Funeral Insurance: The Ultimate Guide (2021)

Funeral Insurance
Funeral Insurance: The Ultimate Guide (2021)

There comes a time when planning for your end-of-life expenses is needed. This is both a smart and financially responsible task to take on as these expenses can cost between $8,000 – $12,000 and can quickly increase.

These costs do not consider outstanding car payments, a final utility bill, credit card balances, etc.

Fortunately, there is a low-cost product that can help families account for these expenses.

Funeral Insurance: The Ultimate 2021 Guide

Funeral Insurance is specifically designed for seniors. This plan is simple to understand, easy to obtain, and invaluable to have by offering affordable premiums and permanent benefits.

We have put together this ultimate guide to explain the policy features, the top companies to work with (plus reviews), how to submit an application, and everything in between. The hope is to help you determine if this is the right insurance coverage for you by the end of this review.

how does it work drawing gears

Understanding Funeral Insurance

This product is a type of whole life insurance. Two key factors separate it from traditional whole life plans.

No Medical Exams: The plan goes through a simplified issue underwriting process. This means no doctor’s office visits, and seniors can complete the process from the comfort of their own home over the phone. The applicant can expect this process to take roughly 30 minutes, and once approved, the policy will be issued in a matter of days.

Affordable Coverage: In contrast to a larger whole life policy, funeral insurance has coverage amounts typically from $2,000 – $40,000. This makes the monthly premiums much more affordable while still receiving the valuable permanent benefits of a whole life policy.

Product Features

With every whole life product, regardless of where you get it, there will be three key benefits that are included.

Price Lock: The monthly premium will never fluctuate. For any senior on a fixed income, this is a major benefit. With these permanent policies, you will always know the price no matter if it is in year one or thirty of the coverage.

Coverage Lock: The coverage will never expire, terminate, or decrease. This gives every applicant peace of mind knowing that the policy will continue to be active with the death benefit available when your family needs it most.

Builds Cash Value: This allows the policyholder to borrow against the policy if needed. This is money you can access while you are still alive. Consider this to be a living benefit. With each payment made, a portion will go towards the cash value. Over time, this amount will grow and is what you can borrow from.

Funeral Insurance Can Pay For Anything

The great thing about this insurance coverage is its flexibility. Beneficiaries can use the death benefit for anything necessary. Make sure to communicate with your beneficiary so they know what your final wishes are and how you would like the money to be spent.

While there are no rules or regulations, a list of common items that the lump-sum payout is typically used for.

  • Funeral
  • Cremation
  • Interment
  • Memorial/Celebration of Life
  • Medical Bills
  • Charity Donations
  • Credit Cards
  • Post-Mortem Expenses
  • Other End-of-Life Expenses
  • Remaining Balance on a Mortgage
  • Legal Expenses
  • Remaining Car Loan Balance

Funeral Insurance Coverage with No Exam and No Waiting Period

Funeral coverage with no waiting period and no medical exam is attainable, but you will need to be able to answer favorably to a series of health questions. Depending on how you answer these questions will determine eligibility for specific plan tiers.

Under no circumstances will you be required to get a medical exam to receive funeral insurance with no waiting period.

Four Types of Funeral Insurance Plans

Your medical history will be the basis of which of the four plans below you can qualify for.

Level: This product is reserved for the healthiest of applicants. With strict underwriting guidelines comes no waiting period and the lowest monthly premiums. Out of the four plans, this is the only one that offers no waiting period.

Graded: This product has a two-year waiting period with immediate partial coverage due to the more lenient underwriting. The first-year death benefit is a percentage of the total coverage amount increasing in the second year. Complete coverage can be awarded upon the conclusion of the waiting period.

Modified: With a standard two-year waiting period and mid to high prices, this plan is not recommended. If death occurs during the waiting period, the beneficiary will receive the paid premiums plus 10%. If this is the only option you can qualify for, it may save you money using a Guaranteed Issue plan with no health requirements.

Guaranteed Issue: Asking no medical questions, this plan is best for those with a chronic or terminal illness. It can also be used for someone who simply does not want to answer any medical questions. It is always recommended that the applicant answer health questions to qualify for a more favorable policy structure and lower rates.

