The National Funeral Directors Association shows a median funeral cost with viewing and burial at $7,848 in 2021, without the cost of a plot, headstone, or vault.
With a vault, it is estimated to come in at $9,420. While your family grieves, they’re also trying to figure out how to honor your final wishes and manage such a large financial expense.
It’s not hard to imagine that you will leave behind a huge legacy when you pass, but you don’t want to leave behind a huge debt for your loved ones as well. That’s where burial insurance for seniors can help.
Burial insurance can cover all or most of your final expenses. You and your loved ones can rest easy knowing you’re able to take care of your end-of-life expenses now.
What Is Burial Insurance for Seniors?
Burial Insurance for Seniors is a form of life insurance plan that applies to burial and final expenses for seniors between 50-85 years of age. It is also known as Final Expense Insurance or Funeral Expense Insurance.
Policies, payouts, and coverage are reliant on many factors including age, gender, and level of coverage purchased.
It requires you to make a monthly payment for a fixed amount of time to qualify for the final payment. The monthly rate is fixed for life and cannot increase once the policy goes into effect. Coverage cannot decrease once the policy has been implemented.
When the policyholder passes away, their designated beneficiary(ies) will receive a tax-free payout of the death benefit. This can cover funeral and final expenses, as well as any other expenses.
The policy also holds cash value that can you can access at any time if need be. It will not expire and cannot be canceled at any age for any reason as long as the monthly payments are made.
There are no restrictions on the money or how it is spent. Any money left over once the final expenses have been paid can be used by your heirs how they wish.
The Differences Between Life Insurance and Burial Insurance Plans
There are many differences between Life Insurance and Burial Insurance for seniors.
Life insurance plans can exceed hundreds of thousands of dollars to several million; whereas, a burial insurance policy doesn’t go over more than $50,000 for a single policy.
Life insurance policies also tend to have very high monthly premiums, depending on the amount of coverage selected and the age and gender of the individual. But burial insurance monthly premiums are typically lower.
Life insurance plans need you to provide your family history, completed health questionnaire, with a stated occupation to determine coverage. They will also require a health exam in order to prove your overall health level.
Burial insurance plans may need you to answer health questions on the application, but will not require a medical exam. You may be able to complete a burial insurance plan application over the phone in as little as 30 minutes.
Life insurance can pay lump sums or monthly payments, depending on the coverage bought and the type of insurance. But they may delay the final payment due to the lengthy investigatory and approval phase.
This means your beneficiaries will still have to come up with funeral expenses until the policy processes.
Burial insurance can pay out an almost immediate lump sum once they receive the death certificate because it is a much smaller payout.
Standard life insurance policies may end before your death, based on the type of policy and coverage you select. Burial insurance continues to offer coverage until you die, as long as you pay the monthly premiums.
For burial insurance, you should also calculate your age and policy premium to see at what point your total premium payments may exceed the policy’s total value so you don’t overpay.
Some life insurance policies can build up a cash value that you can access and borrow against at other times, but term life insurance does not offer this option. Burial insurance for seniors builds cash value that you can use at any time during the policy’s duration.
Which Is Better For My Needs?
When given the option between life insurance and burial insurance there are several factors to consider.
Life Insurance is a better option for larger families who rely on one spouse’s or parent’s income to provide for them. Life insurance is also ideal for those looking for a way to have more money saved for larger expenses for other family members later on in life.
Life Insurance is better if:
- you intend to supplement your income for a surviving spouse or dependent
- you are an individual in good health who can get a better monthly rate
- you want to help offset the costs of a loved one’s home
- you intend to have the money go towards future educational expenses
- you wish to have extra cash savings for retirement
The downside of traditional life insurance is that if you chose a 20-year plan at 50 years old, by the time you turn 70, you will have outlived the policy and have no coverage money left over for burial expenses.
For seniors on a fixed income, burial insurance is preferable because it is a more affordable way to accumulate a type of savings. It is also helpful for families who don’t have a large income to manage funeral expenses when a loved one passes.
Burial insurance is better if:
- you have an underlying health condition that excludes you from qualifying for life insurance
- you are seen as having too risky an occupation or lifestyle for traditional insurance coverage
- you want your inheritors to have immediate access to a monetary payment when you die
- you only need a small amount of coverage with cash value
- you only want your beneficiaries to receive a small payment to cover expenses
- you do not expect to have any large financial expenses after you pass
The downsides of burial expense insurance are that they usually have higher monthly premiums for less coverage than traditional life insurance monthly premiums for more coverage because they don’t ask for an extensive medical history.
