Have you ever considered how much your funeral might cost?
The answer might surprise you. Once you add up the costs of the burial plot, casket, burial vault, headstone, memorial service, funeral home rental, and other final expenses, the average funeral cost in the U.S. is over $10,000.
Funeral costs can be a massive financial burden to loved ones when they are already grieving your loss.
Funeral costs are forcing many families to choose cremation (56% of Americans were cremated in 2020).
If a traditional burial is important to you, an affordable insurance policy, called burial insurance, can serve as a solution. These policies pay your loved one a lump-sum payment upon your death to cover funeral expenses, burial costs, and any other end-of-life expenses you may have.
Let’s get into more details.
What Is Burial Insurance?
Burial insurance is just whole life insurance. It’s whole life insurance that’s sized to cover final expense costs. These death benefits generally fall between $1,000 and $50,000, as shown in the table below.
|Insurance Company||Death Benefit Ranges|
|Mutual of Omaha||$2,000 – $50,000|
|Aetna||$2,000 – $50,000|
|Transamerica||$1,000 – $50,000|
|AIG||$5,000 – $35,000|
That is, to cover funeral and burial costs and other final expenses (also referred to as “end-of-life expenses”).
Don’t let anyone confuse you. Burial insurance is the same thing as:
- Final expense insurance
- Funeral insurance
And because these policies all fall under the “life insurance” umbrella, they are sometimes referred to as burial life insurance, final expense life insurance, and funeral life insurance, respectively. We’ll use these interchangeably throughout the article.
Burial Insurance = Life Insurance
This is one of the most common questions about burial insurance.
Burial insurance is simply whole life insurance (with a payout that matches how much you need to cover final expenses.
Life insurance is an agreement to make a payout (“death benefits”) to your beneficiary when you (the “insured”) die.
A whole life insurance policy lasts your “whole” life (as long as you keep making monthly premium payments!).
This differs from a term life insurance policy, valid for a pre-set time (called the “term”). The most common “terms” are 10, 15, 20, and 30 years.
What Is Burial Insurance Used For?
You can use a burial insurance payout for anything. You are not limited to using these funds for burial and funeral expenses.
Just because the policy is a “burial” insurance policy, this does not mean that your use of the funds is restricted.
While people typically use the funds for funeral costs and other final expenses, your beneficiary can use the death benefit payout for any purpose.
This could include paying medical bills, any financial obligations or outstanding debts you have, or even time off from work for your loved ones while they grieve your loss.
Burial Insurance Policies Build Cash Value
Yes, some burial insurance policies do build cash value over time.
This means that, while you’re paying for coverage every month or year, your life insurance company is setting aside a portion of your payments in a savings account. You can borrow against these funds or withdraw them at any time you like.
Why Purchase Burial Insurance
Here are some reasons why burial insurance is needed:
Funeral costs can be quite expensive, ranging from several thousand to tens of thousands of dollars. According to the National Funeral Directors Association, the median cost of a funeral with viewing and burial was $7,640 in 2019. This cost includes the services of a funeral director, transportation of the body, preparation of the body, casket or urn, cemetery plot or crypt, and headstone or grave marker, among other expenses.
Cremation is becoming an increasingly popular option for final arrangements. According to the Cremation Association of North America, the cremation rate in the United States was 56% in 2020, up from 48% in 2015. While cremation is generally less expensive than burial, it still involves costs such as cremation fees, urns, and memorial services.
Burial insurance can help cover these costs and ease the financial burden on loved ones during a difficult time. By having burial insurance, individuals can ensure that their final arrangements are taken care of without leaving their loved ones with a significant financial burden.
This financial motive above is the most significant and most tangible motivation for funeral insurance policy sales.
However, people often have a deeper, more personal motivation when purchasing funeral insurance. I.e., their desire to avoid cremation, whether for personal, family, or religious reasons.
Cremation is still a relative novelty within American culture. Many Americans are reluctant to give up the traditional, more “dignified” option (burial), where they may be put to rest next to family members and where their loved ones have a dedicated spot to “visit” and grieve.
How To Purchase Burial Insurance
To purchase burial insurance, you must contact the company you are interested in or an independent life insurance agent who can compare multiple policies.
This can be done quickly over a phone call or online consultation with an agent.
The application process should take around fifteen minutes from start to finish if it’s your first time purchasing this kind of policy (and even less if not!).
