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Final Expense Insurance and Burial Insurance [Top Comprehensive Guide]

final expense and burial insurance guide

After taking into account your location and the certain burial preferences that one might have, the average funeral is thought to cost around $10,000. Every day, stories surface of how families inherit huge debts while having to cope with the loss of a source of income and find the money to pay for a funeral.

However, it doesn’t have to be this way and we will tell you exactly why.

Today, we have a complete guide to final expense and burial insurance because many people don’t realize that they differ from ordinary life insurance. When discussing insurance options, you can guarantee that one of the main questions will be – what is the difference?

In truth, this is justified since the whole process of buying any insurance, from life to car, can be a little overwhelming. With this in mind, we have compiled genuinely useful information into one easy-to-read guide.

What is Burial Insurance?

Before we head into the more detailed questions, let’s start with the basics. After removing all of the common misconceptions that are often heard around this topic, burial insurance is something that one can set up so that loved ones will have a means to execute your funeral with no worries regarding finances after you pass.

On the whole, they are actually smaller life insurance policies that solely focus on covering final expenses after one passes away and this could be credit card bills or even hospital bills as well as funeral costs.

Otherwise known as ‘final expense insurance’, burial insurance is a fantastic way of allowing your family to have the necessary finances to deal with any bills that may arise after your death.

Often, Americans say that such policies are just a ‘waste of money’ but they are very simple to set up and provide millions with peace of mind every single year.

Nowadays, most of the largest life insurance companies offer this type of policy and the coverage limits are low at around $5,000. For those hunting for a small policy, you may even find $1,000 policies with others reaching as high as $25,000.

Three Ways to Get Life Insurance

There are three main types of coverage options: fully underwritten, simplified issue and guaranteed issue. 

You can choose fully underwritten insurance. With fully underwritten policies you will be required to submit to a paramedical exam including a blood draw and urine sample, answer health questions, and possibly submit attending physician statements.

Another option is simplified issue life insurance. With simplified issue policies no exam is needed. However, typically there will be a background check and health questions. This is a great option for final expense insurance for those who are moderately healthy. However, for those who have health issues, simplified issue may not be available.

Finally, there is guaranteed issue life insurance. With guaranteed issue the policy is guaranteed as long as you meet some basic criteria, such as the age requirements. Guaranteed issue life insurance is great for anyone looking for burial insurance with a serious pre-existing health condition since the policy is issued regardless of your health history.

You can learn more about the differences between simplified issue vs guaranteed issue life insurance in our accompanying article. 

Age Limits

In terms of age, most insurance companies offering guaranteed issue burial insurance or final expense insurance will have a minimum age limit and this tends to be around 50 years, although we do know of at least one company that offers burial insurance at age 45.

You will also find that there is a maximum age between 80-85 for a burial insurance policy for seniors.

Once the policy has been set up, it will normally run until you reach 100 years of age, at which time a good final expense whole life policy will be fully paid up, meaning the cash value in it is worth the face amount of the death benefit.

Burial insurance vs. Prepaid funeral insurance

At this point, it should be noted that burial insurance is not a prepaid funeral insurance. While burial insurance comes from dealings with an actual insurance agency, a prepaid funeral will see the funding come from a chosen funeral home.

Prepaid funerals limit the location while burial insurance allows the flexibility of choosing any burial site or using the funds for other needs.

When the insured passes away, the beneficiary takes control of the money and can use it to pay for funeral costs, medical bills, and any other expenses. With a prepaid funeral, the cost of burial and all related expenses are often overpaid which is why burial insurance is the more popular of the two.

Who Buys a Final Expense Insurance Policy? 

Although this may seem as though it would yield a very simple answer, there are many people who would typically buy a policy of this type. Ideally, a prime candidate for a final expense insurance policy would be slightly older considering the minimum age who wants to cover the cost of their own funeral to prevent their family from having the worry.

Sometimes, there is a concern of outliving life insurance so people come to recognize the benefits of burial insurance instead.

If you are over the age limit of term life insurance or find it cost prohibitive and want to start building a fund to take care of important expenses once you pass away, burial insurance is ideal as it will save your loved ones from trying to find the money during a difficult time – let’s not forget that the average burial costs $10,000.

Of course, there is also a certain demographic of people who buy burial insurance when they are terminally ill and they see it as a way of easing the burden on loved ones.

