Keeping seniors informed about new resources available to them.

Burial insurance is a whole life insurance policy (whole life is a permanent life insurance policy which means it will never expire and rates will never increase) to ensure your loved ones aren’t burdened with your burial and other associated funeral costs. When these policies payout as designed, they provide peace of mind to the surviving family members.

It most commonly comes in the form of traditional life insurance but can also be purchased through a pre-need funeral plan sold by a licensed pre-need specialist.

How much burial insurance do you need?

This all depends on your preference as well as the debts you need to cover.

According to the National Funeral Directors Association’s cremation and burial report, “the 2021 cremation rate is projected to be 57.5% and the burial rate is projected to be 36.6%.”

The average funeral cost with viewing is $7,848, and cremation was $6,971. Some say cremation is much less, which is true, but these stats take into consideration all associated final expense costs associated with the funeral home, such as flowers, death certificates, transportation, etc.

Without getting too detailed, it’s safe to say that a burial insurance policy between $7,000 and $10,000 will work for the majority of people.

Are Burial Insurance policies the same as funeral insurance?

It depends on what type of policy you buy.

If you buy funeral insurance directly from a funeral home, then it’s not likely going to be the same as burial insurance purchased from an insurance agent. Most funeral homes sell pre-need plans, which allow you to pre-purchase your service or the service for a loved one at a predetermined price. A pre-need plan is not a life insurance policy.

A burial insurance policy is most commonly a whole life insurance policy that has a death benefit equivalent to the market rate of a funeral. In some cases, people might use a portion of their term life insurance as well. Solving for funeral insurance can be achieved with a variety of types of life insurance.

In both instances, the insurer is completely different as the policies are completely different.

For more information, visit http://burialfundplans.com/enrmnt24

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Are burial insurance policies the same as final expense insurance?

In most cases yes.

If you’re purchasing from an insurance agent, the difference between final expense insurance and burial insurance policies is the name. They are both life insurance products designed to help cover the costs of funeral expenses at the time of a loved one’s death.

And, they are most commonly both going to be whole life insurance products.

Is final expense insurance the same as final expense life insurance?

Yes, these are exactly the same and just used differently by different companies and both are great solution to cover the cost of a funeral service.

Is a burial insurance policy a life insurance policy?

Yes, traditional burial insurance policies sold by an insurance agent is a life insurance policy and both pay a death benefit. Companies use marketing terms that often just confuse you.

If it’s sold by a insurance agent, it’s going to be a life insurance policy regardless if it’s marketed as funeral insurance or burial insurance policies.  And, as with all life insurance policies, you have a 30 day free look period that allows you to cancel for any reason and get 100% of your money back.

Hopefully this simplifies the confusion.

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Four Main Types of Burial Insurance

So, how does burial insurance work?

There are four main types of burial insurance you can qualify for based on a short health history questionnaire, also known as underwriting, which is the key for the insurance provider to issue life insurance.

Nearly all insurance providers that offer burial plans will offer plans that are simplified issue. This means you complete a short questionnaire, which is then verified in the underwriting department and given an instant decision of acceptance. All of this is done without requiring a medical exam.

Below is a quick look at how each of these types of burial plans work.

Level Benefit (Least Expensive)

Graded Benefit

Modified Benefit

Guaranteed Issue (Most Expensive)

Level Benefit Burial Insurance Policies (Day One Coverage)

This is the type of expense coverage that will pay the full amount of the life insurance benefit starting immediately upon approval. Level benefit plans are often referred to as low-cost burial insurance as they are the cheapest way to qualify.

For example, if you purchase a level benefit burial insurance plan based on the average cost of $12,000 for a funeral, your family will receive the death benefit of $12,000 when you pass away.

Level benefit burial plans are the lowest cost and are available through many burial insurance companies. It’s important to always shop the various plans to make sure you’re getting the best burial plan company.

How much burial insurance is needed for a $12,000 funeral? If you have a level benefit policy, you’ll need $12,000 in burial insurance.

Unfortunately, not everyone passes the underwriting questions for level benefit burial plans, so there are other options to be considered.

Graded Benefit Burial Insurance Policies

The next low-cost burial insurance is the graded plan.

Graded burial insurance is used when certain pre-existing health conditions exist and are discovered during the health history assessment. “Graded” means these plans do not pay the full death benefit amount immediately upon approval.

