Many people don’t like thinking about death, especially if it’s one’s own death. But the truth is, it is a reality that we all must face. Most people do not think of life insurance or burial insurance until later on in life.
However, both are recommended, the latter even more so, regardless of one’s age. Burial insurance is even more important if you have people who depend on you.
To get a better idea of life insurance and burial insurance, we need to understand what these two insurance policies are and how they differ from each other when it comes to coverage.
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In the same way, that dementia is often used for Alzheimer’s disease, Life Insurance, and Burial Insurance are also sometimes used interchangeably by some folks, which is incorrect.
For instance, Alzheimer’s disease is a sort of dementia, much like burial insurance is a type of life insurance, but there are some differences that you need to know about. To keep things simple, first, let’s go through the basics of life insurance.
Life insurance is a contract that pays out a sum of money to the insured person or they’re next of kin either after a set period or in the event of the insurance holder’s death.
Life insurance coverage is a pretty straightforward policy that is well known and widely used by many people. One of the requirements of a life insurance policy is that the person taking out the policy has to pay a monthly premium to the insurance provider in order for them or their beneficiaries to get the benefits stated in the contract.
A medical exam may be required to qualify for Life Insurance. The results of such tests may determine which rate you are eligible for.
Individuals with excellent medical records are more likely to be approved and get incentives, such as a lower premium, compared to someone who has an underlying illness. Once you’ve been accepted, you’ll be required to pay the insurance company a specified amount of money on a regular basis.
But, you may be wondering, “Why would I pay money to an insurance company that will only pay out when I die?” That’s a valid question. Most of us are aware of the necessity of life insurance in ensuring that our loved ones are able to continue to live after our death without going into financial trouble.
The simple reason why life insurance is recommended is that there’s no denying that life is costly, even more so if your loved ones rely on your monthly income to pay the bills and other expenses.
In short, the goal of life insurance is to guarantee that your loved ones that you leave behind have enough money to pay off any obligations and continue to live a comfortable life.
This is why life insurance is considered a long-term financial security strategy, and there are a variety of solutions available based on your requirements. When searching for insurance plans to safeguard your beneficiaries, it’s important to know what you’re looking for and your purchasing alternatives.
Term life and whole life insurance are two popular forms of life insurance. The difference is that Term Life has a maximum number of years it may cover you for, generally between 15 and 30 years.
Whole life insurance does not have an expiration date. It will cover you until the end of your life. But, even a life insurance policy can only go so far. This is where burial insurance coverage comes in.
One significant distinction between Burial Insurance and Life Insurance is that the former does not need a medical examination. You only need to answer a few medical questions and clarify your prescription history in order to get coverage.
Most insurance providers can offer your coverage in as little as a few days if you qualify. Once in effect, a Burial Insurance policy can swiftly cover your funeral costs in the event of your death. Also, burial site fees, cemetery fees, grave marker, coffin, cremation, embalming, flowers, hearse, and any last expenditures will be covered.
One of the major benefits of burial insurance, regardless of the insurance provider, is that even without a death certificate, certain burial Insurance plans can pay payments in as little as 24 hours.
This is the primary reason why most funeral homes accept it as a form of direct payment with no further conditions, which is a great help when it comes to paying for funeral costs.
It goes without saying that death happens to us all, and when it does, you’ll need some money saved aside for the final arrangements. Regardless of how you wish to be honored, this form of coverage eliminates the need for family members to cover these costs out of pocket.
In other words, when you purchase burial insurance coverage, you are attempting to protect your loved ones from the financial burden of covering your ultimate costs.
Unlike typical term, whole life, and universal life plans, burial insurance is meant to cover one-time and short-term expenditures. It isn’t intended to replace income or cover big costs such as homeownership or college tuition.
It’s also not a form of investment or retirement plan. Its primary purpose is to cover funeral costs, but it can also be used to cover other end-of-life obligations such as unpaid medical bills, credit card debt, or other liabilities incurred in the month of your death (phone bill, utility bills, car payment, etc.).
Burial Insurance vs. Life Insurance
Burial insurance is a product that might assist your loved ones in paying for your funeral costs. It is a form of life insurance policy, but because its emphasis is narrower.
It provides a lower benefit amount than typical term life insurance. As with other insurance, the cost is determined by your age and health at the time of purchase.
However, there are many advantages of getting burial insurance for those who know the main differences between burial insurance and life insurance.
