Burial insurance: How it works and how much it costs
Burial insurance is a type of whole life insurance policy that can be used to cover your burial and other funeral costs. You can generally purchase one of these policies after you turn 50 to help your family afford your funeral service. But before you do this, you should understand how burial insurance works to assess whether it’s a good fit for you. Bankrate’s insurance editorial team will walk you through what a burial insurance policy usually covers, how it works, burial insurance rates and alternative options.
What is burial insurance?
If you have your affairs in order, your loved ones already know what will happen when you die. You may have given instructions for how you would like your body to be treated, as well as notes on the organization of your memorial service or what you want written on a tombstone.
But all of these things cost money, sometimes many thousands of dollars. If you do not want your survivors to be stuck paying those costs, you may want to consider a burial policy. This is a small permanent life insurance policy that pays out a death benefit — usually anywhere between $5,000 and $25,000 — intended to cover these costs.
Because the payout for burial insurance is small compared to many regular life insurance policies, the premiums can be quite affordable, too. The policies are generally easy to get and do not require a medical exam, even for those not in the best of health. But a waiting period may apply or the policy may offer only limited benefits in the first two years.
What is covered by burial insurance?
Burial insurance policies cover all the normal costs incurred by someone’s death. Unless you have managed the estate of a loved one, you may not realize the number of costs involved in a death or how quickly they can mount up. According to the Federal Trade Commission, costs may include:
- Embalming or preserving the body
- A casket
- Flowers
- Cremation costs
- A burial plot
- The cost of transporting the body and/or cremains
- A headstone with customized carving
- Payment to minister or priest
- Rental costs for the venue where the memorial service is held
- Cost to open and close the grave
- Grave vault and/or grave liners
In addition, burial insurance can also be used to cover the deceased’s outstanding debt, such as medical bills, credit card debt or even a mortgage. For example, if you’re married and die before your partner and they’re listed as a beneficiary on your policy, they could choose to use some of your policy’s death benefit to pay down the mortgage.
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Whole life insurance combines life insurance with an investment component.
- Coverage for life
- Tax-deferred savings benefit if premiums are paid
- 3 variations of permanent insurance: whole life, universal life and variable life include investment component
Term life insurance is precisely what the name implies: an insurance policy that is good for a specific term of time.
- Fixed premium over term
- No savings benefits
- Outliving policy or policy cancellation results in no money back
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How does burial insurance work?
Burial insurance is sometimes referred to as final expense, pre-need or funeral insurance. All are designed to cover the costs of your funeral and other end-of-life expenses. In many cases, approval is guaranteed as long as you meet the age requirements. Some burial policies that have higher coverage amounts, for instance, $100,000 in coverage instead of $25,000, may ask a few health questions. It depends on the policy you’re applying for.
Final expense insurance offers either a guaranteed or a simplified approval process. If simplified underwriting, coverage amounts are typically higher than what you’d receive if the policy was guaranteed acceptance, and there may be a few health questions to determine eligibility — but no medical exam. It’s an accessible option for many people, making sure your family has the financial help they need when the time comes.
Guaranteed issue insurance is a type of policy that doesn’t ask any health questions and guarantees coverage. If you have health issues that have caused you to be turned down for life insurance in the past, this may be an option for you. However, it often includes a graded death benefit period. This means that if you pass away within the first two to three years of the policy (unless due to an accident), the full death benefit won’t be paid. Instead, your beneficiaries may receive a percentage of the premiums you’ve paid or a portion of the death benefit, depending on the insurer. After this graded period, the full death benefit becomes available.
With most types of life insurance, the beneficiaries will file a claim directly with the insurance company or through an agent. Once approved, they’ll receive the death benefit funds to cover funeral costs or any other expenses they choose. However, the payout process is different with pre-need insurance.
Pre-need insurance, also called pre-paid or funeral insurance, is life insurance purchased directly through a funeral home. It allows people to pre-pay for their funeral needs ahead of time to lock in today’s rates and relieve the burden on their loved ones. The death benefit proceeds are paid directly to the chosen funeral home.
Who has the best burial insurance?
