Maybe you’ve heard of burial insurance, or seen ads offering ‘low-cost life insurance for seniors.’ Some companies even tout burial insurance starting at just $1 per month for thousands of dollars of coverage.
But how true are those claims? Is burial insurance worth it? What’s the catch?
Here are 10 basic things you should know about burial insurance for seniors if you’re considering a policy for yourself or a loved one.
Many people ask, “Is burial insurance the same as life insurance?” And the short answer is yes. Burial insurance is just a type of life insurance — though it has some unique features that set it apart from standard term or whole life.
Namely, burial insurance is intended for seniors. That means:
Of course, there are drawbacks too. You can’t get as much coverage with burial insurance as you would with another policy. And premiums are higher than they would be for an equally-sized term life insurance plan.
But those drawbacks have to be weighed in context.
Burial insurance is meant for elderly people, especially those who can’t get coverage due to health issues. For the right person, burial insurance fills a specific purpose that other kinds of life insurance don’t.
Probably THE most important feature of burial insurance is that there’s no medical exam to qualify for coverage.
Applicants may have to answer a few basic health questions, but you’re not likely to be turned away from a burial insurance policy because of a pre-existing condition. That means almost anyone can qualify, regardless of health.
Unlike other types of insurance, you’re not likely to be rejected for a burial insurance policy because of a pre-existing health condition.
In fact, some might say burial insurance is actually best for seniors who have medical concerns. The truth is that with no medical exam, rates are higher — and those in excellent health might save money with a different kind of insurance.
But for those who cannot qualify for traditional life insurance because of a medical condition, burial insurance is a good way to get the coverage you need.
As a small added benefit, the streamlined application process means you can apply for burial insurance online and get quotes almost instantly. You don’t have to wait days or weeks for exam results. So it’s easier to shop around with a few companies and find the lowest rates.
One big draw of burial insurance is that seniors can get a new policy late in life. Most burial insurance companies will sell policies up to age 80 or 85. That includes major, top-rated insurers like State Farm, Mutual of Omaha, and New York Life.
Seniors may be able to get term life insurance up to age 80 as well. But there’s a key difference.
That’s important because the size of your policy affects how much you’ll pay for it.
All other things being equal, a $50,000 policy will always cost more than a $5,000 one. And rates get higher with age — so a $50,000 policy becomes less affordable in your 60s, 70s, and 80s.
A larger, term life insurance policy might make sense for some. But a burial insurance policy might work better for those who only need a little coverage and have a limited budget to pay for it.
The name “burial insurance” is actually a little misleading. Why? Because the payout does not have to be used for a funeral. Burial insurance can cover other post-life expenses, too.
Burial insurance is a type of life insurance, which means the payout or “death benefit” functions the same way. It’s paid as a one-time, tax-free lump sum to the policy beneficiary. After that, it’s up to the beneficiary to spend the money however they deem most appropriate.
Burial insurance is paid out as a one-time, tax-free sum that the beneficiary can use however they see fit.
Of course, many who purchase burial insurance do so because they intend the money to be used for just that purpose. A funeral with burial costs around $10,000 on average — so many seniors seek coverage to protect their families from paying thousands out of pocket.
But burial insurance can provide seniors with a little more coverage than might be required for a funeral: up to $15,000 or $25,000 in some cases.
That leaves a little extra to be used for things like managing the deceased’s affairs, selling their home, and handling other financial necessities.
How much does burial insurance cost? It’s hard to give a straight answer, as prices vary so much by person. The Insurance Information Institute says burial insurance can cost as little as $2-$3 per week. But different sources give different estimates, depending on the amount of coverage and age of the applicant:
These rates are estimates, intended only as an example. Your own premium will be different.
But what’s plain to see is that burial insurance rates can vary hugely — from just $8 dollars per month to over $200.
How much you’ll actually pay for burial insurance depends on:
As mentioned above, your health won’t block you from getting burial insurance in most cases.
But some companies do ask general health questions on the application. If you answer that you have a serious pre-existing condition, your rates might still be higher than if you were deemed “healthy.”
Burial insurance is “guaranteed” coverage. If you keep up with premium payments throughout life, it promises to pay out after you pass away. That means it’s a secure investment for your funeral funds.
It also means the burial insurance policy could pay out more than you pay in. But that depends on how long you pay premiums for.
Remember, burial insurance is a lifelong contract. No matter what age a senior first purchases the insurance, they’re expected to pay premiums for the rest of their life. If they stop making payments, the coverage can lapse.