Keeping that in mind, the following is a quick breakdown of the major factors that differentiate burial insurance policies from the traditional life insurance policy;
- Mainly for funeral costs that are incurred before your funeral –
What sets burial insurance apart from life insurance or any other type of insurance coverage is that burial insurance has been specifically designed for funeral or burial expenses and all of the costs that are incurred just before the burial.
This ensures that your loved ones aren’t stuck with the bill for your funeral. It also gives the person more control over how the funeral arrangements are made.
- Pays a lump sum immediately after the person’s death –
One of the benefits of having a burial insurance policy is that you don’t have to wait long to get the payments or get your payments in installments.
Burial insurance ensures that your beneficiaries get the money in a lump sum amount so that burial arrangements can be made without having to wait.
- The beneficiary can be a funeral home to pay expenses directly –
Another major advantage of having burial insurance is that the beneficiary does not have to be a person. You can assign the funeral home of your choice as the beneficiary who will get the payment for your funeral arrangements directly.
- Coverage is available up to $50,000 –
So, you want to be buried in style. That’s not a problem when you have burial insurance. This is one of the reasons why burial insurance comes highly recommended. Because you don’t have to fork up the money on short notice.
In this way, burial insurance ensures that you have more than enough money to cover your funeral expenses and all the costs that are associated with your burial.
- Easy to find with no medical exam required –
This is a big one. Remember how difficult it can get to take out a life insurance policy if you have an underlying health condition. Well, you don’t have to worry about that when taking out a burial insurance policy.
There’s no need to report your previous health record or take a medical examination to get approval for burial insurance.
It wouldn’t be wrong to say that burial insurance is one of the easiest policies that you can get approved for, which is another reason why it shouldn’t be taken for granted.
- Doesn’t have to have a waiting period of up to three years or more –
One of the most common misconceptions of burial insurance is that you could have to wait for up to three years or longer for approval.
That is not always the case. You can find a provider offering a burial insurance policy that comes with a much shorter waiting period.
This waiting period may vary depending on the insurance provider you go with, so it is recommended to shop around first when looking for burial insurance.
- The policy remains in effect until you die –
One of the best things about having a burial insurance policy is that the policy does not finish or get canceled because you stop paying.
In fact, the burial insurance policy will remain in effect until your death, making it one of the more reliable insurance policies available in the market today.
Now that we know exactly what we get with a burial insurance policy, it’s time to take a quick look at the traditional life insurance policy and what it gets you.
You will find that there are many advantages that the burial insurance policy has over life insurance, which is why it pays to get burial coverage before it’s too late.
The following are a few pointers to keep in mind of how life insurance differs from burial insurance:
- A waiting period of one year or even less
- The policy term might expire before your passing
- Pays out a lump sum – payment can also be done in monthly amounts
- Legal matters can delay benefits
- Coverage starts at $100,000
- The beneficiary must be an individual, organization, or trust
- A medical exam is required (not required for those getting life insurance from an employer)
Which Is Less Expensive: Life or Burial Insurance?
Both burial and life insurance tend to increase in price as you become older, and whether you are a smoker influences prices. With the exception of group plans that charge the same cost to all insured individuals, males pay more for burial as well as life insurance than women.
Life insurance is quite low if you are under the age of 40 or if you qualify for group coverage, such as plans offered by many corporations and some groups, such as credit unions and college alumni.
It’s a smart idea to buy additional life insurance beyond what your employer provides because you’ll be leaving your life insurance behind when you leave your job.
Burial insurance may be less expensive than life insurance as you get older. You can purchase insurance that doesn’t need a medical exam for an additional $20 each month.
If you have ongoing medical problems, this type of funeral insurance may be a reasonable bargain when compared to the alternatives.
A health questionnaire will be necessary, but no physical examination is required, and most burial insurance policies will cover practically everyone.
We utilized bids for a $100,000 policy with a 15-year term to compare term and burial insurance premiums. Keep in mind that if you do not die during the term, this sort of life insurance will expire with no reward.
|Gender & Age||
Annual Burial Insurance Rate
Annual Term Insurance Rates
|Female (70)||$770 – $2,200||$981 to $4,750|
|Male (70)||$1,060 – $2,950||$1,060 – $6,645|
|Female (60)||$610 – $910||$370 – $2,320|
|Male (60)||$792 – $1,150||$506 – $2,900|
Should You Buy Burial Insurance or Life Insurance?