Cheap Option four plan types

The Cost Of Funeral Insurance

Premiums can vary drastically from person to person. This is due to the way companies underwrite their products. So the price your friends, loved ones, or even spouse pays depends largely on the policy they can qualify for.

How is Price Determined?

The price will depend on four key factors.

Health: Your health history will be the most important aspect of determining the price you will pay. The more complex your medical history is, the higher risk it is for the carrier to cover. With higher risk comes higher prices.

Age: Once the policy is taken out, the price will never change. However, the longer you wait to buy coverage, the more the price will be. Each year that passes without buying coverage, the price will rise.

Gender: On average, females live four years longer than males in the USA. This makes men a higher risk to insure, meaning they will pay a higher premium than women for the same coverage.

Policy Amount: The more coverage taken out, the more a policyholder can expect to pay each month.

How Much is Funeral Expense Coverage?

The chart below shows the price range that seniors can expect to pay. If you have a simple medical history, you will be at the lower end of the price range. If you have a complicated health history, you will be paying more towards the higher end of the price range.

Female

Monthly Premium Range

Non-Smoking Rates

Age$10,000$15,000$20,000
45$23 – $34$32 – $49$42 – $64
50$24 – $39$35 – $57$45 – $80
55$28 – $47$40 – $69$52 – $103
60$33 – $54$48 – $80$63 – $119
65$41 – $66$60 – $99$79 – $146
70$53 – $80$78 – $120$103 – $177
75$72 – $116$107 – $173$142 – $254
80$98 – $190$146 – $283$194 – $411
85$136 – $220$202 – $328$269 – $436

Male

Monthly Premium Range

Non-Smoking Rates

Age$10,000$15,000$20,000
45$27 – $47$39 – $68$51 – $89
50$31 – $56$44 – $83$58 – $110
55$36 – $61$52 – $91$69 – $135
60$44 – $68$64 – $101$84 – $149
65$56 – $91$83 – $135$110 – $199
70$75 – $106$110 – $158$146 – $233
75$100 – $150$148 – $223$197 – $328
80$140 – $232$208 – $346$276 – $461
85$193 – $312$288 – $467$382 – $621

Best Funeral Insurance Companies And Plans

This is a list of the best companies and the premier plan that each offers. There are funeral insurance plans right for specific health histories and should be discussed with a trusted insurance professional.

Logo Icon Insurance Company

AIG

  • Plan Name: Guaranteed Issue
  • Age Eligibility: 50 – 80
  • Death Benefit Size: $5,000 – $25,000
  • Health Questions: None
  • Waiting Period for Benefits:  2-years
  • State Availability: 49 states & DC (excluding NY)
  • A.M. Best Company Rating: A (excellent)

Americo

  • Plan Name: Ultra Protector I
  • Age Eligibility: 50 – 85
  • Death Benefit Size: $2,000 – $30,000
  • Health Questions: Yes
  • Waiting Period for Benefits:  None
  • State Availability: 47 states & DC (excluding MS, NY, & VT)
  • A.M. Best Company Rating: A (excellent)

CVS/Aetna

  • Plan Name: Accendo Level
  • Age Eligibility: 40 – 89
  • Death Benefit Size: $2,000 – $50,000 (depending on age)
  • Health Questions: Yes
  • Waiting Period for Benefits: None
  • State Availability: 39 states & DC (excluding CA, CT, DE, FL, MA, MI, NY, ND, PA, SD, WA)
  • A.M. Best Company Rating: A (excellent)

Foresters Financial

  • Plan Name: PlanRight Level
  • Age Eligibility: 50 – 85
  • Death Benefit Size: $5,000 – $35,000 (depending on age)
  • Health Questions: Yes
  • Waiting Period for Benefits: None
  • States Covered: All 50 & DC
  • A.M. Best Company Rating: A (excellent)

Gerber

  • Plan Name: Guaranteed Acceptance
  • Age Eligibility:  50 – 80
  • Death Benefit Size: $5,000 – $25,000
  • Health Questions: No
  • Waiting Period for Benefits:  2-years
  • State Availability: 49 states & DC (excluding MT)
  • A.M. Best Company Rating: A (excellent)

Guarantee Trust Life

  • Plan Name: The Heritage Plan
  • Age Eligibility: 40 – 90
  • Death Benefit Size: $2,500 – $25,000
  • Health Questions: Yes
  • Waiting Period for Benefits: 2-years
  • State Availability: 48 states & DC (excluding CA & NY)
  • A.M. Best Company Rating: A (excellent)