Major Burial Insurance Companies
Remember that burial insurance is just life insurance, so any major life insurance company likely sells burial insurance. Some of the most well-known burial insurance companies are:
- Globe Life
- Colonial Penn
- Mutual of Omaha
- AAA Life
- AARP / New York Life
While you can buy from the insurance company directly, you’ll be better off using an independent insurance agent. Independent agents can help you compare your monthly premiums across dozens of insurance companies.
Burial Insurance Costs
The cost of burial insurance coverage primarily depends on your age. Since most of these policies are guaranteed acceptance, age is the life insurance companies’ primary way of gauging your risk.
Monthly premiums can range anywhere from $10 per month to $80 per month, depending on the size of the policy’s death benefit payout and, again, your age.
Medical Exam NOT Required
A key concern for many people is whether they must take a medical exam. Here’s the good news:
Burial insurance is almost always a “simplified issue” or a “guaranteed issue” life insurance policy, neither of which requires a medical exam.
With “guaranteed issue” policies, you cannot be denied if you meet the (age-based) eligibility criteria.
With “simplified issue” underwriting, you must answer a few health questions, but again, you will not be required to take a medical exam.
The Best Insurance Companies for Seniors
When it comes to finding the best burial insurance companies for seniors, Mutual of Omaha and Transamerica are often regarded as top choices. These companies have established themselves as trusted providers in the insurance industry and offer comprehensive burial insurance policies tailored specifically for seniors.
Mutual of Omaha is renowned for its strong financial stability and exceptional customer service. With a history spanning over a century, Mutual of Omaha has earned a reputation for reliability and dependability. They offer burial insurance plans that provide coverage for funeral expenses, including funeral services, burial or cremation costs, and other related expenses. Their policies are designed to offer seniors peace of mind by ensuring that their loved ones are not burdened with financial responsibilities during a difficult time.
Transamerica is another highly regarded burial insurance provider for seniors. With a strong presence in the insurance market, Transamerica has built a solid reputation for its commitment to customer satisfaction. They offer burial insurance policies that provide coverage for funeral and burial expenses, allowing seniors to plan ahead and alleviate the financial burden on their families. Transamerica’s policies are flexible, allowing seniors to choose the coverage that best suits their needs and budget.
Both Mutual of Omaha and Transamerica understand the unique needs of seniors when it comes to burial insurance. They offer competitive rates, flexible payment options, and a streamlined application process that takes into consideration the specific needs and preferences of seniors. These companies prioritize customer care and provide personalized support to help seniors make informed decisions about their burial insurance coverage.
Is Burial Insurance Worth It? The Pros and Cons
Funeral Insurance Pros
- No medical exam required: Unlike traditional life insurance policies, burial insurance typically does not require a medical exam. This can benefit individuals who may have difficulty obtaining traditional life insurance due to pre-existing medical conditions.
- Fast approval process: Burial insurance policies typically have a fast approval process, with some policies being approved in as little as 10 to 15 minutes.
- Fixed premiums: Burial insurance policies typically have fixed premiums, meaning that the premium amount will not change over time. This can provide peace of mind for policyholders who are on a fixed income.
- Cash value accumulation: Some burial insurance policies have a cash value accumulation feature that allows the policyholder to borrow against the policy or surrender it for cash value.
- Tax-free payout: The payout from a burial insurance policy is typically tax-free, which can provide additional financial relief for loved ones.
Burial Insurance Cons
- Lower coverage limits: Burial insurance policies typically have lower coverage limits than traditional life insurance policies. This may not be enough to cover all funeral and burial expenses.
- Higher premiums: While burial insurance policies typically have fixed premiums, they may be higher than traditional life insurance policies with similar coverage amounts.
When Burial Insurance Is Worth It
In the end, here is how I would look at the decision:
- Will you have enough in savings to cover the cost of an average burial and funeral (at least $7,000) from now through the end of your life?
If yes, you don’t need burial insurance. If no, consider the following two questions:
- How important is a traditional burial to you?
- Is the alternative (cremation) acceptable, given your personal preferences and religious beliefs?
Consider A Guaranteed Issue Policy
You should also consider how good your health is. If you are in relatively good health, going for a traditional whole life policy (with full underwriting) will likely be cheaper than a burial insurance policy.
If you have serious health conditions (or are in your 80s), a burial life insurance policy will likely be more attractive to you, given that approval is guaranteed without a medical exam.
In any case, please give yourself enough time to consider this important and emotional decision. And if you have any questions, don’t hesitate to contact us at hello [at] getsure.org.
The GetSure Team