Burial insurance is a sort of life insurance that is expressly designed to cover funeral expenditures. It’s also known as funeral insurance or final cost insurance.
Many elderly consumers may get a life insurance policy just to cover funeral expenses. However, burial insurance may be costly, and you may have other choices.
What Exactly Is Burial Insurance?
Robert Schmidt with Burial Insurance Pro notes “Burial insurance is a type of whole life insurance coverage that is sold in tiny increments ranging from $5,000 to $25,000. These plans are designed to cover last expenses including funeral expenses.
Burial insurance policies are not intended for those who are growing families and require life insurance to cover larger responsibilities, such as a mortgage, college tuition for their children, and income replacement during their prime working years.
Burial insurance for the elderly is frequently promoted to persons on fixed incomes and in bad health. They may not have any funds or life insurance that a family may utilize to cover funeral expenses.
What Is The Process Of Burial Insurance?
When you apply for burial insurance, you specify the amount of coverage you require and designate a beneficiary (or beneficiaries). Burial and burial insurance plans do not often need a medical exam, and the application may just include a few health questions—or none at all. Rates are mostly determined by age and gender.
When you die, your beneficiary submits a claim to the life insurance company and is normally required to furnish a certified copy of the death certificate.
Burial insurance is usually one of the following types of whole life insurance:
- Simplified Issue Life Insurance: There will be no medical exam and simply a few health questions, but answering “yes” to any of them may disqualify you. For example, simplified issue applications frequently inquire if you live in a nursing home or if you have HIV.
- Guaranteed Issue Life Insurance: No health inquiries or medical examinations are required to apply. You cannot be refused.
The disadvantage of these simple applications is that the policy generally has a tiered death benefit. If you pass away within the first two or three years after acquiring the policy, your beneficiaries will only receive a refund of the premiums you paid, plus interest, or a small portion of the coverage amount. Accidental fatalities, such as those in an aircraft crash, are normally fully covered from the commencement of the policy.
Most consumers will have several insurance providers to choose from. Depending on your age, health, and amount of insurance seeking, you’d have 50 or more choices to make. To find the best burial insurance policy, you’ll wish to speak with a qualified agent.
What Does Burial Insurance Cover?
Burial insurance can assist your beneficiaries in paying for your funeral, burial, or cremation expenses. The following are some of the expenditures that beneficiaries can pay for with a life insurance payout:
- Burial site
- Burial vault
- Funeral home services
- Opening and closure of graves
- Obituary notices
Burial insurance can also be used to pay off existing obligations such as:
- Credit card debt
- Legal services
- Medical costs
- Mortgage, vehicle loan, or other outstanding debt
Burial Insurance Types
Life Insurance With A Simplified Issue
When you apply for simplified issue life insurance, you will be asked certain health-related questions, but you will not be required to complete a medical exam. The insurance provider frequently obtains additional information about you from third-party sources. This might include information on your driving history and prescription drug usage.
One benefit of using a simplified issue life insurance policy to pay for your funeral is that it is typically less expensive than guaranteed issue life insurance. In addition, simplified issue plans often provide larger death payouts than assured issue policies. These plans often include a graduated death benefit, which means your beneficiaries will not receive the whole payout if you die within the first few years after purchasing the policy.
While purchasing burial life insurance is an extremely simple option to obtain burial insurance, there are several important drawbacks:
- It is an extremely costly way to get life insurance, with typical maximum coverage limits of $25,000 or less.
- You must be at least 50 years old to get guaranteed issue life insurance, which normally includes a graded death benefit.
Insurance For The Unborn
Pre-need insurance is occasionally offered by the funeral home where you want to have your services performed. You enter into a contract with the funeral home for the services you require. When the funeral director is also a qualified life insurance agent, they can sell you pre-need insurance. When you die, the policy proceeds are sent straight to the funeral home to cover the arrangements you’ve chosen.