Furthermore, those on dialysis and those receiving care may also want to look into this option.

Finally, it should be noted that sometimes there is a need for a small whole life policy and this seems to tick all the boxes for this niche.

Why Buy Burial Insurance?

Whenever the topic of insurance comes up and law doesn’t require it to be in place, there will always be the question of ‘why’ and the same can be said for burial insurance.

In truth, the answer is extremely simple – why not?

Why would anyone want to leave their loved ones behind with no way of paying for funeral and other expenses?

Knowing that they would be going through a rough time having lost a loved one, doesn’t it make sense to do what we can now to make this time a little easier for them?

Consider…

Even with the average funeral cost we have mentioned, people often say ‘well, we will go minimal for everything’ but even this racks up a huge bill. Not only do you have to worry about a casket, you also have to consider flowers, transportation, a burial plot, headstone, taxes, and more.

Even though it sounds trivial, there are also likely to be expenses at the wake after the funeral too. When all the family is grieving, the burial insurance will allow them to pay all the necessary bills without having to make huge sacrifices or rack up debt that will affect them for years to come.

Deciding the Owner of the Burial Insurance Policy

When you set up a burial insurance policy you will need to determine a few things.

The first thing to determine is who will be the owner of the policy. The owner of the policy is typically the insured. However, sometimes the life insurance beneficiary is the owner.

Why might the beneficiary be the owner, you ask? Sometimes people buy burial insurance on someone else, such as an elderly parent or grandparent who needs life insurance.

Rather than have your parent or grandparent pay for and manage the policy, you, as the beneficiary and owner, manage and pay for the policy. The advantage is you will be able to make sure the premiums are paid so the policy does not lapse.

Note however that you cannot take out life insurance on someone else without his or her consent. You will need to talk over getting burial insurance on a parent before you go out and attempt to buy it on the life of someone else. 

Advantages of Burial Insurance

Of course, we have already discussed one of the biggest benefits that comes with burial insurance and this is the peace of mind it brings. When you know that you are allowing your family to live on and have a bright, prosperous future without you, it can be a calming feeling.

However, they are also becoming increasingly popular among those who struggle to get accepted for the more traditional life insurance plans.

With ordinary life insurance, those with poor health may struggle to receive coverage or the premiums will be extortionate. Instead, a burial insurance policy can be obtained for an affordable amount.

Since premiums for life insurance have been increasing of late, burial insurance policies are also providing a good option for the elderly.

As long as they haven’t exceeded the maximum age limit, the elderly should be able to afford burial insurance within their living costs.

Sadly, many elderly people are forgoing life insurance because of the high premiums we are currently seeing which leaves them feeling useless because, although they are trying to ease the burden on loved ones, it is a near-impossible task.

Disadvantages of Burial Insurance

Ultimately, there are normally two types of death benefit that one must choose between and it can impact those that currently have health issues.

Level Death Benefit

With a level death benefit, the face value of the policy will be applicable from the very first day but some health questions are required.

As long as you can answer ‘no’ or positively to the questions asked, a level death benefit is the option that you should take.

Graded Death Benefit

On the flip side, a graded death benefit will be needed by those who have health problems. Here, no questions are asked regarding health but the downside is that the value of the policy does not take effect until two or even three years after the policy is opened.

Effectively, this means that there will be no pay out if the insured dies before the set date which will waste all of the investment made up until this point.

Although it seems a little unfair, this is to protect the carrier when they have chosen to insure those with illnesses. If you are looking into opening a burial insurance policy, this is definitely something that you need to consider.

Finding the Best Burial Insurance Policy

Whether you have decided that you want to open a plan or even if you want to do some more research, you might be wondering exactly how you get the ball rolling. If this is the case, you first need to decide on how much you want saved for your funeral.

Immediately, you might wonder how you are going to bring this up with the family but you should start thinking about whether you want to be buried or cremated as well as any other wishes you may have.

Once you know all of your wishes, you can start to work out the size of the policy that will be required. Since most major insurance companies offer this type of policy, you will benefit from researching the different final expense and burial insurance companies.

Although there should be a focus on the rates, you will also need to consider the restrictions on the policy in addition to the coverage amounts and all of the other important details.

When completing this phase of your research, there is nothing wrong with contacting multiple companies before making a final decision.

