Burial Insurance vs. Life Insurance: Ultimate Guide 2022

Burial Insurance vs. Life Insurance

Both life insurance and burial insurance provide a lump sum to designated beneficiaries in the event of the insured’s death. Even so, the two products are different and serve different purposes.

If you are looking for a way to provide for your loved ones when you pass away, it is extremely important to understand the difference between burial insurance and life insurance. That way, you will know the right policy for you and provide for your family properly.

Burial insurance and life insurance policies pay out a death benefit. Read on to know how they differ and whether and when to buy either coverage.

What is life insurance?

Many folks use life insurance as a means to cover funeral expenses, with 84% of life insurance policyholders citing final expenses as a reason for them to buy life insurance. So, what does life insurance really mean?

Life insurance is a contract between an insurance company and a policyholder, where the insurer promises to pay a designated beneficiary a sum of money when the insured dies.

Contrary to what many people think, life insurance is a broad category of insurance products that includes several other types, including term, whole, universal, simplified, guaranteed, variable, and group life policies.

If you are in the market shopping for a life insurance policy, there are many options available from which you choose. The best policy for you immensely depends on your insurance needs and reasons for obtaining coverage.

What is burial insurance?

Burial insurance is a specific type of whole life insurance designed to specifically cover the insured’s end-of-life expenses. It is sometimes called final expense insurance or funeral insurance.

Because of the internment component in it, burial insurance is considered an excellent tool that you can use to help your loved ones pay for your final expenses.

It may be worth noting that burial insurance offers a smaller benefit, in most cases, just enough to cover funeral expenses.

Unlike other forms of life insurance that give beneficiaries the option to receive a lump sum or monthly payments, burial insurance policies usually pay in a lump sum only. Burial insurance providers make the death benefits available as soon as the beneficiary provides proof of the insured’s death.

Burial insurance vs. Life insurance

Life insurance policies pay out a death benefit just like burial insurance policies do. Proceeds from both are paid when the insured dies, which makes them great options for people looking to leave some funds for their families to cover some expenses in the event of death.

So, how do they compare? Are they really different? Is one component of the other?

Here are the key differences between burial insurance and life insurance:

  1. What they cover

Both burial insurance and life insurance provide a benefit for loved ones when the insured passes away, but they cover different things.

By definition, burial insurance is designed to cover funeral and other end-of-life expenses.

In most cases, burial insurance policy payouts are used to cover the cost of burial or cremation, casket or urn, traditional services, embalming (when viewing is part of final arrangements), flowers, decor, and other related merchandise and services. As such, these policies are ideal for people who want a small coverage, enough to cover funeral expenses.

On the other hand, life insurance helps loved ones continue covering their regular expenses in the event of the insured’s death. Many people buy life insurance policies with the aim of ensuring that their families will have enough money to settle outstanding debts and cover their daily needs.

A life insurance policy will provide a lump sum for your loved ones in the event of your death, whereas a burial insurance policy will pay your final expenses. Although there is a wide range of options, life insurance is more or less a long-term financial security measure.

  1. Underwriting requirements (eligibility)

One of the key differences between life insurance and burial insurance is the fact that burial insurance policies usually don’t require a medical exam. When applying for a burial insurance policy, you are required to answer a few questions related to your health and lifestyle in lieu of a medical exam. Coverage is issued based on the answers you provide on the application.

Generally, many adults who meet the minimum age requirements outlined by the insurer are likely to secure coverage.

In comparison, life insurance usually involves rigorous underwriting, which means the insurer gathers and analyses more information about your health and lifestyle. While obvious factors like age and gender have a role to play when you are purchasing a life insurance policy, most carriers require you to undergo an in-person medical exam and answer questions regarding your health history.

After applying, your insurer may conduct a thorough background check by reviewing your MIB and medical records.

  1. Death benefit size

Burial insurance policies are usually intended to help cover the cost of the insured’s funeral. The face amount you can obtain with these policies is, in most cases, enough to pay for your burial, not other expenses. With most insurers, the death benefit is anywhere from $5,000 to $25,000.

