Family Burial Insurance

    Family Burial Insurance: Ensuring Your Final Expenses Get Paid

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    Funerals are an expensive affair, costing up to $8,000 or even more depending on where you live. This means when you die, you’ll be leaving a very large bill for your loved ones. Fortunately, there are ways to ease this financial burden and let your loved ones grieve in peace.

    A burial insurance policy will help your family cover your end-of-life costs, making the process less costly for them. Even if you feel like you don’t need burial insurance, you might know someone who does, like an elderly parent or relative. 

    In this guide, we’ll go over the things you need to know about burial insurance! We’ll cover how a burial insurance policy works as well as what things you should keep in mind when looking for a burial insurance policy. 

    What Is Burial Insurance?

    Sometimes called final expense insurance, burial insurance is a form of whole life insurance. Like most types of life insurance, there is a death benefit paid out when the policyholder passes in exchange for regular premium payments. Burial insurance policies are mainly sold by insurance companies, but in some states, funeral homes are licensed to sell them as well. 

    Burial insurance policies usually pay out lower death benefits compared to most types of life insurance. However, this low payout is balanced by the simplified process of application which only requires a health questionnaire and no medical exam. 

    This policy is intended to help family members pay for the policyholder’s funerals and it’s generally marketed to seniors. However, there are no limitations to what the beneficiaries can spend the death benefit. So if there’s still any money left over after the burial, they can save it up for other expenses. 

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    Can You Get A Family Burial Insurance Policy?

    Generally, burial insurance policies exist as individual insurance. Unlike family life insurance, you can only insure one person with a burial policy. Not only that, but a family burial insurance policy wouldn’t be a wise choice in the first place. Burial insurance is generally not recommended for those under the age of 60, so insuring an entire family would be a waste of potential value.

    Instead of looking for family burial insurance, you can choose other ways to insure your entire family. Family life insurance could be a better option if you’re looking to insure your spouse and children. If you need extra protection for your elderly parent or relative, you can insure them with individual burial insurance.

    Alternatives To Burial Insurance

    Traditional Life Insurance

    If you opt to take out a life insurance policy to pay for end-of-life costs, you have the choice between whole or term life insurance. A whole life insurance policy has lifelong coverage, while a term policy will have a limited period of coverage. Generally, the payout will be larger which means not only can it be used to cover end-of-life costs, it can also be used to provide extra inheritance.  

    However, most traditional life insurance policies require a medical exam as a prerequisite to qualify for protection.  If you’re still young and are in relatively good health, getting a traditional life insurance policy may be a better idea. Being younger generally means you’re in better health and your premiums would cost less. However, this option may not be favorable if you’re an older applicant since your age and health issues may lead to rejection or higher premiums. You can skip the medical exam entirely with a guaranteed issue policy, but they usually charge even more on premiums.

    Prepaid Funeral Plan

    Another option to consider when making funeral arrangements ahead of time is a prepaid funeral. These are usually arranged with a specific funeral home and paid in advance. Usually, these payments can be made in installments. 

    Having a funeral already paid for will grant you peace of mind, but one thing to keep in mind is that everything paid to arrange a prepaid funeral will go to your funeral, leaving nothing for potential beneficiaries. Furthermore, since this arrangement is made with a specific funeral home, there is also a risk of them going out of business. If the funeral home shuts down, you stand a chance of losing all the money you paid them.

    Payable-On-Death Account

    A payable-on-death (POD) account, sometimes called a Totten Trust, is a bank account that you can use to put aside money for end-of-life costs. After you name a beneficiary, all they need to access the money is to present your death certificate to the bank. This money can then be withdrawn right away and be used to pay for your funeral.

    Savings Account

    A savings account can be an even simpler alternative to burial insurance. The most optimal method would be to set up a joint savings account with your beneficiary. When you die, they’ll gain ownership of the account and they can withdraw money to pay for your end-of-life costs. 

    Government Assistance

    In some situations, you can take advantage of burial assistance provided by the federal government. For instance, veterans are qualified to be buried in a national cemetery at no cost. Some state governments also have programs to assist those who can’t afford to be buried. Victims of disaster or crime are also eligible for government assistance programs to assist in covering their funeral expenses. 

    How Burial Insurance Helps Your Family

    One of the most important reasons for getting life insurance is to protect your family. Your insurance payout can be used to pay for their expenses in your absence as well as pay for your funeral. However, not everyone can qualify for traditional life insurance. If you can’t qualify for life insurance due to age or health issues, burial insurance can be an alternative.

