How Does Funeral Insurance Work? 10 Simple Explanations

how does funeral insurance work
How Does Funeral Insurance Work? 10 Simple Explanations

Once you start looking into funeral costs, the numbers are eye-opening. A traditional, basic funeral service can range from $8,000 to $12,000. If you are unprepared, this is a major financial burden to leave family members and loved ones.

This is where funeral insurance can be a financial lifeline for loved ones left to take on this cost. It was designed specifically for seniors that might not have money set aside to cover their funeral expenses.

There are many products on the market, and it is easy to be overwhelmed by all of the options. Funeral coverage is also called burial insurance and final expense insurance. We will walk through funeral insurance’s inner workings and how it functions so you can make an informed decision.

How Does Funeral Insurance Work?

Funeral insurance never expires or raises in price. Simply take out a policy, make your monthly payments, and the listed beneficiary will be guaranteed a death benefit payout. The beneficiary can use the lump-sum death benefit for any expense necessary. 

senior man looking confused at computer

10 Simple Explanations Of How Final Expense Insurance Works

The list below details the benefits of funeral insurance coverage and how each feature works.

1. Low-Cost

The goal is to get the coverage you need, want, and can afford. Final expense insurance companies know that most clients are on a fixed income, so plans are designed with this in mind. Your insurance agent will be able to work with your budget to get you the coverage that’s right for you.

On average, seniors pay $50 – $90 a month. With that said, the price you pay will vary depending on your coverage amount, age, gender, and health. The healthier you are, the less you will need to pay for burial insurance coverage.

Compared to large traditional permanent whole life insurance plans, funeral coverage comes in smaller, more affordable coverage amounts, making it the ideal coverage for funeral expenses.

2. No Medical Exam

This type of coverage goes through a simplified issue underwriting process, meaning that the process is fast, easy, and you will never be asked to get a medical exam.

Applying for a policy can be done 100% over the phone from the comfort of your home. The majority of insurance companies will let you know immediately if you are accepted, while others may take a few business days.

3. No Waiting Period Options

Even though there are no exams, you still have to qualify for burial insurance with no waiting period.

Most applications will have a few “yes” or “no” health questions to determine eligibility. The company will also run a medical background and prescription history check to confirm your answers. To obtain a plan with no waiting period, you must answer the health questions favorably.

A level plan is the only coverage tier that has no waiting period. Seniors need to be in good health to qualify for one of these policies. However, we have been able to qualify clients with varying health concerns for immediate coverage. We are able to do this by representing numerous insurance providers.

There are 4 tiers of plans for seniors: Level, Graded, Modified, & Guarantee Issue.

4. No Health Question Options

A plan with no health questions that provide automatic acceptance is called guaranteed issue.

While these options do not ask any health questions, they have a minimum two-year waiting period before the full death benefit is available upon death.

These plans are more expensive than others and have limited policy amounts. However, it’s still a coverage option for those unable to qualify for the other plans.

Guaranteed issue policies are a great choice for seniors with a complex medical history but should not be someone’s first choice.

5. Coverage Lock

The amount of coverage that you take out will never fluctuate or expire.

For example, if you sign up for a $15,000 death benefit, your beneficiary is guaranteed to receive the $15,000 after you pass away regardless of how long you have had the policy for. This example assumes you have immediate coverage or have completed the waiting period.

Assuming you pay your premiums, you will be covered for as long as you live. This allows you to be at ease, knowing that your loved ones will reap the benefits of the policy no matter when you pass away.

Coverage lock is important to mention because not all life insurance products have this feature. Some plans decrease in coverage over time or terminate altogether. Fortunately, whole life final expense insurance coverage does not work like that.

6. Price Lock

The costs of your premiums will never change. The monthly price you pay for your first monthly premium is the same price you will pay for your last premium, whether in 5 years or 40 years.

This is not the case for other types of coverage on the market. Different policies actually increase in price the older you get; the Globe Term Life for Adults plan is an example of this.

It is important to verify that your funeral insurance plan has a monthly price that will not change over time.

7. Builds Cash Value

Whole life burial insurance has a cash value. From each payment, a small portion goes into an account that accumulates and builds over time.

With this cash value, you have the option of taking out a loan against the policy at a predetermined interest rate, usually 4 – 10%. If you do not pay this money back before passing, the company will deduct your outstanding loan balance from the total death benefit.

Every funeral policy that Willamette Life represents is whole life insurance.

8. Mobile

If you move, your policy moves with you, so you are not tied to any specific state or location.

This is important to mention because mobility is not an option with other funeral plans.

For example, pre-need policies are sold directly through the funeral home, locking you into a specific funeral home.

If you do not have flexible coverage, you are committing to funeral arrangements at the time of purchase.

9. Fast Payment

Funeral plans pay out claims within 7 days, but usually less.