So while burial insurance offers financial security, it’s also a big investment — one that needs to be considered carefully.
Burial insurance is often lumped together with “preneed funeral insurance.” In fact, many people describe pre-need insurance as a type of burial insurance. This makes sense, as both policies are geared toward seniors as a way to put aside funeral funds during life.
But there’s a key difference between burial insurance and preneed funeral insurance. It has to do with how the money and funeral arrangements are handled.
Burial insurance is a lot more like traditional life insurance in this regard.
The insured pays premiums to their insurance company, who then writes a check to the family after that person dies. The family can use those funds however they see fit — whether for a burial, cremation, or anything else. It doesn’t have to be a funeral.
But preneed funeral insurance is a lot less flexible.
With a preneed funeral plan, the insured person selects a funeral home and makes arrangements during life. Premiums are paid directly to that funeral home, so everything is covered when the insured passes away.
The biggest benefit of a preneed policy is that the family is relieved of having to make funeral arrangements. That’s already taken care of. But they aren’t able to use the funds for any other post-life expenses like they could with a burial insurance policy.
What’s more, if the funeral home goes out of business, the preneed insurance disappears. That’s a big risk to take with such a large investment.
Here’s the tricky thing about burial insurance: You can get coverage almost instantly, but you aren’t actually covered right away. Most policies include a two-year waiting period or “contestability clause” where the insurance not yet in full effect.
If the insured person passes away during the two-year waiting period, their policy won’t pay out in full. Instead, the insurer will likely refund paid premiums plus interest to the beneficiary. This will be a much smaller amount than the full policy value.
You can purchase burial insurance coverage almost instantly. But your coverage does not take full effect for the first two years.
This is an important distinction.
Many companies highlight the fact that burial insurance lets you get coverage “with no waiting period.” But those claims can be misleading.
While it may be possible to fill out an application and get approved in mere hours or days, your coverage will still be subject to the two-year contestability clause.
In plain terms: If someone buys a burial insurance policy knowing they are sick and will pass away in a few months, they should not expect their beneficiaries to receive the full amount of coverage in their policy.
So if you’re considering a company that offers “no-waiting-period” burial insurance, make sure you’re clear on what those terms mean before signing on.
Depending on where you look, you might read that burial insurance is the perfect financial solution for seniors. Or, you might read that burial insurance should be avoided at all costs. It’s hard to find opinions in between.
So — what’s the truth? Is burial insurance worth it?
That has to be answered on a case-by-case basis. Burial insurance might be completely worth it for one person, but better avoided by the next.
Luckily, it’s relatively easy to figure out whether burial insurance is worth it for you. All you need to do is check rates — which you can do for free online — and map out the long-term cost versus the policy’s overall value.
Take a look at a few examples below:
|Age of Purchase||Cost Per Month||Cost Over 2 Years||Cost Over 6 Years||Cost Over 10 Years||Cost Over 15 Years|
If you’re likely to pay more in premiums than the policy is worth, then burial insurance might not be the best choice. But if the policy is worth more than what you expect to pay in, it could be a wise investment.
Of course, it’s impossible to know exactly how much you’ll spend on burial insurance. Premiums are a lifelong commitment. So you’ll likely want to make a long-term projection to be on the safe side.
Remember to check rates from more than one burial insurance company before deciding.
Rates vary a lot from one insurer to the next, so burial insurance might be worth it from one company but not another.
Burial insurance might be worth it if you need a small amount of coverage in your 60s, 70s, or 80s. But the only way to know for sure is by checking prices and comparing your rate with the policy’s overall value.
Luckily, you can check burial insurance prices without having to get on the phone with an insurance agent. This allows you to compare plans and rates on your own time, without being pushed toward any specific policy before you’re ready.
This site offers a tool for you to compare rates from multiple burial insurance companies in one place. Just answer a few simple questions about your age, gender, desired coverage, and basic health status to see rates. You can get started using the link below.
Burial insurance is a type of life insurance that pays out a smaller benefit with the specific purpose of paying end-of-life expenses. Whether these expenses are medical bills, debts, or funeral costs, beneficiaries will get immediate access to the death benefit so they won’t have to pay out of pocket.
Many seniors opt to purchase burial insurance so their next of kin don’t need to worry about finances during an already hard time.
Burial insurance is worth buying for seniors if they’re worried about end-of-life expenses. While most seniors hope to be financially secure before they pass, there are still a lot of unknowns when it comes to end-of-life costs. No matter what age you are, making sure your family will be financially set when you pass is well worth purchasing burial insurance.
