There comes a time when every family has to lay a loved one to rest. This is a time of reflection and mourning. However, it is easy to overlook the financial aspect that comes at the end of life.
Funerals can leave a significant monetary burden for family members attempting to honor their loved ones. Fortunately, there are ways to plan for these fine expenses, but deciding which product or planning tool can be overwhelming.
A simple and easy way to prepare is by securing senior burial insurance. There are several things to consider to ensure that funeral insurance is a good idea for you and your family.
- Is Burial Insurance Worth it?
- How are Premiums Calculated?
- Saving vs Life Insurance
- Other Planning Options
- Benefits of Burial Insurance
Is Burial Insurance Worth It?
Burial insurance is a great option for anyone looking to secure affordable life insurance coverage that never expires. Final expense policies allow seniors to leave money behind for their funeral expenses and other end-of-life costs. This provides the resources for loved ones to celebrate the deceased’s life rather than take on a financial burden.
To better understand the costs associated with the end of life, it is important to comb through the numbers and assess your specific needs. It is also a good idea to read reviews of the best burial insurance companies to make sure you get your policy from a trusted provider.
Funeral Insurance Coverage is a Good Idea if You:
- are unable to qualify for a policy that requires a medical exam
- do not want to get a medical exam
- want a permanent policy
- want a policy to cover funeral expenses
- have no money set aside for your final expenses
- want your monthly insurance premiums to be locked in for life
- want your coverage amount to remain the same
How Are Final Expense Insurance Premiums Calculated?
When looking at how much final expense insurance costs, the price will vary depending on four important factors.
Age: The older you are when you take out coverage, the higher the monthly premiums will be.
Gender: Males will pay more for coverage than females. There are several reasons why this is, but the most prominent component is that females live an average of four years longer than males, thus they will be paying into the policy longer.
Health: Your health has a major factor in the price point. If you are in good health, you will qualify for a less expensive burial plan when compared to seniors with compromised health. Seniors who use tobacco will also see increased premiums.
Policy Amount: You should expect your monthly payment to be higher the more coverage you take out. More coverage means higher premiums.
Funeral Insurance Pricing
The leading funeral insurance companies offer very affordable rates. The chart listed below has a range of prices someone should expect to pay according to their age. The premiums listed below are intended to provide estimated prices only. To get a more accurate cost, fill out the quote machine on this page or learn more about funeral insurance quotes.
If you are in great health, you can expect to pay the cheapest rates listed. If you have a complicated medical history or a terminal illness, anticipate paying towards the high end of the price range.
Monthly Premium Range
|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
|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|
Saving vs. Life Insurance: Do The Math
To make sure funeral insurance policies are worth it for your specific financial situation, all that you’ll need is a calculator and a little basic math.
According to statistics, the average life expectancy in the United States is around 77.8 years old.
Suppose a healthy female takes out a $10,000 policy when she is 65. How long will she need to live to overpay the amount she could save in a savings account?
Let’s dig into the numbers.
In this example, the monthly premium would be $41 per month, and it would take over 20 years (244 months) for her to pay more than she could have saved.
Here is a simple chart to illustrate the amount of money she would pay into the policy until the day she passes away.
Amount Paid Into Policy
This example shows final expense insurance is worth the money for her. The woman would only begin to overpay for the policy after turning 86, well over the average lifespan.
See if final expense coverage is worth it for:
Other Planning Options For Final Expenses
There are other vehicles to use when planning for end-of-life expenses.
Everyone’s financial situation is different, the next four options are available for funeral planning, but each comes with its own considerations and drawbacks.
Savings or Investment Account
Placing money in a savings or investment account is noble and an idea that is worth pursuing in certain situations.
If you are a disciplined and frugal saver, this could be an option for you. However, some risks still come into focus.
Passing Away Unexpectedly: Saving or investing is a good idea, but no one knows when their health will decline, and having enough money is not guaranteed.
