What Is Burial Insurance?

Burial insurance -- also known as funeral insurance, funeral expense insurance, or final expense insurance -- can help cover end-of-life expenses after you pass away. It can provide peace of mind to family members, as this type of insurance is designed to cover all final expenses. Burial insurance is a popular type of life insurance that many people purchase for the benefit of their loved ones and dependents.

What Is Burial Insurance?

Burial or funeral insurance is a specific type of life insurance policy. After a death, the policy will pay out funds known as a death benefit, which is usually between $5,000 and $25,000, depending on the policy selected. The purpose of these funds is for your loved ones or family, who are named as the insurance beneficiaries, to be able to use them to pay for your final expenses.

To obtain burial insurance, you'll first need to apply for a policy, which usually doesn’t require a medical exam. After that, you’ll begin paying premiums to keep the policy current. Setting up your burial insurance is a straightforward process, and acceptance is usually guaranteed.

What Are the Benefits of Burial Insurance?

By having burial insurance, you ensure that your final expenses are taken care of in advance. This relieves your loved one of the huge burden of having to pay for unexpected funeral costs.

For many families, burial insurance is important because it provides peace of mind that their loved ones don't need to take funds out of pocket for a funeral. Instead, they can focus on love, remembrance, and coming together as a family to grieve.

What Does Burial Insurance Cover?

Burial insurance provides a cash payout to the policy beneficiaries that may be put toward any expenses associated with end-of-life arrangements. This may include anything related to a funeral, memorial, or celebration of life, as well as burial or cremation services. These expenses may include:

• Funeral home services
• Burial plot or vault
• Cremation
• Flowers
• Casket, headstone, urn
• Grave opening and closing fees
• Venue
• Catering
• Printed materials
• Music
• Obituary

In some cases, it may also be possible to put some of the payout toward other expenses that remain after the person has passed, such as medical bills or debt.

Are There Different Types of Burial Insurance?

There are several types of burial insurance, depending on your needs.

1. Simplified issue life insurance

Simplified issue life insurance is a streamlined type of funeral insurance that may be obtained easily and quickly. As the name implies, the application process is simplified, in comparison to the process of applying for traditional life insurance.

No medical exam is required, and applicants only need to answer a few questions related to their health. However, the insurer is likely to use additional channels to find data on applicants that may impact their health, such as checking whether they have a clean driving record. After the application is submitted, a decision is often made within minutes, allowing policyholders to start their funeral insurance policy right away.

Simplified issue life insurance offers the applicant convenience, as they can apply and be approved very quickly. However, it’s important to note that this type of burial insurance often has a graded death benefit. This means the beneficiaries of the policy will only receive a partial payout if the policyholder passes away within the first few years.

In contrast, other types of policies include a no-waiting period, meaning your policy will be paid out in full at any point after the first payment has been made. It's always important to read the terms and conditions carefully when signing up for a new insurance policy.

2. Guaranteed issue life insurance

Another common type of burial insurance is guaranteed issue. A guaranteed issue life insurance policy is one that you can’t be rejected for, meaning everyone who applies for a policy is accepted.

This means there are no medical questions or lengthy application forms, making it convenient and simple to access. However, as you may expect, this policy type also comes with higher premiums, as the insurer is taking on a greater risk. It tends to have lower payouts, and it also often has a graded death benefit attached.

However, guaranteed issue policies may be appealing to those who have serious health conditions that could prevent them from being approved for a simplified issue policy.

3. Pre-need insurance

Unlike guaranteed and simplified issue policies, which are purchased from an insurance company, pre-need insurance is a type of funeral insurance purchased from a specific funeral home. You may also hear this referred to as a prepaid funeral plan.

After death, instead of paying out to chosen beneficiaries, the policy pays out directly to the funeral home to cover your final expenses. This option essentially allows you to prepay your final expenses over time to your preferred funeral home.

With pre-need insurance, you'll lock in a rate for guaranteed final expenses and pay it off over time in monthly installments. However, some services may be considered non-guaranteed, which means family members may still need to pay the difference if these expenses go up in cost over time. Types of Burial Insurance Premiums

Before signing up for a funeral insurance policy, be sure you understand how the premiums are calculated. This can be done in several different ways.

1. Leveled: The premium rate is locked in for life and won't increase. It's calculated by certain factors, including age, gender, and policy value.

2. Stepped: Each year, the premium is recalculated based on age, sex, and policy value. This type of premium is likely to increase each year.

3. Capped: A capped premium has a set limit, either based on a monetary value or on age. Once you’ve reached the cap, your policy is effectively paid in full, meaning you won’t need to continue making monthly payments.

4. Guaranteed payout: This option provides a guarantee to your beneficiary that they will receive either the full benefit of the policy or the total amount of premiums you’ve paid into your policy. They will receive whichever option is higher.

Who Is Eligible for Burial Insurance?

Since there is no medical exam required, funeral insurance policy options are available for almost anyone interested in ensuring their loved ones aren't left paying out of pocket when it comes to final expenses.

To purchase a burial insurance policy, there are only a few requirements, which may include that a person:

• Possess a Social Security or tax identification number
• Be physically located within the United States
• Be of sound mind, meaning you have the mental cognizance to enter a legally binding contract
• Some policies may also have a minimum and maximum age range for acceptance, usually about 50-85. However, some policies will cover adults over the age of 85.

If you're unsure if you are eligible, it's best to contact a few insurance companies to find out more. They can recommend plans and policy types most relevant to you.

How Much Does Burial Insurance Cost?

If you're seeking the best burial insurance, know that costs may vary greatly, depending on your age, overall health, and the type of insurance selected.

The cost of monthly premiums also increases with age, and women generally pay lower premiums than men. Also, the higher coverage you need, the more you'll pay each month.

Other factors that impact burial insurance costs include tobacco use, pre-existing health issues, and geographical location. If you're seeking cheap burial insurance, simplified issue plans are generally more affordable than guaranteed issue plans.

Do I Need Burial Insurance If I Already Have Life Insurance?

If you already have life insurance, the lump sum payout from the policy may also be used for funeral expenses. However, life insurance payouts can often be a timely process, and they are required to go through probate first.

In contrast, burial insurance policies pay out right away, so your beneficiaries can receive the funds quickly.

How to Select the Appropriate Burial Insurance Plan for Your Needs

It helps to do plenty of research into each policy type and not to rush into a decision. You may wish to estimate your final expense costs, so you can work out which plan would provide optimal coverage, along with deciding how much you’re comfortable paying each month for your burial insurance policy.

It's also useful to research potential insurance companies, ensuring they have favorable reviews from both customers and industry leaders. Then, reach out to several companies and ask for a quote before selecting a policy that feels like a match for your needs.

The Neptune Society is the nation's oldest and largest provider of affordable cremation services. Whether you have an immediate need or want to plan cremation services in advance, we are always available to assist you and your family. Call 1-800-NEPTUNE (800-637-8863) today or contact us online to learn more.