses, final expense insurance is another option that allows the beneficiary to use the death benefit for anything, including funeral costs, transportation of family members, unpaid medical expenses, or any other debts. Final expense insurance offers competitive, fixed premiums that do not change over time, and it does not require a medical exam to qualify, making it accessible to older individuals and those with pre-existing conditions.
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Life insurance
The average cost of a funeral is around $8,000, with the median cost of a funeral with viewing and burial in 2021 being $7,848. Burial insurance can be an affordable option for those who want coverage for end-of-life expenses, including their funeral. It is a whole life policy that lasts until the policyholder passes away. The payout from burial insurance is usually lower than that of traditional life insurance policies, and there may not be much left after paying funeral and burial expenses.
Final expense insurance, also known as funeral insurance, is another type of life insurance policy that can be used to cover funeral costs. The main benefit of this type of policy is that the payout time for the death benefit is much faster than other life insurance policies, which can take 30 to 60 days to pay out. With final expense insurance, the insurance company will pay the claim as soon as it's approved.
Some funeral homes accept life insurance, but only if the policy is assignable. The funeral director can determine whether the policy is assignable and, if so, work with the insurance company to have a portion of the death benefit assigned to cover the funeral and burial costs.
It's important to consider both final expense insurance and a more comprehensive life insurance policy to ensure that your loved ones are financially protected after your death. A more robust whole or term life insurance policy can provide financial support to aging parents or siblings and help maintain their lifestyle. Additionally, life insurance can replace income, pay off debts, and help with college tuition.
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Frequently asked questions
No, medical insurance does not cover funeral expenses. However, you can purchase final expense insurance or burial insurance to cover funeral costs.
Final expense insurance covers funeral and burial costs, medical needs, and any other expenses that will help loved ones. It can also be used to pay off the deceased's debts, including medical bills, credit card bills, mortgage loans, and personal loans.
Burial insurance, also known as funeral expense insurance, is a type of life insurance policy that covers funeral, burial, and other end-of-life expenses. It is designed to help loved ones pay for funeral costs, which can be significant, and relieve them of financial stress during an already difficult time.
