Learn how these plans work, what they cover, the cost, the pros & cons, and how to avoid a waiting period and qualify.
Burial insurance is a small face value whole life policy that covers your burial and other end-of-life costs. It’s also commonly referred to as funeral or final expense insurance.
Unlike traditional life insurance plans, the coverage amounts are small-typically $50,000 or less.
While the policy proceeds are usually meant to pay off funeral costs, the money can technically be spent on anything, including medical bills, credit cards, or other outstanding debts.
When you die, the life insurance company that issued the coverage will provide a quick cash payout (tax-free) to your loved ones or funeral home.
That gives your family members the money to carry out your last wishes according to your desires without dipping into their own pockets.
When you set up a burial insurance policy, you decide the amount of coverage you want and the beneficiaries who will receive the money upon your passing.
Funeral insurance has very lenient underwriting. Burial insurance requirements are very minimal. Seniors, despite previous health challenges, will still qualify.
The application process is “simplified issue” because neither medical records nor a medical exam is required.
You only need to answer some basic health questions. Although, some plans have no health questions at all.
Most people opt to make monthly premium payments, but you can typically pay quarterly, semi-annually, or annually.
When you pass away, your beneficiaries must file a death claim with the insurance company.
Generally, the insurance provider will require your beneficiaries to sign claim forms and provide a copy of a death certificate.
Once a claim is approved, they usually cut a check equal to the amount of coverage you bought within 24-48 hours.
If you need a final expense policy, be sure to compare offers from the best burial insurance companies so you can isolate which company is best for you.
However, there are no restrictions on how life insurance coverage proceeds are spent.
Your beneficiaries can use the money to pay for the following:
- Funeral services, including the casket, vault, and viewing
- Burial plot
- Cremation services
- Medical bills
- Outstanding debts
- Legal services
- Cemetery fees
- Memorial services
- Grave opening and closing
Your beneficiaries are entitled to keep any remaining money they don’t use for your final expenses.
On average, a burial insurance program costs $50-$100 per month for a $10,000 death benefit.
Burial insurance quotes are based on your exact age, gender, health, state, tobacco usage (if any), and the coverage amount you want.
Below is a table with some sample monthly funeral insurance prices.
There are typically five different burial expense plans that you could qualify for.
The rate plan a company offers you and the monthly price is directly related to your health.
- Level/Preferred: This plan is when the company approves you for the lowest price they offer. Also, it would pay the full death benefit immediately. You will only qualify for this rating if you can honestly respond with “no” to all the health questions.
- Standard: This plan has no waiting period, but the price is somewhat higher than a level/preferred plan due to a health issue(s). The full benefit amount is payable the day you make your first payment.
- Partial: This plan is often called a “graded death benefit.” It will only pay out a portion of the death benefit during the first two years. It will usually payout 30%-40% during the first year and 50%-70% during the second year. Then after two years, the entire amount is payable.
- Modified: This plan will be the most expensive option possible. Generally, only people with severe recent health issues will qualify for this rating. Modified plans will always have a 2-3 year waiting period (varies by the insurance company).
- Guaranteed Acceptance: Guaranteed issue burial plans have no health or lifestyle questions. Simply put, you are guaranteed to be approved. A policy like this (such as Alex Trebek’s life insurance) with no health questions will always (no exceptions) have a 2-3 year waiting period before you’re covered.
Yes, burial insurance with no waiting period does exist. In fact, dozens of companies offer it.
And you don’t need to be in good health to qualify. Many health issues are still eligible for immediate protection.
Nearly all immediate final expense life insurance plans are sold via licensed agents.
Carriers that allow you to buy burial insurance online without talking to an insurance agent almost always have a waiting period.
Lastly, there are some health situations where a modified whole life policy with a two-year waiting period is inevitable.
For example, if you’re on dialysis or have HIV, you will have a limited death benefit during the first two years.
- No medical exams & fast approvals (typically in 10-15 mins)
- All health issues can be insured
- Permanent whole life coverage with a fixed price
- High age limits for new applicants (up to age 90)
- Fast claim payouts
- Tax-free cash payment that can be used on anything
- More costly than other types of life insurance
- Low coverage maximums (typically $50K or less)
- Premiums after many years could one day exceed the death benefit
- Does not lock in funeral costs at current prices
- Many companies (not all) include a 2-year waiting period
- May not be enough to pay your funeral expenses
It’s critically important to understand that every no exam burial insurance company has a unique set of health questions they ask.
That’s because they all accept and reject different health conditions.
Generally, if a health questionnaire does not ask about a medical issue, it’s an acceptable condition.
For example, virtually no burial expense applications have questions about blood pressure or cholesterol. That’s because those are acceptable health issues.
Below are some common health questions you’ll see on most burial insurance applications.
A yes answer to these questions could result in A) a decline, B) a higher price, or C) a higher price plus a waiting period.
- Have you been diagnosed or treated for:
- Dementia or Alzheimer’s, congestive heart failure, AIDS or HIV?
- Metastatic cancer or end-stage renal disease requiring dialysis?
- Organ transplant or terminal end-stage illness or condition?
- Are you currently wheelchair-bound, bedridden, in a nursing facility, or receiving hospice care?
- Have you been diagnosed or treated for:
- COPD, emphysema, hepatitis, or liver cirrhosis?
- Chronic kidney disease?
- Parkinson’s, lupus, or multiple sclerosis?
- Bipolar disorder or schizophrenia?
- In the last 24 months, have you had or been treated for:
- Heart attack, stroke, or surgery on your heart or circulatory system?
- Angina, chest pains, or irregular heartbeat?