    The simplified application process of a burial policy only requires a medical questionnaire, bypassing the medical exam process entirely. Some burial policies even offer a guaranteed issue option where your application is automatically accepted in exchange for larger premiums. These options can help you secure a burial policy much easier than a traditional life insurance policy. Even if the coverage value is generally smaller than a traditional life insurance policy, it can still help your family cover the costs of your funeral. Some burial policies also feature accident protection, giving your family the extra protection of a larger payout if you die in an accident.

    Moreover, contrary to what its name implies, burial insurance doesn’t just cover your funeral costs. The payout can be used for other purposes, like leaving a small inheritance and paying any other expenses you may have left behind. Even if you have a life insurance policy, you can still benefit from burial insurance. You can take out a burial policy with a smaller value to exclusively cover your final expenses.  This way, you’ll be able to leave your entire death benefit for your family.  

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    What To Consider When Getting Burial Insurance

    • Age: If you’re relatively young, then other types of life insurance might be better for you. However, if you’re looking to insure your elderly parent or grandparent, burial insurance may be more affordable compared to other types of insurance.
    • Health: Though burial policies usually skip medical exams, applicants in poor health are usually charged more on premiums. If you’re suffering from a terminal disease, be sure to look for a policy that has no waiting period before the coverage activates.
    • What kind of funeral you want: A lavish funeral will be more expensive than a modest one. Do some research to get a good idea of how much the funeral you want will cost and adjust the death benefit accordingly.
    • What you need out of your policy: Do you only want to cover burial costs or do you want to leave an inheritance as well? Depending on the answer, the death benefit also needs to be adjusted. One thing to keep in mind is that burial policy payouts are relatively small. If you want to leave a large inheritance, you may consider getting a whole life or term insurance policy.
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    How To Get The Most Out Of Burial Insurance

    • Talk to a funeral home to plan out your burial arrangements in detail. This way, you’ll know how much you need to pay for your funeral. If possible, compare costs from several funeral homes to find the best value for the funeral you want. 
    • Have an estimate of your final expenses. Final expenses aren’t just for the funeral, it can also consist of medical bills and other debts you may leave after your death. Having an accurate estimate of your final expenses will allow you to adjust your death benefit more accurately.
    • Make sure your family documents your final wishes ahead of time. If anything is in doubt during the funeral arrangement, they can clear up the confusion quickly.
    • When choosing a beneficiary, make sure that they can be trusted. You need to be sure that your chosen beneficiary will use your insurance payout for your burial first and foremost.
    • Know exactly what you need out of your burial insurance. Do you only need to cover your end-of-life costs, or do you want to leave a sizable inheritance as well? If all you need to pay for is the funeral, burial insurance may be right for you. However, if you want to leave more to your beneficiaries, consider getting a traditional life insurance policy.
    • To save up on your burial costs, don’t buy a casket if you plan to be cremated or undergo a green burial. If you still want to hold a viewing ceremony, consider renting one instead.
    • As with traditional life insurance, health matters. Insurers will consider applicants in good health as lower-risk, netting you lower premiums. 
    • Despite generally not requiring a medical test, be honest on your policy application’s medical questionnaire. Any discrepancies between your answers and your medical records will often result in your death benefit claim being denied. 
    • If you smoke, consider quitting. Smokers usually get charged 30% more on premiums compared to non-smokers. The older you are, the higher this extra rate will be.
    • Age also matters, even for senior citizens. The older you are when getting insured, the more you’ll be charged on premiums. Consider getting burial insurance as soon as you have your burial plans figured out.
    • Compare rates from several insurers to make sure your policy represents the best value for your budget.
    • If your burial policy is being offered by a life insurance company, do some research to verify their reliability.
    • Consider all the options available to secure your end-of-life expenses. Research each one and find one that will fulfill your needs.
    • Know your policy in detail. You need to know how long it takes for the final expense insurance to pay out, whether it has an expiration date, as well as if there’s any waiting period before your application’s approval and the protection activating. 
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    Conclusion

    Burial insurance might not be the best option for a younger person – however, for an elderly parent or grandparent who may otherwise be uninsurable, a burial policy can save a lot of money. The ease of application and relatively low premiums can ensure that when their time comes, their funeral will happen just as they planned.

    If you’re looking to help secure your funeral arrangements, reach out to Wesley Insurance, LLC. Our professional team can advise you on the best options to finance your funeral. Contact us today for more information!

    Written By Cameron McDowell
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