A typical burial insurance policy will be paid out directly to the policyholder’s beneficiary. As a result, the beneficiary could spend the death benefit on whatever they want. However, most policyholder’s will make a plan with their beneficiary to determine beforehand where that money will go.
Of course, the main purpose of burial insurance is to cover funeral costs, which are constantly on the rise. Because of the freedom of these policies, though, beneficiaries can use extra funds to cover unexpected expenses that arise in the weeks following the death of a loved one.
Most burial insurance policies are ‘guaranteed issue’, which means agencies can’t deny a policy. Guaranteed issue policies allow seniors who might not otherwise qualify for life insurance to get a policy.
However, depending on answers to the application, premiums could be increased on a burial insurance policy.
Most funeral homes offer pre-paid funeral plans. These plans allow you to pick out all the details for your funeral and pay upfront or in installments.
However, most experts agree that pre-paid funeral plans are risky and getting insurance through an agency is safer. Pre-paid funeral plans don’t allow for much flexibility, they might be voided if you die in another state, and they could be completely cancelled if the funeral home goes out of business.
On average, a burial insurance policy will cost seniors about $30 to $50 a month for a $10,000 policy. These costs will vary depending on age, gender, and the location of the policyholder. For those wanting larger policies, the premiums will inevitably increase as well.
Technically, burial insurance is a form of life insurance. When people think of life insurance, though, they often think of a large whole life insurance policy that includes a death benefit. More often than not, burial insurance policies are term plans that are significantly smaller, all with the purpose to pay final expenses.
If a senior already has some form of life insurance through an agency, it makes the most sense to get their burial insurance through that company.
For those starting their insurance search from scratch, it’s important to start by deciding what your needs are and what type of coverage you’ll need to meet those needs. Then, request quotes from several well-known agencies, reaching out to those that meet your criteria.
Most burial insurance companies have online applications, making it quick and easy to apply. However, for those needing more guidance, it’s also possible to apply on the phone with the help of an agent.
Burial insurance applications are quite simple when compared to more detailed life insurance policies. For the most part, you’ll be asked general personal questions, like your age, your gender, and where you live. You might be asked a few basic health questions, though these don’t often delve in too deeply.
There are waiting periods for some burial insurance policies. But these will depend on what company you’re using and your specific plan.
On average, burial insurance plans have a two year waiting period. During these two years, most companies offer graded benefits, or a growing percentage of the death benefit the longer the policy ages. By year three, most policies will pay everything.
There are burial insurance options with no waiting periods, though these do tend to be more expensive.
Most burial insurance policies are term, meaning you’ll pick the length of time you want the coverage. These terms can be anywhere from a year to thirty years.
There are burial insurance whole life insurance options, but these don’t make much sense for seniors. They’re more expensive and while they’ll offer coverage for the length of your life, that time could probably be covered with a term policy.
As long as you pay your premiums on time and your policy term hasn’t passed, burial insurance can’t be cancelled by your insurance company.
Seniors can cancel their burial insurance policies by calling in and cancelling them or by stopping payments. But if seniors stop paying or cancel their policy, they won’t receive their death benefit.
You can pick whomever you want to be your burial insurance beneficiary. Most seniors opt for a child to be their beneficiary, since it makes the process a lot easier. One of the benefits of burial insurance is you can decide on anyone to receive your death benefit.
Seniors should pick the person or people who will be most affected by their death to be their beneficiary. While burial insurance is very flexible with who can be a beneficiary, it all comes down to trust and intent.
If you’re a senior considering burial insurance, sit down and talk with the person you want to be your beneficiary. Let this person know what your expectations are and how you want the death benefit to be used. These conversations will give you a clear vision about whether the person is able to follow your wishes.
Most burial insurance policies allow for contingent beneficiaries, so you can actually put more than one person down.
The average funeral costs $7,360. The average cremation costs $6,260. These prices will vary depending on where the deceased lives and what services they want for their end of life.
Medicare does not help seniors pay for funeral expenses.
Social Security doesn’t pay for a funeral directly, but does provide a death benefit to a surviving spouse or child. The death benefit is currently $255.
Term life insurance is a policy that lasts for a very specific set of time. When you purchase the policy, you decide on the length of the term, which can be from five years to thirty years. Once this term is over, you are no longer covered.
Whole life insurance, also called permanent insurance, is one that lasts the entirety of your life. No matter when you die, as long as your policy is active, you will be covered.
Term life insurance is usually less expensive than whole life insurance.