Some plans have a 2-year waiting period before full coverage can begin.
Also important to note, if you die within 2-3 years of purchasing a policy, your beneficiaries will only receive a small percentage of the policy’s coverage due to “graded death benefits” or a refund of the premiums paid with some interest.
If your death occurs earlier due to an accident, your loved ones will receive full benefits active from day one of the policy’s start.
What Does Burial Insurance Pay For?
Burial insurance is a lump sum payment made to your chosen beneficiaries or organization named before your passing.
There is no set use of funds. Your listed beneficiaries can use this money to pay for all burial expenses such as the casket or crematory urn, a plot or vault, headstone, viewing service, a hearse, and any other funerary transportation.
It can also be used to pay for church or house of worship rental for the service, flowers, obituary, and funeral service programs. Your loved ones may also use the balance to pay off any outstanding medical or credit card debt left over from your passing.
The rest of the money can be used by the beneficiaries however they choose. The money could be put towards a modest inheritance once the outstanding expenses have been paid.
If the payment and spending of funds is a problem for any reason, funeral homes can even be paid directly through the burial insurance policy provider. If this is the case, it is important to ask for an itemized bill of services provided, as stipulated by the Federal Trade Commission’s Funeral Rule.
Federal Trade Commission’s Funeral Rule
The Federal Trade Commission’s Funeral Rule states that you choose the services you want and make the decision to buy.
This prevents consumers from any high-pressure package deals at a fixed rate with unnecessary expenses or unwanted goods and services tacked on. It also allows you or your beneficiaries to comparison shop amongst different funeral homes for the best rate.
Under the Federal Trade Commissions Funeral Rule, funeral homes are required to give you pricing information and quotes over the phone. They may also mail you a pricing list or post their pricing lists online on their website.
They must provide casket prices on their General Pricing List and provide a separate casket pricing list that details all casket prices up-front, even the cheaper ones that may not be on display in the showroom.
If you wish to provide your own casket or urn, the funeral home cannot turn it down or charge you a fee for a burial receptacle purchased from an outside source.
If you would like to use an “alternative container” for cremation, the funeral home must respect your wishes and supply you with or inform you of other non-casket options including cardboard, un-pressed wood, unfinished wood, or fiber wood.
The funeral home must inform you, in writing, of any legal burial or cremation requirements that involve the sale of more services and products.
Routine embalming is not required by every state law for every death unless burial or cremation of the body will not happen within a certain time.
In most states, refrigeration is a perfectly acceptable option. But this is pursuant on a state-by-state basis and according to individual circumstances and state laws.
How Much Does Burial Insurance Cost?
Many factors can determine the total cost of burial insurance. The first is the age and gender of the prospective policyholder. For example, premiums for women tend to be lower than those for men, due to a male’s shorter lifespan in comparison.
Age is a major determining factor as well since an average policy premium for a 60-year-old woman who wishes to have $10,000 of coverage will pay an estimated $643 a year or around $54 a month.
A 70-year-old woman, because of her more advanced age, can expect to pay around $934 per year or roughly $78 per month for the same $10,000 coverage.
A 60-year-old male can expect to pay $811 annually for the same $10,000 coverage or around $68 per month compared to males. Whereas, a 70-year-old male seeking $10,000 worth of coverage would pay $1,246 per year or just around $104 per month in premiums.
It is advisable to get burial insurance as soon as you can, if possible, to lock in a lower premium as rates rise with age. This may still be a small price to pay in the long run when faced with the compounded costs of funeral and burial services.
Another factor in the cost of burial insurance is the amount of coverage you wish to purchase. For example, if you want to leave enough money to cover all your final expenses and still be able to provide a modest amount to your survivors. Or if you wish to make a charity donation.
With an average funeral coming in at just under $10,000, a $15,000 policy would provide enough extra cushioning to enable you to bestow something more beyond the funeral costs. You’ll want to calculate this ahead of time.
A $15,000 policy for a 60-year-old male will run about $1,203 per year or about $100 per month and for a female of the same age, it would cost approximately $951 per year or around $80 per month.
Burial Expenses Laid to Rest
Let’s face it. It’s not easy to talk about death, but it’s an important conversation that’s often overlooked or put on the back burner until it’s too late. Wouldn’t it be nice to have your affairs in order now?
With burial insurance for seniors, now you can. Even if you haven’t been able to qualify for other life insurance plans, burial insurance can give you that peace of mind you can leave behind.
Simplified Burial Insurance can help you find the affordable burial insurance for seniors you need. Visit our website today to get your free quotes and rest easier.