Have you ever wondered what would happen to your loved ones if you died today?
Did you know the average cost of a funeral in 2021 was $7,848? If you pass away today, would your family be financially burdened simply trying to honor you with a proper funeral and burial?
Burial insurance may be what you’re looking for. It will help you care for the ones you love even after you’re gone.
Keep reading to learn what burial insurance Plan is and how it may be the answer to a problem you didn’t even realize you had.
Table of Contents
What Is Burial Insurance?
Burial insurance helps families pay the expensive costs that come with arranging things when a loved one passes away.
Unlike other insurances, burial insurance addresses funeral and burial expenses directly. It may also cover other end-of-life costs depending on the type of plan purchased.
You can also refer to burial insurance as funeral insurance or final expense insurance. These terms depend on the insurance company you are working with and the policy you choose.
How Does Burial Insurance Work?
Setting up burial insurance begins with selecting a policy from a company of your choosing. Your insurance agent then helps you select the amount of coverage best for you. You then name your beneficiary.
As an example, let’s say a person were to choose Mutual of Omaha. Their insurance agent would help them determine their best level of coverage. The agent would also help set up the policy and make sure all paperwork was in order.
Upon the death of the insurance holder, the beneficiary of the policy would contact the insurance company, Mutual of Omaha.
To begin the claim process, the insurance company would ask the beneficiary for a copy of the insurance policy and a copy of the death certificate.
This process information can be important to know for both the policyholder and the beneficiary.
How Is Burial Insurance Different From Life Insurance?
Burial insurance is a type of life insurance.
The main difference between the two is that burial insurance has a smaller payout. Its purpose is to cover funeral and burial costs only.
There are times when burial insurance may allow for other expenses to be covered. These might include debts or legal fees. However, these remain the exception and not the rule.
Life insurance, on the other hand, is designed to help cover living costs.
Final expense insurance beneficiaries only receive between $5000 and $20,000. Life insurance beneficiaries may receive thousands or even hundreds of thousands of dollars to help replace the income of a lost loved one.
What Does a Burial Insurance Plan Cover?
The best burial insurance will cover not only the costs loved ones will be expecting at the time of your death, but also any unexpected ones.
Families generally have an emotional understanding that there will be costs for a funeral. This may include a viewing and funeral service.
However, families may not be prepared for these things financially.
This is where final expense insurance for seniors can be beneficial. The policy pays these expenses so that families are not burdened in this way.
Some of the best burial insurance will also cover expenses that families may not expect, like medical bills. It may also cover other burial options such as cremation.
Even the best burial insurance will not include a monetary payout for the beneficiary of the policy. These policies are specifically intended to cover the costs related to burial and funeral services.
There are some policies, however, that have clauses allowing for funds left over to be used for other expenses related to the deceased.
For example, if an AARP final expense insurance policyholder’s family had paid all burial and funeral expenses, they may still have money from the policy remaining.
Depending on their policy, they may be able to use the remaining money to cover debt or legal fees incurred by their deceased loved one.
The more financially valuable the policy is, the more money the family will have left after they pay expenses. Of course, the more valuable policy will also come with a higher premium.
How Much Does Burial Insurance Cost?
As one of the most affordable types of insurance, burial insurance is accessible on most budgets.
Burial insurance policyholders generally purchase between $5000 and $40,000 in coverage. Mutual of Omaha’s final expense policies begin as low as $20 per month, depending on the age of the policyholder.
Mutual of Omaha burial insurance offers a policy they call living promise, which has a benefit amount as low as $2000.
The Mutual of Omaha living promise is a nice option for those considering cremation or looking to invest in a low-cost option.
Types of Premiums
An insurance premium is an amount paid to the insurance company to keep your policy active. Most insured people prefer to pay premiums monthly, but you can pay premiums yearly as well.
There are also different ways that insurance premiums can be set up, depending on your policy. Burial insurance premiums may look like one of the following options.
These are called ‘stepped’ because they increase each year. This type of premium is computed each time you renew your policy. The insurance company will base the new premium on gender, age, and death benefit.
As the opposite of stepped premium, the leveled premium is a rate that is locked in for life. For as long as the premium is paid, this premium will never increase. The insurance company will also base this rate on gender, age, and beneficiary benefit.
This type of premium has an end date. Once the insured reaches a predetermined age or dollar amount limit, premiums stop. The policy and coverage continue despite no longer requiring a premium to be paid.