When it comes to finding the best burial insurance, there are several companies that focus on these types of policies. However, many traditional life insurance providers also offer it. To help narrow it down, here are a few options worth looking into.
| Carrier | Best For | Coverage amount |
|---|---|---|
| AARP | Ease of applying | Up to $25,000 |
| Colonial Penn | Flexibility | Varies |
| Gerber Life | Guaranteed acceptance | $5,000 to $25,000 |
| Mutual of Omaha | Affordability | $2,000 to $25,000**($5,000 – $25,000 in WA) |
| State Farm | Cash value | $10,000 to $15,000 |
| Transamerica | Digital application process | $1,000 to $50,000 |
AARP
The American Association of Retired Persons has a great deal of experience in meeting the needs of older people. In collaboration with New York Life, they offer burial policies and life insurance specifically geared toward seniors.
There is no health questionnaire; acceptance is typically guaranteed. One potential downside is that you have to be an AARP member to qualify — a standard membership costs $16 a year.
Learn more: AARP Insurance review
Colonial Penn
Colonial Penn sells only life insurance, including a guaranteed acceptance life policy that can be used for burial costs. There are no medical exams or health questions to answer to purchase a final expense policy.
You can borrow against the cash value of the policy, and flexible payment options are available. Rates are guaranteed, and prices are competitive. A drawback, however, is that Colonial Penn has a higher-than-average NAIC Complaint Index score.
Learn more: Colonial Penn Insurance review
Gerber Life
Gerber Life’s Guaranteed Life Insurance is ideal for seniors aged 50 and older who want guaranteed acceptance without medical exams or health questions. Coverage amounts range from $5,000 to $25,000, making it an affordable option for covering final expenses like funeral costs and medical bills. The policy also builds cash value over time, which can be borrowed against if needed. However, the policy includes a graded death benefit, meaning that during the first two years, beneficiaries will receive 110 percent of the paid premiums instead of the full death benefit for non-accidental deaths.
Learn more: Gerber Life Insurance review
Mutual of Omaha
Mutual of Omaha offers guaranteed acceptance policies for those aged 45-85. There are no health questions to answer.
If you are looking for a smaller policy, coverage amounts start at $2,000 in most states and go up to $25,000. If the insured passes within two years of the policy effective date, 110 percent of premiums paid replace the death benefit amount.
Learn more: Mutual of Omaha Insurance review
State Farm
State Farm’s policies may allow you to earn dividends, which can be paid to you in cash or used to pay premiums. Cash value also grows within the policy, which is tax-deferred and can be borrowed against the death benefit if needed.
Though there are advantages to its final expense policy, a con is that coverage is capped at $10,000. Policies are available to seniors 50-80 or until age 75 in New York.
Learn more: State Farm Insurance review
Transamerica
Transamerica offers a flexible and convenient solution for burial insurance with its Final Expense Express Solution. Policies are available without a medical exam, and coverage amounts range from $1,000 to $50,000. Designed for quick and easy digital applications, Transamerica’s process allows for instant approvals and electronic policy delivery, making it a great option for those looking for a streamlined experience. Additionally, the plan comes with helpful tools like the Concierge Planning Rider, which assists with funeral arrangements and legal documents at no extra cost. A potential downside is that coverage amounts for seniors over 75 are limited to $25,000.
Learn more: Transamerica Insurance review
How much does burial insurance cost?
The cost of burial insurance depends on factors like your age, gender and the amount of coverage you need. To give you an idea of common burial insurance rates, we gathered quotes for a $25,000 guaranteed-issue policy for a 70-year-old male in Texas from a few of the providers we covered above:
- AARP: $268 per month
- Gerber Life: $246.59 per month
- Mutual of Omaha: $215.25 per month
These rates are based on a guaranteed-issue policy, meaning no health questions or medical exams are required. Your actual premiums may vary depending on your personal details, so it’s always a good idea to compare quotes from multiple companies to find the best fit for your budget and needs.
Are burial insurance policies worth it?
Burial insurance can be a lifeline for families, especially if health issues make it hard to qualify for traditional life insurance. If you or your loved one is in poor health and uninsurable through standard policies, burial insurance provides a way to ensure that final expenses are covered so your family won’t have to face unexpected financial burdens during an already difficult time. The peace of mind that comes with knowing everything is planned for can be priceless.
For those in better health, fully underwritten life insurance might offer more coverage for your money. You often get lower premiums and avoid graded death benefit periods, which means the full death benefit is available from the start. But if that’s not an option, don’t worry — burial insurance can still be an incredibly valuable choice.
What matters most is that you’re taking steps to protect your family’s future. By planning ahead, you’re making sure your loved ones are supported when they need it most. Every family’s situation is unique, and covering funeral costs and other final expenses is a loving, thoughtful decision that can ease the stress on your family during a challenging time.
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