Investment Risk: There is always the possibility of your investment not performing the way you planned. This can leave your family members in a crippling financial position.
Inflation: No one knows what our dollar will be worth in the coming years, and it’s hard to predict if your savings efforts will be enough to cover burial costs in the future.
Traditional Whole Life Insurance
Traditional whole life has very similar benefits to burial insurance policies, with a few specific differences.
Standard Whole Life Benefits: This product offers a coverage lock, price lock and builds cash value over time like final expense insurance.
Larger Policy Amounts: The death benefit for traditional whole life plans typically starts at a higher coverage amount. This means the monthly premium will be much more expensive than a smaller policy designed to cover their final expenses.
Used To Preserve Wealth: Some many financial planners and experts will counsel individuals to use this product as a tool to protect their wealth.
Term Life Insurance
Term coverage differs from whole life in several major ways.
Coverage Expires: The coverage amount will eventually terminate at a specific age or a period of time. Multiple products on the market will end the coverage agreement when you turn 80 years old. You are basically betting that you will not outlive your policy.
Price Is Cheaper: Since coverage expires, Term policies are cheaper than whole life coverage. Keep in mind not only do plans expire, some even raise in price the older you get. Purchasing this plan type is fine as a short-term option, but you may not have coverage when your family needs it the most.
Does Not Build Cash Value: Unlike a whole life plan, this product does not allow you to borrow from the policy. You are simply paying a monthly fee for temporary coverage.
Pre Need Insurance
Pre Need is much different than the previous products we discussed. This coverage is also known as a prepaid funeral plan.
Covers Specific Services: Unlike other life insurance policies that allow the beneficiary to use the funds on whatever they choose, this product is designed to pay specifically for your burial expenses.
Funeral Home is Beneficiary: The life insurance company will pay the distribution directly to the funeral home. This will limit what the funds can be used for.
Single Funeral Home: You are making these arrangements and have an agreement with one funeral home. This raises a few concerns. What happens if you decide you want to be buried in another state or the company goes out of business?
The Benefits Of Final Expense Life Insurance
When asking how does final expense insurance work, it is important to know the basics. This is a type of whole life insurance, but the primary differences between burial insurance and most traditional whole life plans come down to two main factors.
Simplified Issue Underwriting: This means that coverage is easy to qualify for, and there are no medical exams. Seniors can complete the application in approximately 20-30 minutes, entirely over the phone.
Lower Coverage Amounts: The amount of available coverage ranges from $2,000 – $40,000. This makes the monthly premiums more affordable for seniors on any budget compared to traditional whole life insurance starting coverage at $50,000 and extending into the millions.
Built-in Whole Life Insurance Features
Once the plan has been issued and is in force, the policyholder will make their simple and affordable monthly payment. The life insurance company, in return, guarantees three key benefits.
Coverage Lock: The coverage will never decrease or expire. The death benefit is locked in for life. Whether the insured passes in year one or forty of the plan, the coverage amount will always be the same.
Price Lock: The price will never increase. Seniors on a fixed income know how important it is to budget costs down to the penny each month. There are no price games, just simple and straightforward payments.
Builds Cash Value: For every payment made, a portion will go towards the burial policy’s cash value, and over time you will be able to borrow from the policy if you choose. This money will need to be paid back and typically has a low-interest rate for the borrowed amount.
If you cannot pay this loan back before passing, the outstanding loan balance will be deducted from the money given to your beneficiary.
There are three main types of burial insurance plans that you will be able to qualify for depending on your health.
Level: This plan type comes with no waiting period and has the lowest prices. Level is reserved for seniors with a healthy medical history, but some providers will take on specific medical conditions like diabetes or obesity.
Graded: This product has a two-year waiting period that typically has a progressive payout schedule within years one and two. Graded offers midpoint premium prices. If you have a more serious medical condition, this plan could be your best option.