- Diabetic complications such as coma, insulin shock, amputation, retinopathy, or neuropathy?
- Cancer (except basal or squamous cell)?
Every industry has its share of bad apples. The insurance industry is no exception to that rule.
You can take some straightforward and practical steps to 100% ensure no company or agent scams you.
Follow these two steps, and you can enjoy peace of mind knowing that you are invincible when shopping for funeral insurance. Nobody will be able to take advantage of you.
Step 1: Ask these questions first
Before you sign on the dotted line with anyone, there are specific questions you must ask. The answers to these questions will reveal what type of policy you’re being offered.
- Do the premiums ever increase?
- Will the policy terminate at any age?
- Does the coverage ever decrease in value?
- Is there a waiting period for non-accidental death?
Also, it’s a huge red flag if you ever speak to an agent who has trouble answering those questions.
If the answers are satisfactory, you should submit a formal application to see if the carrier will approve you.
Step 2: Review the policy after you’ve been approved
For all types of insurance, no company will give you a policy before you’ve applied and been approved.
You must formally apply to determine if they’ll accept you.
If you are approved, you will get the policy in the mail. Once you get it, it’s critical that you verify the details.
The goal of analyzing the policy is to confirm that you received what was promised.
Here are the elements of the policy that you need to verify:
- Price: Verify the premium and that it does not change over time.
- Coverage: Verify the amount of insurance coverage and whether it remains the same or decreases over time.
- Policy duration: Verify if it expires at a certain age or if it lasts forever.
- When coverage begins: Verify if there is or isn’t a death benefit for natural causes of death during years 1-3 or any amount less than what you were promised.
If the information in the policy does not exactly match what you were offered in the sales process, then something is very wrong.
But do not worry because there are fail-safes to protect you.
The insurance department in most states mandates that each policy comes with a free-look provision.
Furthermore, the best life insurance companies voluntarily include this clause.
This provision grants you the right to review your contract once you receive it. It typically lasts 10-30 days, depending on your state.
During this time, you can refuse the policy for any reason and get a full refund of any premiums that you’ve paid (if any).
So, if you buy from a sleazy agent who tried to swindle you, have no fear because you’ll get your money back.
Burial insurance is a very worthwhile purchase if you currently have no means to pay for your final expenses.
The National Funeral Directors Association reported that the median cost of a funeral in 2021 was $9,420, which includes a burial, vault, and viewing.
Remember, Social Security only provides $255 for burial costs to eligible survivors.
A bill of nearly $10,000 would constitute a heavy financial burden to most Americans.
A funeral insurance policy can provide immediate peace of mind knowing that your family won’t be saddled with unpaid funeral bills in the event of your passing.
A whole life burial insurance policy isn’t the only way to financially prepare for a funeral.
For some folks, it’s easily their best option. However, some people don’t like the insurance option and prefer to pursue other avenues.
Below are some alternatives to consider.
- Pre-need insurance: Prepaid funerals are plans you set up directly with a local funeral home to design your preferred funeral. After making all your selections, they will tell you how much it costs. The first option is to pay it in total upfront. If you opt to make payments, the funeral home will set you up with a pre-need funeral insurance policy where the funeral home is the beneficiary. Once you die, the policy proceeds will be paid to the funeral home so they can execute your funeral plan. Buying life insurance for a parent requires their consent. You can set up a prepaid plan for your parents even if they aren’t involved in the process.
- Savings account: A savings account could work if you’re a diligent saver. The biggest drawback with this option is that it will take many years to save enough. If you religiously put away $100 per month, it would take you over eight years to save $10,000.
- Other forms of life insurance: You could rely on a term life insurance policy, universal life, or traditional whole life policy to pay for your final expenses. Granted, most other types of life insurance typically have adjustable rates or decreasing coverage. Or they can expire in your 70s or 80s.
- POD account: A payable-on-demand account (aka POD account) is a unique bank account. The funds will only be dispersed to beneficiaries upon the account holder’s passing. Be sure to put enough into this account to cover your final bills. Also, notify your beneficiaries so they know you have this account.
Burial insurance covers all your final expenses, including funeral costs, memorial services, cemetery fees, medical bills, or debts. The policy pays a cash benefit to your loved ones which is good because every funeral home and cemetery accepts cash.
The average cost of a funeral policy is $50-$100 per month for a $10,000 death benefit. However, your rate might be higher or lower depending on your insurability factors, including age, health, gender, state of residence, and the amount of coverage.
Overall, there are two basic types of burial insurance programs available from most companies. First, there are simplified issue policies that don’t require you to take a medical exam. However, you must fill out a health questionnaire. Second, there are guaranteed issue policies that have no health questions and guaranteed approval. Each has its pros and cons so consider both before deciding.
Burial insurance is life insurance. It’s a specific type of permanent life insurance with small coverage options, lenient underwriting, and fast payouts. A burial only happens when someone dies, which is why burial insurance is life insurance. (Learn more: burial insurance vs. life insurance)
You only need a funeral life insurance policy if you cannot pay for your final wishes. Funeral costs often exceed $10,000, which would be a massive financial burden to most families. If you can presently afford a bill that large, then you don’t need funeral insurance. Otherwise, you do need a funeral policy.
To calculate how much burial insurance you need, you first must decide which type of funeral service you prefer. If you want to be buried, you’ll need at least $10,000 in coverage. However, if you want to be cremated, you only need $5,000-$7,000 in coverage.
Most funeral insurance companies make these programs available to seniors 50-85. However, some companies go lower than 45 and older than 85, but it’s uncommon.