Mutual of Omaha

  • Plan Name: Living Promise Level
  • Age Eligibility: 45 – 85
  • Death Benefit Size: $2,000 – $40,000
  • Health Questions: Yes
  • Waiting Period for Benefits: None
  • State Availability: 49 states & DC (excluding NY)
  • A.M. Best Company Rating: A+ (superior)

Oxford Life

  • Plan Name: Assurance
  • Age Eligibility: 50 – 85
  • Death Benefit Size: $5,000 – $30,000
  • Health Questions: Yes
  • Waiting Period for Benefits: None
  • State Availability: 45 states & DC (excluding AL, MS, MT, NY, WV)
  • A.M. Best Company Rating: A (excellent)

Royal Neighbors of America

  • Plan Name: Simplified Issue Whole Life
  • Age Eligibility: 50 – 75
  • Death Benefit Size: $7,000 – $30,000
  • Health Questions:  Yes
  • Waiting Period for Benefits: None
  • State Availability: 43 states & DC (excluding AL, AK, HI, LA, MA, NH, NY)
  • A.M. Best Company Rating: A (excellent)

Transamerica

  • Plan Name: Immediate Solution
  • Age Eligibility: 45 – 85
  • Death Benefit Size: $1,000 – $40,000 (depending on age)
  • Health Questions:  Yes
  • Waiting Period for Benefits: None
  • State Availability:  All 50 & DC
  • A.M. Best Company Rating: A (excellent)

calculator with piggy bank

Is Paying For Funeral Insurance Worth It?

If you or your family have no savings set aside for inevitable funeral costs, this product is necessary. This coverage will allow family members to respectfully lay the deceased to rest while not taking on a financial burden. Consider it a gift to those you love.

Pros and Cons of Funeral Insurance

There are different variables to consider when looking to see if this product is right for you. Every individual’s financial situation is different, and this needs to be taken into account when planning for end-of-life costs.

Pros

Cons

Affordable coverageSlightly more expensive than a term plan
Rates never changeLower coverage amounts than other products
Coverage never decreases or terminatesLiving a long time could lead to overpaying
Simplified underwriting (no medical exam)
Builds a cash value over time
Quick payout distribution to families
The payout can be used for anything

Do The Math

To better understand if this product is right for you, for parents, or other loved ones, all that is needed is a calculator and basic math skills.

The average life expectancy in the United States is 78.7 years old.

For example, if a healthy female takes out a $10,000 policy when she is 65 years old, how long would she need to live to be overpaying the amount she could have saved in a savings account?

Let’s look deep into the numbers:

Here is a simple chart to illustrate the amount of money the applicant would pay into the account up until the day she passes away.

Woman’s Age

Amount Paid Into Policy

70$2,460
75$4,920
80$7,380
85$9,840

In this presentation, the monthly premium would be $41 per month, and it would take over 20 years (244 months) for her to pay more than what she could have saved.

In this example, the women would only begin to overpay for the policy after turning 86. That is over 20 years of having peace of mind that the policy will cover her funeral expenses, regardless of when her time comes.

Funeral Insurance vs. Life Insurance

There are many different choices when looking into life insurance coverage, insurance for funerals is one of the many options.

Funeral insurance is a type of whole life insurance product that provides permanent benefits at a much lower cost than a larger traditional whole life plan.

However, there are some other life insurance options to plan for these final costs.

Funeral Insurance Alternatives

Other products are solutions to pay for your end-of-life expense, but each product comes with drawbacks and things to be aware of.

Traditional Whole Life Insurance

This product is a staple in the life insurance industry and includes permanent benefits.

Whole Life Benefits: As mentioned above regarding whole life, the monthly price will never increase, coverage will never decrease or terminate, and a cash value will build over time.

Larger Policy Amounts: Coverage typically starts from $50,000 – $100,000 and can go up into the millions. Due to the face amount being larger, the monthly premiums will be more expensive than other choices. This is not a cheap insurance option.

Tax Benefits: A financial advisor may encourage certain clientele to use this plan to shelter wealth for tax advantages. This is because most policies are set up not to require taxes to be paid on the death benefit.

Universal Life Insurance

There are different types of Universal Life plans, but they all are connected to the financial market.