As we discussed earlier, you will need to know whether they have a graded death benefit since this will decide the amount of time until the money is confirmed or active. If you were to die before this date, your family may not have a right to the money which renders the whole policy ineffective.

Overall, some companies offer three years while others will offer as little as two so this can be an important step in your research.

Information Needed

Once you have decided on the company with which you will open a policy, you will need to gather a few items to start the process.

For example, bank information, photo ID, and all addresses and vital information will be useful. If there is no need for a medical examination, most of the paperwork will be completed within the office and may only take an hour or so.

After the application has been submitted, it will generally be accepted within three to five working days.

Saving Money on Burial Insurance

In just a moment, we will take you through the basic costs of final expense insurance and what you should be considering when choosing a plan.

However, we first want to give you some tips for saving money on final expense insurance because this will help to keep a burial insurance policy affordable.

To start, we highly recommend shopping around because this really will allow you to seek out the best deal.

Although it might require a bit of effort, the practice is actually quite simple nowadays with the various price comparison sites you will find online, such as here at JustBuryMe.

After entering your details, you can normally review a ballpark quote from all different insurance companies offering final expense so spend some time reviewing each quote to see what each company can offer.

Burial vs. Cremation

Other than this, knowing how much your funeral will cost is also a sure-fire way to save yourself some money.

If you know that you will definitely be cremated, this is generally less expensive so you don’t have to overspend on your premium each month.

Avoid Burial Insurance Policies without a Guaranteed Fixed Premium

You should also be avoiding the type of policies that increase, in terms of the premium, after a certain amount of time.For the most part, this will be every five years which means that your premiums could increase significantly at regular intervals.

Essentially, this all comes down to reading the fine print and knowing exactly what you are getting yourself into.

If you don’t understand something written in the insurance documents, don’t be afraid to ask questions so you understand and potentially save money.

How Much is Burial Insurance?

Burial Insurance Quotes form Top Companies

Once people decide that they are going to get burial insurance, this is normally the next question that follows and for good reason – we are a frugal people that don’t like to spend any more money than necessary.

However, we won’t be able to give you an exact quote today because there are a number of factors that come into play with a typical policy.

First, you will be paying more money per month for a big policy so the size is perhaps the biggest contributing factor. After this, small changes will be seen depending on overall health, age, gender, and whether or not you smoke.

Furthermore, you will also notice that there are a variety of insurance plans and these will differ when it comes to premiums.

As well as ‘guaranteed issue life insurance’, there will also be an option for ‘simplified issue life insurance’ and the main difference is seen in the application process.

As the name suggests, guaranteed is certain to see you receive cover regardless of any pre-existing medical conditions since there are no medical questions just as we saw a little earlier. If you choose to go for a simplified issue, there will be a short list of medical questions that will go towards the application.

Although we cannot provide you with an exact quote, we do have rough figures for the different age ranges.

Of course, every company will vary somewhat in their unique charges but the average 70-year old male that does not smoke would probably pay between $100-$150 per month (if the policy was worth $10,000).

If the same policy was seen for a female who did smoke, the price would likely start at $150 and move upwards from here.

As you can see, different factors will play a huge role in the amount that one might pay so this is something that needs to be considered.

Should I Buy Burial Insurance?

Although you may have similarities to the aforementioned examples, we are all unique which means that you might pay more and you might end up paying less.

Regardless, burial insurance is something that is worth a consideration because of the positive effects it can have alone.

As we have said already, the biggest benefit to burial insurance is that it provides peace of mind beyond anything else that you can do in preparation of death.

Once you know that there are sufficient funds for a funeral and any other costs, the family can be happy that they won’t be lumbered with debt after you pass.

Although this is a fairly morbid way to look at the whole situation, you won’t get anywhere without planning and your family will struggle to forgive you if you leave them to cope with the bills alone.

For senior citizens that might have been rejected traditional life insurance, burial insurance provides a fantastic back-up option.

For the consumer that is either too old or in too poor of health for traditional coverage, the plans available make for fantastic resources and evens the playing field somewhat for those who want such a plan.

Summary

Overall, many burial insurance and final expense policies these days, depending on the various factors, can fall under the $100 a month mark which is probably less than all other major expenses in life.

In fact, this amount is normally less than the average American adult has in credit card debt.

For something that can be so useful and provide protection for loved ones, it is a small price to pay!

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