Guaranteed Payout Premium
When this type of premium is selected it guarantees the beneficiary a payout. They will receive the higher: the total dollar amount of premiums paid or the insured amount.
Who Can Get Final Expense Insurance?
Anyone between the ages of 45 and 85 is eligible to apply to purchase burial insurance.
A great thing about burial insurance for seniors is there is most often no medical exam necessary to qualify.
Depending on the type of policy you are applying for, you can opt to answer medical questions or opt-out of those same questions.
This means even if you do not have healthcare, or if you have a pre-existing condition, you most likely will be able to purchase a policy.
Different Types of Policies to Consider
It is important to think ahead about the type of burial policy that will best assist your family at the time of your death. There are three types of policies to consider.
This policy type requires the policyholder to answer medical questions with which the insurance company can evaluate your health. The policy does not require a medical exam.
A simplified policy does have factors that may cause an insurance company to deny a policy to someone. These include pre-existing conditions, smoking, or other activities the insurance company deems unhealthy.
This type of policy is often more costly because the insured does not answer any medical pre-screening questions while obtaining insurance. Because of the risk involved to the insurance company, premiums are higher.
A policy of this type may also come with a waiting period, generally 2 to 3 years, before full benefits go into effect.
If the policyholder were to pass away due to natural causes during this time, their beneficiary would only receive a portion of the policy payout.
However, insurance companies do honor the full policy amount in cases of accidental death.
A policy of this type includes a contract with a specific funeral service company.
With a pre-need policy, an agreement is in place and all funeral products are selected by the policyholder in advance.
All financial transactions occur between the insurance company and the funeral company, with the necessity of involving a beneficiary.
The important part to understand about pre-need policies is that they can help save families money. They will lock in today’s prices for services and products that may cost much more in the future.
However, the flip side of this is that if you end up paying less than cost, your family is not refunded the difference.
How to Choose the Best Burial Insurance Option
It is important to think carefully not only about what level of burial insurance is right for you personally but also what is the right fit for your loved ones financially.
There are several important factors to consider personally, such as:
- What financial level of coverage do you need?
- Are you willing to take a medical exam?
- Does your insurance provider have family support services available?
- How much do funerals and burials cost in your area?
- Have you looked at final expense reviews for providers near you?
Choosing burial insurance may seem like a small choice in some ways. Burial insurance policies have many of the same main features – similar premiums and payouts. It’s the small details that will help one policy stand out from the others.
When end-of-life occurs you want to be sure your family is working with someone they can trust. It is also important to make sure they have the policy to work with, one with just the right choices to fit the situation.
Is Burial Insurance Worth Purchasing
When you consider the costs associated with a funeral, then add in burial expenses and any medical debt incurred and this can be incredibly burdensome for families.
Planning for how your family will cover these costs is very important. You do not want your family to find themselves with a large financial burden at a time when they are already struggling with grief and loss.
Final expense insurance companies have developed these policies to give both seniors and their families peace of mind.
Choices and arrangements can be made ahead of time so that when end-of-life arrives times can be spent enjoying one another’s company instead of discussing arrangements.
What Happens if My Family Can’t Afford Burial?
Families have a few options if the cost of burial is too much for them to afford.
If the deceased is a veteran, they may qualify to be buried at one of the national cemeteries.
Or, if a natural disaster is the cause of death, the family may be able to apply for federal aid through FEMA. This aid package should cover both funeral supplies, burial, and help with a headstone.
Outside of these options families can apply for a loan through their local bank or try to raise funds through social media.
Families should also check with their local state government as many states have programs to help in these situations.
How to Get Burial Insurance Plan.
There are many companies to choose from when you are ready to get burial insurance.
One of the best ways is to work with an independent broker who can help you determine which insurance is right for you and your family.
An independent insurance broker will work with many different insurance companies, giving you the ability to compare many different policies.
This will allow you to have an objective view of companies from someone who has insider knowledge of the business.
Are You Ready to Get a Burial Insurance Quote Today?
If you’re between the ages of 45-85, you can get qualified for final expense insurance now.
It makes good financial sense for the well-being of your family to take care of end-of-life expenses ahead of time. Even just funeral expenses can unnecessarily burden a family.
You can give yourself the gift of peace of mind with burial insurance by contacting us today to receive a quote.