For example, if the amount of coverage was a $10,000 burial insurance policy for an average funeral that has a graded benefit, your family’s payout would have a structured payout over a two-year period as follows:

If you pass away in Year 1 = 30% of the $10,000, or $3,000, would be paid to your beneficiary from the final expense policy.

If you pass away in Year 2 = 70% of the $10,000, or $7,000, would be paid to your beneficiary.

Year 3 = 100% of the $10,000 payout is paid to your beneficiary.

How much burial insurance is needed if you have a $10,000 funeral and qualify for a graded policy? Using the same math above, you would need a $33,000 ($33,333 x 30% = $10,000) policy to pay out the full cost of the funeral if you passed away within the first year of owning a graded burial insurance policy.

Or, you purchase the graded policy knowing that, unless it’s an accidental death, you’re not likely to pass away until well after the 3rd policy year.

Different companies have different payout schedules, so it’s important to fully understand before making any purchase decisions.

Modified Benefit Burial Insurance Policies

Modified burial insurance plans are nearly identical to graded plans, except for the payout schedule. These plans are still used when you have a pre-existing condition, but the condition poses a higher risk, which results in a reduced payout schedule as follows (using a $10,000 policy as the example):

Year 1 = Return of your premiums paid to date + 10% interest

Year 2 = Return of your premiums paid to date + 12% interest

Year 3 = 100% of the $10,000 payout

The important thing to remember about modified burial insurance plans is that it is worth shopping other insurance companies because you might be able to qualify for a graded plan, which would increase the payout to your family and lower your costs.

Guaranteed Issue Whole Life Insurance or Guaranteed Acceptance Burial Insurance Policies

The last type of burial insurance is called guaranteed issue whole life insurance, also known as guaranteed acceptance. This means there are no health questions whatsoever, and everyone who applies is approved. The biggest difference is the waiting period.

Guaranteed issue burial insurance is designed for those with pre-existing conditions that deem them uninsurable for any other type of burial policy. These kinds of conditions may include Alzheimer’s, kidney failure, past organ transplant, and other conditions.

These are the types of plans you commonly see sold through the mail. It’s unfortunate that many healthy people are buying these types of plans and putting their family at risk should they pass away in the first 3 years. However, it’s great for those that truly need it to help their loved ones avoid financial burden and cover end-of-life expenses.

Guaranteed issue payout waiting period schedule:

Year 1 = Return of your premiums paid to date + 5% interest

Year 2 = Return of your premiums paid to date + 7% interest

Year 3 = Return of your premiums paid to date + 10% interest

Year 4 = 100% of the $10,000 payout.

How much burial insurance do you need if you have a guaranteed acceptance policy? In this instance, you shouldn’t try to purchase a larger policy due to the tiered payouts being so low.

This is very important: If you do not have any pre-existing health conditions and your agent isn’t asking health questions during your meeting, you need to speak up so you don’t overpay for your burial insurance. This is why it is so important to shop your options.

How Does Burial Insurance Work?

Now that you understand the 4 different types of burial plans, let’s answer your question, “How does burial insurance work?”

Burial insurance works like any other whole life insurance plan, with a focus on funding burial expenses.

If the policyholder passes away, their beneficiary will receive a death benefit based on one of the 4 types of burial plans we just listed above, which have different types of payout schedules based on the policy type from the insurance providers.

Level Benefit (Least Expensive and pays out immediately)

Graded Benefit (Pays an increasing percentage of the policy in Year 1 and Year 2)

Modified Benefit (Returns premium plus a small percentage for the first 3 years)

Guaranteed Issue (Most Expensive and takes the longest to pay out a full benefit)

Filing a Claim for Burial Insurance

To file a claim with burial insurance, follow these steps:

Get copies of death certificates. You will need multiple death certificates to close out the various items in your loved one’s estate.

Contact the insurance provider’s claims department at the burial insurance company where the policy is held. You don’t need to know a specific phone number; you can always call the general customer service phone number and simply tell them you need to file a claim.

Verify the policy number and request the contact information where you can send a copy of the death certificate.

Top Burial Insurance Providers

Burial insurance is very much a commodity, especially when you consider the total number of burial insurance providers that exist with strong financial ratings. And, you’ll find rates are pretty standard across the various states. For example, someone shopping the best companies in Florida will likely have the same rates whether they are a resident of Florida or a resident of another state. Florida rates could be completely identical to others.

For more information, visit http://burialfundplans.com/enrmnt24.

What are Burial Coverage?