There are many products on the market claiming to be the best way to plan for funeral costs. Along with these claims, each product is named something different, and it is easy to be overwhelmed.
Fortunately, burial insurance policies are simple, low-cost, and have permanent benefits.
What Is Burial Insurance?
An affordable monthly payment will cover your final expenses, allowing your family to celebrate your life rather than taking on a financial burden. Burial insurance plans include whole life features like permanent coverage and a locked-in monthly premium.
Burial insurance, final expense, and funeral insurance are identical types of whole life coverage. These names are all interchangeable and used to market the product.
10 Features of Funeral Insurance
- No Expiration
- No Medical Exam
- No Waiting Period Options
- No Health Questions Options
- Coverage Amount Never Changes
- Price Never Increases
- Builds Cash Value
- Fast Payout
How Does Burial Insurance Work?
Burial insurance never expires or raises in price. Simply take out a policy, make your monthly payments, and the listed beneficiary will be guaranteed a payout. The beneficiary can use the lump-sum death benefit for any expense necessary.
Since final expense insurance is a type of whole life plan, there are distinct benefits included.
Benefits of Whole Life Insurance
Three standard whole life benefits are included in every final expense insurance policy. Many of the best life insurance companies offer final expense coverage.
Price Lock: The price never changes. For seniors on a fixed income, this is a key feature. Understanding your budget and monthly costs is pivotal, and this benefit by itself makes funeral insurance worth it.
Coverage Lock: The coverage amount will never decrease or expire. When taking out a policy intended to cover funeral costs, it must be active when your health declines. This product is permanent with a locked-in death benefit amount and will be there for your family when they need it most.
Builds Cash Value: For every payment made, a portion will go towards the cash value. Over time, this amount will grow, allowing the policy owner to borrow from it if needed.
What Makes Final Expense Life Insurance Different?
Three features separate this product from traditional whole life coverage.
No Medical Exam: This policy has simplified issue underwriting, which means there are no doctor visits. The application can be completed over the phone from the comfort of your own home. Applicants can complete the process through a 30-minute phone call by answering a series of health questions. There are also plans available that ask no health questions.
Affordable Coverage: The policy death benefit amounts are much lower than traditional plans. The more coverage you have, the higher the monthly cost. Final expense coverage ranges from $2,000 – $40,000, and traditional policies begin at $50,000 and extend into the millions. This makes the cost of burial insurance premiums much more affordable while still having the great permanent advantages of a whole life policy.
Flexible Payout: Final expense insurance can cover any needed expenses. There are no mandates or regulations on what the beneficiary must use the distribution for. This coverage is most commonly taken out with the intent to cover funeral and other final expenses.
Qualifying for Coverage
Completing the simplified application process will determine which policy someone will qualify for. There is a plan available for everyone, regardless of health.
Immediate Coverage: Healthy seniors will qualify for final expense insurance with no waiting period. Applicants will need to favorably answer all of the questions to get day one coverage.
Waiting period: These policies are often referred to as Graded or Modified. Applicants who do not favorably answer all health questions will likely fall into one of these plans. Most waiting periods are 2 years, with full coverage available after this time.
Guaranteed Issue: These policies do not ask any health-related questions to qualify. Every senior can get a guaranteed acceptance plan. This type of policy also implements a 2-year waiting period.
Final Expense Insurance Pricing
The average price for coverage is $50 – $90 per month. However, the cost fluctuates depending on the applicant’s health, age, gender, and the desired policy amount.
The burial insurance quotes below show the price range someone can expect to pay for coverage. The healthier the applicant is, the lower the monthly premium. The more complicated medical history someone has, the higher the premium will be.
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|
Is There A Difference Between Life Insurance And Burial Insurance?
While life insurance is designed to replace income, burial insurance is protection against leaving the burden of funeral costs behind. Final expense insurance can be obtained for an affordable monthly payment with permanent benefits, while life insurance will come in larger coverage amounts and differ in policy structure.
Seniors can use other financial products to prepare their family for funeral costs, but each comes with features to be aware of and potential drawbacks.