However, depending on the plan you choose, the death benefit can be as high as $100,000 but less likely to be more than that.

Life insurance policies, on the other hand, give policyholders a lot of flexibility, depending on the type of insurance they choose. Depending on the specific type of insurance you buy, you can leave your loved ones a death benefit of up to $1,500,000. The maximum death benefit you can choose depends on your age, overall health, and ability to pay premiums.

  1. Length of coverage

Burial insurance is a specific product, whereas life insurance is a broad category of insurance products, which makes it hard to compare how long they can stay in force. Even so, there are a few things to note as far as the length of coverage is concerned.

Burial insurance is a form of permanent insurance. As such, the policy stays in effect until you die as long as you pay the premiums on time.

On the other hand, life insurance is a broad category of insurance products that includes term and whole life policies. How long your coverage will stay in force will depend on the type of coverage you obtain.

When shopping, you have the option to choose a term policy, which is bound to expire after a certain period or when you reach a certain age. You can also choose whole life policies that never expire.

Notably, term insurance policies usually require you to undergo further underwriting every time you want to renew your policy.

  1. Payout time frame and schedule

Burial and life insurance policies pay death benefits but may have different terms and conditions, making it imperative to compare burial insurance vs. life insurance payout schedules.

Talking about the payout schedule, burial insurance usually pays in a lump sum only. In contrast, life insurance policies allow beneficiaries to receive the death benefit as a lump sum or monthly payments.

This makes perfect sense, considering that the payout of burial insurance is meant to cover immediate expenses, while life insurance proceeds are meant to help family and loved ones cover regular expenses. In fact, people who want to continue providing for their families can choose to have the cover paid out to designated beneficiaries as regular income or lump sum.

Because burial insurance policies are mainly meant to cover final arrangements, the insurer makes the payout available as soon as after the beneficiary provides proof of death. Typically, beneficiaries can receive the payout within 48 after the claim is approved.

In comparison, life insurance claims take longer to be processed, meaning the death benefit will take longer to be paid out. Despite the fact that many people purchase life insurance policies to defray their final expenses, beneficiaries may have to cover the cost of the insured’s burial from their pockets or wait for relatively longer.

  1. Premiums 

Comparing burial insurance vs. life insurance premiums is pretty hard because life insurance is not a specific product. All in all, it makes a lot of sense to look into factors that affect the rates.

Generally, if you don’t smoke and your overall health is great, you may land great deals for your age. People in pristine health can qualify for plenty of plans and pay less for whichever policy they purchase.

Age is another factor that greatly influences the cost of policies. The younger you are, the less you will pay for a policy.

For the most part, life insurance is affordable when the policyholder is healthy and under 40 years. As you approach the geriatric stage, your immunity deteriorates, which may not only make your premiums too high but, worse, impede you from qualifying for many types of life policies.

Depending on the life insurance policy you buy, your premiums may surge after a specified time or when you grow into a certain age.

Burial insurance, on the other hand, can be less costly, especially when you’re older. If you’re a senior with less than perfect health, you can easily find a no-medical policy for $20 to $50 per month, and the face amount will likely be enough to cover your end-of-life expenses.

The most exciting thing about burial insurance rates is that premiums are based on your age when you take out the policy and generally won’t increase as you age. If you buy a burial insurance policy at a considerably younger age, you may end up paying very small amounts at your old age.

  1. Cash value

Typically, burial insurance policies, like other forms of whole life insurance, accumulate cash value. In comparison, life insurance policies may or may not accumulate cash value. Precisely, only permanent life insurance policies build up a cash value over time.

Keep in mind that policies that accumulate cash value do so without affecting your premiums.

Other differences 

  • Life insurance policies are available for purchase by adults of nearly all ages starting from 18 years, whereas burial insurance policies are usually marketed to seniors who struggle to get affordable life policies. With most insurers, the minimum age requirement is 50 years.
  • Burial insurance policies have a lengthy waiting period, typically two years, while life insurance policies may or may not have a waiting period, depending on the type of policy you buy.

