Burial insurance: What it is and how it works

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No one likes to think about their funeral or memorial service, but planning ahead is a wise decision — it protects your family financially when they are already grieving a loss.

Funerals are expensive. In 2021, the national median cost of a funeral was $7,848, according to the National Funeral Directors Association.

You can protect your family from the financial strain of a funeral by buying life insurance. For people who only need a small amount of coverage to pay for their final expenses, a type of life insurance called burial insurance, or final expense insurance, is available. While burial insurance is more expensive than other types of life insurance, it offers coverage for people who don’t need high coverage amounts or aren’t eligible to get them due to their age and health.

Key Takeaways

Loved ones can use burial insurance to pay for final expenses, such as medical bills or funeral costs.
Burial insurance is best for seniors or people with serious health conditions that bar them from getting traditional life insurance coverage.
Traditional term life insurance is more affordable and offers higher coverage amounts than burial insurance.

What is burial insurance?

Burial insurance is a type of whole life insurance policy that helps protect your family from having to pay your end-of-life expenses. This might include things like:

Funeral costs
Leftover medical expenses
Legal costs of your estate

End-of-life costs often are larger than you might think. For example, funeral expenses alone can run $10,000 or more.

Typically, the death benefit with a burial insurance policy ranges from $5,000 to $25,000, according to the Insurance Information Institute. Life insurance companies sell these policies, but in some states, funeral homes also sell them.

Doing a little homework can help you determine how much funeral insurance coverage you need, says Marjorie Ma, head of product management at AIG.

“You can estimate your household expenses — such as the cost of the remembrance ceremony of your choice — and then add in other bills and debts,” Ma says.

What does burial insurance cover?

Burial insurance covers the costs you incur at your death. These might include:

Funeral costs, such as embalming, your casket and even flowers. Other services also are covered.
Burial costs, such as a burial plot, headstone and interment. Cremation also is covered.
Other costs that remain after your death, including medical and legal bills, and even credit card bills.

Who needs burial insurance?

Anyone who wants to protect their family from costs associated with their death is a good candidate for burial insurance. It’s especially valuable if your heirs aren’t wealthy, Ma says.

“If someone has lower financial assets and lower disposable income, they may be more vulnerable to financial burdens from the loss of a loved one,” she says.

Burial insurance could also be a good choice if you can’t get a regular term or whole life insurance policy due your age or health.

How much does a funeral cost?

Funeral costs vary widely, but the average funeral cost can cost thousands. In 2021, the national median cost of a funeral was $7,848, according to the National Funeral Directors Association.

When a vault is included — which most cemeteries require — the median cost for funeral services jumps to about $10,000. This cost doesn’t include cemetery, monument or grave marker expenses. Nor does it include other funeral home charges, such as for flowers or an obituary.

These funeral ceremony costs can quickly escalate, depending on your choices. For example, the Federal Trade Commission notes that caskets alone can top $10,000 in some cases.

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Types of burial insurance

Burial policies are typically whole life policies that cover you for the rest of your life.

These policies are generally either:

Simplified issue: You’re asked a handful of medical questions but don’t have to take a medical exam
Guaranteed issue: The insurer issues a policy to anyone who applies with no medical questions asked

People with serious health problems may receive a policy with a graded death benefit. This means the coverage amount increases over time and your beneficiaries won’t receive the total face value if you die within the first few years of the policy.

Alternatives to burial insurance

There are a few alternatives if you don’t want to pay the high premiums for a burial insurance policy.

Pre-pay for your funeral expenses: You canprepay for your funeral through a funeral home, but if the funeral home goes out of business in the future, you will lose that money.
Set up a trust: You can put money into a trust that your beneficiaries would use for your end-of-life expenses.
Self-fund: If you have the savings, you can leave it behind to family members and designate how it should be used in your will.

Why buy burial insurance?

Burial insurance offers “a way to cover last wishes and any other expenses you provide for your loved ones,” Ma says.

It provides financial protection for your family, who won’t have to dig deep to pay for the expenses that inevitably arise at the end of your life.

While most people will get more coverage from a standard term and whole life policy, these policies usually aren’t offered in low face amounts like $5,000. That is why burial insurance policies can be handy if you need a small amount of insurance money to cover funeral expenses.

The best burial insurance companies

Getting burial insurance is usually easier than getting a different type of life insurance policy because the application process requires fewer steps.

Some insurance companies offering this coverage include:

AIG: Offers up to $25,000 in coverage.
Gerber Life Insurance: Offers up to $25,000 in coverage.
Mutual of Omaha: Offers up to $40,000 in coverage.
Progressive: Offers up to $35,000 in coverage.
State Farm: Offers up to $10,000 in coverage.
Transamerica: Offers up to $50,000 in coverage.

Policy costs and coverage details vary from insurer to insurer. You should shop around and compare quotes from at least three insurers.

Looking for the right life insurance company to meet your needs? Check out Insure.com’s best life insurance companies for 2023.

Frequently Asked Questions

How much is funeral insurance?

Final expense insurance is costlier than traditional life insurance for the amount of coverage you receive.

Do I have to take a medical exam for burial insurance?

Typically, you don’t need to take a medical exam for final expense insurance. You can often qualify for this coverage simply by answering a few questions on an application form.

However, an insurer might decline to sell you a policy if you have a pre-existing condition.

If you have a serious health problem, you may get a graded death benefit, increasing the coverage amount over time.

Is burial insurance worth it?

Final expense insurance may be the best option for people who are not eligible for traditional life insurance, but it’s not for everyone.

Coverage for final expense products is typically small. So, it may not be a good option for those with a higher face amount life insurance needs. For example, other traditional forms of life insurance can be a better choice if you need to cover a large debt, a mortgage or a major loss of income.

Any life insurance policy can be used to pay for a funeral. You can buy any term or whole life policy and instruct your beneficiary to use a portion or all of the death benefit for your funeral.

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Nupur Gambhir

Managing Editor

Nupur Gambhir is a content editor and licensed life, health, and disability insurance expert. She has extensive experience bringing brands to life and has built award-nominated campaigns for travel and tech. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service.