Price Fluctuates: This product is tied to the investment market. Depending on how the market is doing, your monthly premium will fluctuate. This plan can be a major negative for seniors on a fixed income with the uncertainty that comes with it.

Larger Policy Amounts: Like traditional whole life policies, this product will be more expensive due to the larger face amounts.

Cash Value Tied To Market: The market will also dictate the cash value of your policy. This can be extremely volatile over the years.

Term Life Insurance

Many seniors will see this product marketed to them through direct mail or T.V. commercials. There are several reasons to exercise caution before getting this plan to cover your end-of-life expenses.

Coverage Terminates: At a certain point, the policy will terminate. For example, if you took out a 20-year policy at the age of 60, your plan would expire when you turn 80. This can be very problematic for loved ones who are counting on this money, and it’s taking a chance that you will not outlive your policy.

Price Is Cheaper: The way these plans are marketed, companies entice you with low premiums. There are some companies with marketing slogans like “$1 for coverage.” The reason that these plans are cheaper is that they terminate on a designated date. Some plans like AARP will even raise the premium amount the older you get, and the price will start increasing at about the same time that many senior citizens rely on a fixed income. So the plan that was once the cheap funeral insurance option is now much more expensive.

Does Not Build Cash Value: No cash value is built, so this is essentially like renting coverage each month with no option to draw on the policy.

Pre-Need Insurance

If you use this plan, you will work directly with the funeral home.

Funeral Home Is The Beneficiary: When taking out a preneed policy, the funeral home acts as the beneficiary. This limits the flexibility family members have on what they can use the payment for. There will always be a final car note or phone bill that needs to be paid, but this product will not allow for the money to be used on this type of expense.

Covers Specific Expenses: The approved items that are allowed to be used with the money are limited to specific costs associated with end-of-life services. This includes casket, urn, viewing, etc.

One Option Only: With preneed, you are essentially going into a long-term partnership with a single business, which can be problematic for a few reasons. What if the business is no longer operating in future years, or you decide to be laid to rest in another location? These are things to think about before moving forward with pre-need insurance.

Savings or Investment Account

This seems like the safest way to plan for end-of-life expenses. However, there is still risk involved.

Passing Away Unexpectedly: No one knows when their health will decline, this can cause your saving efforts to come up short and leave your family in a vulnerable financial mess.

Investment Uncertainty: Placing your money in the market is a way to grow your funds and leave a financial lump-sum for the inevitable cost, but there is a risk that comes with this strategy. The market can be volatile and may not perform the way you had hoped for or expected, and this could leave a major burden for loved ones to take on.

Inflation: The United States has a history of inflation. It is impossible to say if your saving efforts will outpace the rate that money is printed.

Question Reviews

Frequently Asked Questions

Is Funeral Insurance Necessary?

Funeral insurance allows those who do not have any money set aside for funeral costs to protect their loved ones from a financial burden. This affordable product will give families peace of mind knowing they can celebrate the deceased’s life and not become financially vulnerable.

How Much Funeral Coverage Do I Need?

End-of-life expenses can range from $8,000 – $12,000. Considering the possibility of extra costs, including a final phone bill, utility bills, and other miscellaneous expenses, it is a great idea to have more coverage than the minimum needed. This will remove any burden from family members in the weeks after the policyholder has passed.

Can Life Insurance Cover Funeral Expenses?

Life insurance can be used to cover funeral costs, but it will ultimately be up to the beneficiary to use the distribution for this purpose. Depending on how many other expenses the deceased has and the policy’s size, the family may decide to use another form of payment for the funeral.

Can Funeral Insurance be Denied?

With guaranteed issue plans, even if you have a chronic or terminal illness, you have options. The only time someone is denied is if they are mentally incapacitated and unable to sign the contract or understand what they agree to.

It is possible to be denied a plan that has immediate coverage.

Is it Worth Getting Funeral Insurance?

There are no price increases or coverage decreases. This allows you to easily calculate how many years someone would need to live to overpay for coverage. None the less the benefits are permanent, so the plan will always have value. It is also important to assess your family’s financial situation when determining the need for this product.

Does Social Security Help Pay for Funeral Costs?

The Social Security Administration will award a death benefit up to $255. This is not anywhere near what is needed to lay a loved one to rest respectfully. Do not rely only on this option to cover service costs.