Guaranteed Issue: This plan asks no medical questions and approves every applicant. There is a two-year waiting period that is intended to offset the life insurance company’s risk. If the policyholder passes away during the waiting period, the beneficiary will receive all premiums paid plus 10 percent interest. A guaranteed issue plan could be your best option if you have a chronic or terminal illness.
FAQs About The Value Of Final Expense Insurance
Does Burial Insurance Have a Cash Value?
Yes, over time a cash value builds with every whole life final expense insurance plan. A portion of every premium is allocated to this account, allowing the policyholder to access the money whenever they wish.
Can Funeral Insurance be Denied?
Some funeral insurance plans can be denied. However, some plans offer guaranteed acceptance. So, while seniors can be turned down for specific plans that offer immediate protection, there are coverage options that guarantee approval. These guaranteed plans have a minimum two-year waiting period before seniors are fully covered.
Speak to an agent with access to several companies before getting a guaranteed issue plan because you could qualify for immediate coverage.
Should I Buy Burial Insurance?
You should buy burial insurance if you have no money to pay for your final expenses. It could take years to save enough money to cover your final expenses, with no guarantee. For many, funeral insurance policies are a better and more secure alternative to saving.
Another reason to get a burial policy is for specific coverage dedicated to funeral expenses with a locked-in death benefit and premiums.
Can I Purchase Final Expense Life Insurance for Someone Else?
A few rules need to be followed when looking into burial insurance for parents or grandparents. The applicant needs to be involved in the process. They will have to be able to answer the medical questions and sign their name on the application.
If they apply for a guaranteed issue plan with no medical questions, they will still need to be healthy enough to sign their name and understand what they agree to. By getting life insurance, you are entering into a legal contract with the provider, a power of attorney cannot do this for someone.
Is it Better to Have Life Insurance or Save for a Funeral?
Having adequate life insurance coverage will guarantee that your family has the financial resources to cover funeral costs. Saving money to cover funeral expenses is a good idea in theory, but it is impossible to predict when your health will decline, and your saving efforts might come up short to pay for your final expenses.
Is Funeral Insurance Worth The Cost?
Burial insurance is worth buying depending on the individual situation of the senior. Final expense insurance is worth the cost for those with limited savings who do not want to leave a financial burden behind.
The average cost for a funeral with a viewing in the United States is $7,643 for burial and $6,280 for cremation. However, the price can vary drastically depending on the location of services and the options selected throughout the process. Not included in these price estimates is the cost of a headstone or plot of land.
There can be other expenses that come at the end of life in addition to just burial and funeral costs.
- Medical Bills
- Post-Mortem Expenses
- Remaining Balance on a Mortgage
- Credit Card Debt
- Remaining Car Loan Balances
- Legal Expenses
- Leaving an Inheritance
- Charity Donations
After adding all these costs up, the final expenses can be well over $20,000.
Final Thoughts On If Burial Insurance Is Worth Buying
a. So, is burial insurance worth it? This coverage is straightforward and will help you leave a financial legacy for your family. Not only can most seniors receive coverage with no waiting period, but you and your family will have peace of mind knowing your final expenses are taken care of.
b. One of the best ways to understand if funeral insurance is a good idea is to calculate the premiums and see how long you need to live before overpaying for the policy.
c. After doing the math and seeing how much coverage is needed, you will know how to move forward with your funeral planning. Many variables come into play, and every person has a different financial situation. The key is learning your options and choosing the best final expense insurance plan to use.
Call Willamette Life at 844-576-0019 to speak with an expert.
I’m the owner and founder of Willamette Life Insurance. Willamette Life specializes in Final Expense Insurance. We compare prices with different insurance carriers while finding the perfect match for your health and budget. This company was started to help educate the public on why Final Expense Insurance could be a great option for them and their family. We strive to be friendly, informative, and always have the client’s best interest as our top priority. Everything in this article is my own professional opinion and experiences I have had during my time in helping clients.