There are several factors that you will need to consider when choosing between life insurance and burial insurance. The following are just a few factors that you would want to take into consideration when choosing between these two options:
- Burial insurance is preferred when you already have life insurance, but you are looking for more efficient and reliable coverage for funeral expenses.
- You can buy a burial insurance policy while you still have life insurance coverage.
- Burial insurance is recommended if you have dependents who do not have the financial means to pay for your burial expense.
- Burial insurance is a great thing to have if you like being independent and want to have control over your funeral costs.
- With burial insurance, you also get to choose the funeral home of your choice along with the beneficiary.
- Factors such as the person’s age or whether they have any pre-existing medical conditions may be a hindrance when it comes to getting life insurance, but it is not a problem when you are looking to get burial insurance.
- Burial insurance is also widely considered to be the most affordable out of the two options.
According to the National Funeral Directors Association, funeral costs typically range from $7,400 to $8,800, not including cemetery fees for a burial site and crypt or grave marker.
Given that Social Security only pays a $225 death benefit, you’ll almost certainly need burial insurance to protect your family’s finances.
The following are some of the most frequently asked questions concerning life and burial insurance policies:
What Costs Are Covered by Burial and Life Insurance?
Burial insurance covers the cost of your funeral and any related costs. Most plans enable your beneficiary to use any cash left over to reimburse expenses incurred shortly before the policy holder’s demise, such as doctor bills, etc.
Burial insurance proceeds can be used to pay for burial and funeral costs. This is usually done by the beneficiary that has been named in the burial insurance policy or other purposes, such as debt repayment, charity giving, etc.
Life insurance is typically used to cover expenses that your loved ones would struggle to cover without having their own income. For instance, raising kids, medical bills, etc.
What Are the Benefits of Burial or Life Insurance Policies?
Because burial insurance is meant to pay primarily for your end-of-life needs, it has a smaller face value than conventional life insurance. Burial insurance coverage typically ranges from $5,000 to $50,000.
You may get a cheap life insurance policy, but according to the most current figures, the typical life insurance policy is worth roughly $160,000. Nowadays, it is rare to find life insurance policies that pay out less than $100,000.
Is there a difference between Life and Burial Insurance?
Life insurance comes in a variety of forms, including term, whole, and universal policies, each with its own set of features. Term life insurance is the most cost-effective, but with coverage limitations of 15 to 30 years, it may expire before you die.
Universal and whole life insurance will last as long as you pay the premiums, which will rise considerably unless you get a level premium plan.
Universal or whole life insurance may be more expensive than term insurance, but they come with an investment or savings account that may be used to pay premiums in the future or to withdraw funds.
Burial insurance is a type of whole life coverage that has limitations on what the funds may be used for, such as your burial, funeral, and related costs. Burial insurance is designed to last until you die.
This means, just because you stop paying the premiums, the policy does not expire. This policy may be used for prepaying for your own funeral. This payment can be made to a funeral home of your choice.
It is important to note that this payment is non-transferable, so you need to choose the funeral home carefully.
Waiting Period for Burial and Life Insurance?
This policy does have a long waiting time before it pays out to allow the policy to acquire value.
If there is a waiting period, it’s normally three months or a couple of years if obtained via the group plan of the company you work in.
Normally, when a person dies before the end of the waiting period of their life or burial insurance policy, the premiums are refunded to their beneficiaries.
When may I purchase Burial or Life Insurance?
Anyone over the age of 18 may get a life insurance policy.
However, more often than not, folks don’t consider this option until they start a family or until their company provides free life insurance as part of the benefits.
On the other hand, a burial insurance policy is mostly for people over the age of 50.
There are many people who look towards their life insurance policy and smile, thinking that it will also cover their burial or funeral expenses – that is a grave mistake. Burial insurance is a sort of life insurance that covers last expenditures only.
It’s also known as last expenditure insurance or funeral insurance. Burial insurance is basically a complete life insurance coverage issued in modest increments, ranging from $5,000 to $25,000.
These plans aren’t designed for those who are starting a family and require life insurance to cover larger expenses like a mortgage, college tuition for their children, and income replacement throughout their peak working years.
Burial insurance is the ideal choice for those in poor health or on tight budgets to ensure that their funeral expenses are covered, providing peace of mind to their dependents.