How do I Choose the Best Funeral Insurance Plan for Me?

Depending on your medical history, age, and coverage amount, the best plan can change from applicant to applicant. Your health will be the biggest factor when determining the best funeral policy.

Can I Buy Funeral Insurance for Someone Else?

Yes, this is very popular for children to buy coverage for parents. However, there are a few specific guidelines that need to be followed.

The proposed insured will need to be actively involved in the application process, and there needs to be an insurable interest. This includes answering medical questions and signing their name on the application. You cannot take out coverage without someone’s cooperation.

Are there Funeral Insurance Plans for Families?

There are no plans for families altogether. Each policy is individually underwritten and will be determined on several factors that are unique to each applicant.

Prosperity and Calla Lilies

How To Plan For A Funeral

Each individual in society has to decide how they would like their final arrangements to be carried out. To better understand your options, there are a few key details to know.

What is the Cost of a Traditional Service?

The average cost for a traditional service with viewing is $7,643 or $6,280 for cremation in the USA. This cost estimate can differ depending on many variables.

Not included in these price estimates:

  • Cost of Headstone, Monument, or Marker
  • Cemetery Property, Plot of Land, Columbarium, etc.

Decide on How You Want Your Life to be Celebrated

This is an important decision when planning for your final arrangements. There are many things to decide on, and it can feel overwhelming. Fortunately, there are simple and easy funeral planning guides that can help you through the process.

Decisions to Think About

Cremation or Interment: This is a very personal decision and can be backed by religious beliefs or cost-effective ways for family members once the deceased has passed. Depending on your decision, you will need to decide what type of urn or casket you would like to have.

Service: There are many different types of memorial services. These can be large or small gatherings. If you decide to have a larger celebration of life, there will be additional costs associated with the event.

Final Resting Place: Depending on if you decide to have a cremation or interment, your final resting place options can differ. You can either be laid to rest in a cemetery or columbarium. Other options for cremation would be to have your ashes spread in a meaningful or special place.

Inform Your Family Members of Your Final Wishes

No matter which final arrangement you decide on, the most essential step is to give your family a detailed list of your final wishes. This will make it easy for loved ones to agree on decisions when the time comes. It is recommended to verbalize this and write it down so there is a record of your choices.

Application Pamphlet

How To Get Coverage

There are three avenues to secure coverage for your end-of-life expenses.

Direct With The Company: This is most often advertised on TV commercials or by pamphlets sent to your mailbox. These will be offers from companies like AARP, Globe Life, Colonial Penn, John Hancock, and others. These plans will not be your best option in terms of policy structure and price point, as most of these are guaranteed issue and term plans.

Captive Agent: This type of agent represents one company only and usually are big-name carriers that spend billions of dollars in marketing each year to put their logo on everything, so you know who they are.

The issue with these companies is not that their products are bad, but that they can only show you a limited selection. So even if another company has a lower price, they are handcuffed to one single company. Also, since each carrier has different underwriting standards, you are rolling the dice that your captive agent’s company will approve any medical conditions you might have.

Independent Agent: If you like variety and finding the best price to meet your individual needs, this is the best option. An independent agent works for themself and represents as many carriers as they wish. This means a highly respected independent agent will have the perfect plan for your medical history and budget.

Working with an independent agent is the best way to get cheap funeral insurance plan options.

Getting Quotes and Buying Online

The simplest way to secure a funeral insurance quote is by using the instant online quote tool on this page, which will show you a wide range of prices. The lower the price, the healthier you will need to be to qualify. Once you have received your quote, you will want to talk to an expert who will show you which plan you can qualify for.

Work with an Independent Agent

Working with a highly respected and specialized independent agent or agency will ensure you get the lowest prices and best plan for your specific medical history.

Final Thoughts board

Final Thoughts

a. Funeral Insurance is a simple and affordable option for any senior looking to create a plan for their end-of-life expenses.

b. Many factors go into what plan you will be able to qualify for, with the most important aspect being your health history.

c. Each company has its own price points and underwriting standards. This makes working with a specialized agency that has access to multiple carriers a top priority.

Willamette Life specializes in funeral insurance. We are an independent agency ready to assist you with your end-of-life financial planning needs.

Call us at (844) 576-0019

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