Traditional Whole Life
This plan is a pillar in the life insurance industry and includes whole life benefits previously discussed. Coverage would be best if you were looking for one or more of the following advantages.
Whole Life Benefits: These plans offer benefits including permanent coverage, a price that never changes, and a cash value that builds over time.
Larger Policy Amounts: The policy amounts typically start around $50,000 and rise well into the millions. This makes the monthly premium much more expensive than a more affordable funeral insurance policy.
Used as a Tax Benefit: A financial advisor may counsel someone to use this product to shelter wealth or for tax purposes.
Term Life Insurance
Many individuals will have this product marketed to them through the mail or on television. There is cause for concern when using this product to cover your funeral costs.
Coverage Terminates: Depending on the length of your policy, the insurance coverage will eventually expire. For example, if you take out a 10-year term policy at the age of 70, your plan will automatically cancel when you turn 80 years old. This is problematic and can leave your family in a vulnerable financial position if you outlive your plan.
Lower Premiums: Since the policy will terminate, the monthly premiums are lower than a whole life product. It is important to note that some plans from funeral insurance companies, like AARP’s Level Benefit Term Life Policy, actually increase the monthly price the older someone gets.
No Cash Value: You will earn no cash value, which means you are essentially renting coverage every month. Essentially this makes your monthly payment an exchange for temporary coverage.
When deciding to use prepaid funerals or pre-need insurance, there are a few significant restrictions to note.
Only Covers Funeral Expenses: This product is designed to cover the final expenses of the deceased, including a casket, urn, etc.
The Beneficiary is the Funeral Home: The lump-sum payout is distributed directly to the funeral home, limiting loved ones’ flexibility in using the money.
Working with One Business: Preplanning for your final arrangements is a good idea in theory, but there are things to consider. Suppose the funeral home goes out of business, or you decide to be buried in a different geographical area. Using this policy type locks you into your decisions and location in an ever-evolving world.
Savings or Investment Account
There is merit when considering putting money away to cover your funeral costs, but this comes with risks.
Passing Away Unexpectedly: No one knows when their health will decline, this may cause your saving efforts to come up short and leave family members in a compromised financial position.
Investment Volatility: The market can be a great place to grow your money. However, looking at past statistics, investment accounts can be unpredictable and may not perform the way you hope.
Inflation: The value of the dollar changes consistently. It is impossible to say if your saving efforts will outpace the inflation rate.
Commonly Asked Questions About Burial Insurance Policies
What Does Final Expense Insurance Mean?
Final expense coverage is a type of whole life insurance that comes in lesser policy amounts than a traditional plan. The name final expense refers to what the money is intended for upon the insured’s death. This coverage is also known as burial and funeral insurance but can be used on any necessary expenses.
Can I Purchase a Policy for a Loved One?
You are allowed to buy funeral insurance for parents or grandparents, but there are a few guidelines to follow. Your loved one will need to be involved in the process. This includes agreeing to coverage, signing their name, and being in a healthy enough mental state to understand what they are consenting to. You cannot take out a policy on someone without their permission.
How Do I Find the Best Plan?
The best plan for you can be entirely different from your spouse’s best option because each carrier has different underwriting standards. The way to find the best plan is to work with an agent who has access to many life insurance companies. This will raise the likelihood of finding a great plan specific to your budget and health.
How Willamette Life Can Help
Willamette Life specializes in helping seniors find affordable life insurance to cover funeral costs. We are an independent agency and represent many life insurance providers.
Specializing in final expense insurance allows the Willamette Life team to compare plans from several companies to find the best fit. We do everything we can to get our clients the most coverage at the lowest rate.
Final Thoughts About Funeral Insurance
a. What is burial insurance? First, it is important to understand that this product has different names but has the same type of coverage. Funeral insurance and final expense insurance are used interchangeably to market the product and describe its intent.
b. Funeral insurance is a type of whole life insurance specifically designed for seniors to offer permanent coverage at an affordable price.
c. The money from a final expense insurance policy can pay for anything the beneficiary deems necessary with no stipulations.
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.