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No one likes to think about their funeral or memorial service, but planning ahead is a wise financial 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 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, which is sometimes also called final expense insurance, is typically a type of whole life insurance policy that helps protect your family from having to pay the last expenses of your lifetime. This might include things like:

  • Funeral costs
  • Leftover medical expenses
  • Legal costs pertaining to 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 InstituteLife 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 shield 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 beloved one,” she says.

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

How much does a funeral cost?

Funeral costs vary widely, but the average funeral cost can run to thousands of dollars. In 2020, the national median cost of a funeral with viewing and burial was $8,500, 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.

The national median cost for a funeral with viewing and cremation is more than $5,000. This figure doesn’t include other funeral home costs, such as the price of a cremation casket, rental casket or cremation container, urn, and other charges.

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

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 who have a serious health problem 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

If you don’t want to pay the high premiums for a burial insurance policy, there are a few alternatives. 

  • Pre-pay for your funeral expenses: You can prepay for your funeral through a funeral home, but if the funeral home goes out of business in the future, you would 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 2022.

Frequently Asked Questions

Does the final expense policy expire?

Most burial insurance is whole life insurance, which is permanent. It provides lifelong coverage. The policy remains in force as long as you pay your premiums and the policy has a net cash value.

Do I have to take a medical exam for final expense insurance?

Typically, you don’t take a medical exam for final expense insurance. In fact, the Insurance Information Institute says you often can qualify for this type of 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.

Usually, you can get a burial insurance policy that falls under a simplified issue. In that case, you answer medical questions but don’t have to take a medical exam. You may also find a guaranteed issue policy, which doesn’t require any questions or a medical exam.

If you have a serious health problem, you may get a “graded death benefit,” which increases the coverage amount over time.

Is final expense life insurance worth it?

Final expense insurance is relatively inexpensive. Premiums for burial insurance can be as low as $2 or $3 per week, according to the Insurance Information Institute.

The actual death benefit available to the insured for that amount depends on the insured’s age. For example, the III says a $3 per week premium might buy a $6,000 death benefit for a man who is 36. By comparison, a 9-year-old boy would get an $18,000 death benefit for the same premium.

Because it’s so affordable, the coverage can be a good purchase. But it’s not for everyone.

“Coverage for final expense products is typically small,” Ma says. “So, it may not be a good option for those who have life insurance needs of a higher face amount.”

For example, other traditional forms of life insurance can be a better choice if you need to cover a large amount of debt, a mortgage or a major loss of income, she says.

Remember that 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.

How long do you pay for final expense insurance?

You pay for final expense insurance for as long as you wish the policy to remain in place. Once you stop making payments, your policy ends, and you no longer have coverage.

As long as you pay your burial insurance, you’re family members will receive the death benefit when you die.

What are average funeral costs?

The median price for a traditional funeral is more than $8,500, according to the National Funeral Directors Association, but costs can run into the tens of thousands if the funeral goes beyond the basic services.

The median cost for a funeral with viewing and cremation is more than $5,000.

What is pre-need funeral insurance? 

Pre-need insurance, sometimes known as burial insurance or funeral insurance, is a form of long-term life insurance that covers the cost of funeral services and burial or cremation. Pre-need insurance is distinct from other forms of life insurance, here you work directly with the funeral home, the sole beneficiary of the policy, to price the funeral arrangement.  

The only thing which sets the pre-need insurance apart from final expense insurance is that pre-need insurance is priced out and paid to the funeral home well in advance, whereas in the final expense insurance you can decide where the payout goes, to a beneficiary of your choice.  

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Nupur Gambhir
Managing Editor

 
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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.

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