The quick turnaround time is part of what makes this product so valuable.

Funeral homes require immediate payment. Often estates can be tied up for months before anyone receives any money. For this reason, it is convenient for your beneficiary to receive the funds promptly.

10. Flexible Payout

There are no rules or regulations on what the beneficiary must use the payout for. Traditionally final expense life insurance will pay for funerals. However, there are a lot of other items that come up that beneficiaries commonly use the distribution for.

Seniors find the flexibility of burial insurance to be a great benefit.

  • Burial
  • Cremation
  • Casket
  • Funeral Arrangements
  • Memorial/Celebration of Life
  • Leaving an Inheritance
  • Legal Expenses
  • Credit Cards
  • Charity Donations
  • Post-Mortem Expenses
  • Medical Bills
  • Remaining Balance on a Mortgage
  • Remaining Car Loan Balance
  • Other Final Expenses

senior woman sitting in living room

Final Expense Insurance Vs. Life Insurance

Final expense coverage is a type of life insurance. It is important that we mention other types of life insurance for seniors so you fully understand the available options.

Traditional Whole Life Insurance

Traditional whole life has higher death benefit amounts, thus making the monthly premium more costly. As mentioned, this product is so much more affordable due to the smaller coverage amounts.


Term offers high death benefits while costing less per month, but these plans terminate. In fact, 99% of term policies are never paid out, according to in a study done by Penn State University.

These plans terminate after a predetermined period of time or when you reach a certain age. Also, term coverage is sometimes known to adjust the premiums by increasing over time.

A popular example is the AARP Level Benefit Term plan. One of the plans that they heavily advertise is their term plan that has continued increasing premiums and expires on the insured’s 80th birthday.

Prepaid Funerals

Prepaid funerals are intended to pay for final expenses and are typically arranged directly with the funeral home, essentially listing them as the beneficiary.

This option allows you to have things all planned out so your loved ones can focus on mourning your loss once you pass away.

This might sound good, but it makes the assumptions that the funeral home will still be in business, that they will manage the money accordingly, and you will not change your final wishes or geographical location. Prepaid funerals lock you into these decisions with limited to no flexibility.

elderly couple with grandkids

How To Find The Best Coverage

The best burial policy for you could be completely different than your friend, neighbor, or spouse. This is because of the particular health conditions accepted by each carrier during the underwriting process. There is not a “one size fits all” carrier.

Finding the best burial insurance company means receiving the most coverage at the lowest price with no waiting period.

Each company offers something different in the way of acceptance for certain health conditions. Finding the right type of agent to work with is critical.

Many seniors receive misleading postcards for life insurance that appears to be an exclusive limited-time offer. Anything that comes to you and is very easy to get, is likely not your best option.

Final Expense Insurance Quotes

Burial insurance quotes can vary drastically because each carrier sets its own prices.

The price someone pays for coverage will fluctuate depending on their health, age, policy amount, and gender. These all play a part in the price of a policy.

If the applicant has a relatively clean medical history, they can expect to pay on the price range’s low end. For seniors with a more complex health history, they can expect to pay more for coverage.

You can also get an instant quote for your exact age and desired coverage amount by using the quote generator on this page.


Monthly Premium Range

Non-Smoking Rates

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


Monthly Premium Range

Non-Smoking Rates

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

Captive vs. Independent Agencies

There are two types of life insurance agents to purchase a policy through, captive and independent.

Captive: This agency type is only able to sell products from one company. An example would be companies like State Farm and Lincoln Heritage. Having limited final expense insurance offerings can present a challenge for anyone who is not in great health. Many of these policies have strict health qualification standards meaning that you could be denied coverage.

Independent: These agencies can represent products from multiple insurance companies. This allows them to shop around between different carriers on your behalf and pre-qualify you for the best burial plan that fits your budget, needs, and specific health concerns.

It is also important to note that you will not be saving any money by purchasing directly with the insurance provider. This is because most companies contract their top products out to independent agencies like Willamette Life.

Why Willamette Life?

Willamette Life specializes in finding affordable insurance to cover funeral costs. We take great pride in obtaining plans with the lowest rates and immediate coverage for our clients.

Specializing the way we do allows the team at Willamette Life to fully understand funeral insurance details rather than knowing a little about all insurance products. Ultimately this benefits our clients by finding the most optimized plan for each person.

Happy senior couple with family in background

Final Thoughts On How Burial Insurance Works

a. When asking how does funeral insurance work, there are a few simple but powerful plan features to understand. Coverage lock and price lock are key features of any plan meant to cover funeral expenses because you do not have to worry about outliving your policy.

b. Another important factor in getting the best plan is finding a low-cost policy with no waiting period.

c. Working with an independent insurance agent is the ultimate way to find the best funeral policy to meet your needs.

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