How is burial insurance related to life insurance?

Comparing burial insurance vs. life insurance is often challenging because the two are closely related.

Burial insurance is just one type of life insurance known for paying a small death benefit, enough to cover burial costs.

Although burial insurance providers may have varying names for burial insurance policies, the policies never change, neither do they cease to be a type of life insurance.

Burial Insurance or life insurance: Which is better?

If you are in the market for an insurance policy to help your family in the event of your passing, you may be wondering what type of life insurance should you buy. Well, the best policy depends on your needs and the needs of your family.

Here are factors that will help you determine which policy is right for you:

  • Your age:

Age is one of the factors that insurance companies check when issuing coverage. Burial insurance is generally available for purchase if you are 50 or more years old, but you can still find a life insurance policy available for your age.

  • Pre-existing medical conditions:

Many life insurance policies require the applicant to take an in-person medical exam, making it impossible for people with pre-existing conditions to qualify. If you have a pre-existing medical condition, you can qualify for a few policies, including burial insurance policies.

  • The purpose for buying the policy:

If you have lifetime dependents, you can’t go wrong with life insurance. Life insurance allows you to get adequate financial protection for your loved ones. On the other hand, burial is ideal if you want a small amount to cover your final arrangements.

If you already have a life insurance policy, you can purchase a burial insurance policy to ensure that funding will be available to cover your funeral expenses.

Benefits of burial insurance

  • Burial insurance eases the burial financing burden from your family.
  • Having burial insurance gives the insured and their family peace of mind.
  • It helps you plan ahead of time and source finances to pay for your burial expenses.
  • A burial insurance policy gives you a chance to determine and select the kind of burial and respect that you wish to be accorded to your dead body.
  • The funds are usually sent immediately to your beneficiaries after you die so they can have an easy time planning your funeral.
  • Burial insurance is quite affordable since payments are made every month and generally do not increase.
  • To qualify, one does not need to take a medical exam.
  • You have the freedom to choose a beneficiary and even change beneficiaries whenever you wish.
  • A burial insurance policy covers all costs related to your burial ceremony and any other related cost.
  • Any money left from the burial insurance proceeds after you have been buried can be used by your family to boost their finances or pay your debts.
  • The burial insurance can be transferred or used at any location, so you don’t have to worry about losing it in case you move to another state.
  • You have the freedom to choose a funeral home of your liking.
  • Premiums gain a cash value which you can choose to borrow loans against or even withdraw the cash value amount.
  • It is more flexible as you can choose a funeral service provider 
  • You have full control over your insurance policy.

Benefits of life insurance

  • Life insurance eases the financial burden off your family members’ accounts.
  • Life insurance has many policies which you can choose from.
  • Payouts of a life insurance policy are usually tax-free.
  • Life insurance policies can also supplement your retirement savings accounts.
  • Life insurance offers a high life risk cover to you and your family in case of a risk occurrence.
  • You can take a loan with a percentage of your life insurance cash value as collateral.
  • Life insurance allows you to strategically plan your life stages considering your current financial capabilities and future goals.
  • Guaranteed income benefits are paid out to your dependents to help them pay bills.
  • The death benefits are large enough to pay for burial costs and sustain the family’s financial needs for some time.
  • Life insurance acts as a long-term investment that yields greater returns for your family.
  • Having a life insurance policy cultivates a saving culture in an individual since you need to pay premiums every month.
  • Life insurance can cover loans or mortgages taken by policyholders before they passed away.


Whether you buy burial insurance or life insurance, beware that each policy has its benefits and shortcomings. To ensure you are getting the right policy, make sure to understand your family’s long-term financial needs, then read the policy to ensure it aligns with the intended purpose.

Life policies allow you to obtain a substantial face amount, whereas burial insurance policies give you unmatched control over your final arrangements.

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