Although it's not pleasant to plan for a future where you have passed away, buying burial insurance is one way to make things easier on your loved ones. Even if you can't afford a full life insurance policy, burial insurance can relieve the stress of paying for your final expenses and give your family one less thing to worry about during a tumultuous time.
Since burial insurance has a lower benefit than most life insurance plans, it's more affordable and easier to obtain. If you cannot qualify for term life due to your age or health conditions, you may still be able to find affordable burial insurance.
In most cases, anyone under the age of 85 and with no immediate and serious medical conditions can obtain this coverage very easily. Older people or those with existing medical conditions may still be able to buy burial coverage through a specialty or high-risk provider.
There are several different final expense plans that you can purchase, depending on your needs.
These are usually affiliated with a specific funeral home. In effect, the policy allows you to pre-pay for funeral expenses by using a payment plan. Payment plans will generally last from one to 10 years depending on how much you pay each month. After it's paid off, benefits will be available indefinitely.
If you choose this type of policy, make sure that you choose one that's guaranteed, meaning that the payout will be adjusted for inflation - otherwise you risk coming up short when it comes time to use the plan. Also bear in mind that pre-need policies often pay the funeral home directly rather than the money going to a beneficiary of your choice.
Final Expense Policy
These are sold by most life insurance companies. They are available as either term or permanent life insurance, and they're generally offered as small, low-cost policies that pay a flat rate of death benefits.
The money is paid out to the beneficiary of your choice, and that money can be used for anything; it is not required that the beneficiary use it to cover funeral expenses, but that is a common use since the payout is so small.
This term is often used interchangeably with "final expense" insurance. Both describe a low-cost, low-payout option. However, be sure to read the fine print; burial insurance usually pays out immediately upon the insured's death while final expense policies and other types of life insurance may take several weeks to process.
In general, a burial insurance policy will be worth between $5,000 and $10,000.
Guaranteed Life Insurance
These are policies that can be purchased immediately without a medical questionnaire or exam. They cost more than regular life insurance, but they are a good option for people who might otherwise be unable to qualify for insurance. They are an especially good option for someone facing a terminal illness who wants to quickly obtain burial insurance.
In most cases, the death benefit paid by an insurance company can be used for whatever the beneficiary chooses. Some burial insurance policies may have limits on the way the money can be used, but others will have no such limitations. Regardless, there are numerous final expenses that can be covered by insurance:
- Cremation costs
- The cost of a casket or urn
- The cost of a burial plot
- Headstones and markers
- Embalming costs
- Some flowers
- Funeral service fees
Burial expenses can cost several thousand dollars. Cremation is cheaper, but it can still cost $1,000 or more, especially if a memorial service is held with it.
What to Look For
When shopping for burial insurance, it's a good idea to review the benefits offered and ensure that they match your needs. Here are a few things you should consider:
- Cost of premiums: You should choose a policy that's within your long-term budget.
- Amount of benefits: Consider what type of funeral you might want, and choose a policy that will cover all of your final expenses. For example, if you plan to be cremated, you may not need as much insurance as if you wish to be embalmed and buried.
- Term or permanent: Just like regular life insurance, burial insurance is available on a term or permanent basis. Consider your needs and budget before choosing the policy that works best.
- Any limitations: Ideally, you will want a policy that is very inclusive. Look out for limitations and exclusions in the policy language that could stop your benefits from being paid.
Overall, the best policy will be one that meets your needs and your budget. Aside from the factors above, most burial insurance policies are very similar to one another.
Where to Buy
Most life insurance companies offer final expense policies as well. If you're looking for a provider, here are a few well-reviewed options to get you started:
- State Farm is one of the biggest insurance companies in the country and offers very well-rated life and burial policies. Its final expense insurance pays $10,000 and is available for customers between the ages of 50 and 80.
- AFBA offers life and burial expense insurance to active and retired members of the military as well as government employees. It has a high rating of customer satisfaction and pays the first half of all benefits within 24 hours of the insured's death.
- Aflac is a well-known company that provides a number of specialty medical coverages and some life insurance, including burial policies. It's one of the more affordable companies on the market for many of its products.
You can also compare policies from a number of providers through the True Blue Life Insurance website, which provides plenty of details about the policies you're researching.
Consider Your Options
For many people, especially those who are young and healthy, a full-service term life insurance policy is a better investment. It will be a more efficient use of your premiums and provide better benefits. However, not everyone can qualify for standard life insurance, making burial insurance a better option. It's worth looking into all of your options to see what makes the most sense for your finances and your family's needs before settling on a policy.