Burial insurance is a kind of life insurance specifically designed to cover final expenses. It’s sometimes referred to as funeral insurance or even final expense insurance. This life insurance is possible when you must raise funds for your family members to cover funeral and other minor costs. If you’re hoping to give a substantial sum of cash to the beneficiaries of your life insurance, burial insurance isn’t the most appropriate option.
What Is Burial Insurance?
Burial insurance is generally a full live insurance policy with a low death benefit, for instance, $5,000 to $25,000 intended to pay for funeral and other expenses. The funeral cost is the primary reason people over 65 may purchase an insurance policy for life. However, burial insurance is expensive, and you may have other alternatives.
Burial insurance policies aren’t designed for families with children and those who require the most effective coverage for life to pay for more significant commitments, like mortgage, children’s tuition at college, and the replacement of income in their peak years of employment.
Funeral insurance for senior citizens is usually marketed to individuals with tight budgets and health issues. They might not have savings, or other life insurance plans that families can use to pay for funeral expenses.
How Does Burial Insurance Work?
If you are applying to purchase burial insurance, select what amount you’d like and then name the life insurance beneficiary (or beneficiary). Funeral and burial insurance policies typically don’t require the submission of a medical exam for life insurance, and applications will typically ask for a handful of health-related questions or not ask any questions. Rates are determined primarily by gender and age.
In the event of your death, the beneficiary file a claim with your life insurance company. Generally, they need to provide an official copy of the death certificate.
Burial insurance is often one of these kinds of life insurance that is whole:
- Life insurance with simplified issue: The application process does not require a medical examination and will be limited to a few health-related questions. A “yes” answer to any of them may disqualify you from applying. For instance, simple issue applications typically will ask you if you’re currently in a nursing home or the presence of HIV.
- Life insurance with guaranteed issues: You don’t have to answer medical tests or health questions to be considered. It is impossible to be denied.
The drawback to these straightforward policies is that they typically come with a graduated death benefit. Suppose you die within the first two or three years of purchasing the policy. In that case, your beneficiaries get a partial refund of the premiums you have paid and some interest or a small portion of the amount covered by the policy. But accidental deaths are usually entirely covered at the beginning of the policy, for example, an accident in which you die. Crash.
What Is Covered By Burial Insurance?
Burial insurance could aid your beneficiaries to pay the cost of your funeral, funeral, or cremation services. Here’s a list of which beneficiaries could pay by a payout from a life insurance policy:
- Burial plot
- Burian vault
- Caskets
- Cremation
- Flowers
- Funeral home services
- Opening and closing of the Grave
- Headstones
- Obituary notices
- Transportation
- Urn services
Burial insurance is also used to pay off obligations you have left behind when your death, like:
- Credit card indebtedness
- Legal services
- Medical bills
- Car loan, mortgage, or any other outstanding credit
There are two kinds of burial insurance: Guaranteed issue and simplified.
- Guaranteed burial insurance is available to individuals of all ages and ailments. No medical examination is required, and the policy can’t be refused. However, guaranteed burial insurance is generally more expensive than simple funeral insurance.
- Simple funeral insurance requires a medical check, and underwriting guidelines are not as strict as those for conventional life insurance. The cost of simplified burial insurance is generally less than that of guaranteed one.
Here’s a table listing the advantages and disadvantages of each type of funeral insurance
Guaranteed issue: All are welcome, regardless of age and health conditions. More expensive premiums
Simplified issue Lower premiums than guaranteed issues Might require a medical check-up.
Beyond these two primary types, there are several other kinds of burial insurance.
- Funeral insurance that is pre-need This kind of insurance is purchased before the need occurs. This is an excellent alternative if you know how much you’d like to pay for your funeral and want to set a price.
- Insurance for group burials: This type of insurance is offered by employers or other companies. The cost is usually less than that of individuals who purchase burial insurance.
- Annuity burial insurance This kind of insurance blends an insurance policy for burial and an annuity. Annuities provide income for the policyholder for their entire life, and they will also pay the beneficiary an amount of death benefits.
Your circumstances will determine the most suitable type of burial insurance for you. When choosing, consider your health, age, financial situation, religion, and culture.
Here are a few other things to be aware of when considering burial insurance
- Benefits for death: Make sure that the death benefit will pay for your funeral and any other expenses related to your final days.
- The prices are a good idea to shop around and compare the prices of different companies.
- The waiting time: Some burial insurance policies include an initial waiting period before the death benefit is paid out.
- The surrender costs Certain burial insurance policies include surrender charges when you end the policy earlier.
- Terms and Conditions The policy should be read carefully to understand the conditions and terms fully.
What Happens If a Family Can’t Afford a Funeral?
Federal government assistance
If you are unable to pay for the cost of a funeral or burial or burial, you might be able to obtain assistance through programs that are federal, like:
- Benefits for veterans: If you are a veteran, you may be buried at one of the nation’s 141 cemeteries for no cost. Children and spouses of veterans may also be eligible. Veterans could also qualify for burial allowances that can be as much as $2000 for those who passed away in the year following September. 11 2001. The exact amount is available for veterans who died before September. 11th 2001. Check with the U.S. Department of Veterans Affairs for the eligibility conditions.
- Federal Emergency Management Agency (FEMA): For death as a result of an event declared as a significant emergency or disaster, you could be eligible for the FEMA Funeral Aid to cover costs like a casket or an urn, cremation or burial and costs for a headstone or marker.
State-funded government assistance
Many states offer programs that will help you cannot pay for funerals or burials. If you live in a state with programs, you’ll need to seek assistance from the municipal or county level. Here’s an overview of programs for each state created by Funeralwise.
Crime victim compensation programs
A few states have funds to pay funeral costs for victims of violent crimes. Here’s the list of state-sponsored programs the National Association of Crime Victim Compensation Boards provides.
Personal credit
If you cannot afford funeral costs, you can consider an individual loan from your credit union, bank, or any other lender. Although it’s sometimes referred to as a “funeral loan,” it’s a “funeral loan,” it’s a personal loan you can use however you want. Personal loans are generally “unsecured,” meaning they don’t require collateral (like an auto loan or a car loan) and are typically accompanied by high-interest rates that can vary from 16% to 35%, according to the AARP.
Crowdfunding
Also known as “crowdsourcing,” crowdfunding generally is the process of raising money via donations from the public. Many people have raised money for funerals through websites such as GoFundMe and by donating to churches and other groups.
Tips to Save on Burial and Funeral Costs
Funerals can be costly. However, you can find a good deal. Prices can differ for the same ceremony in the exact location.
Here are some suggestions to make cash:
Price information is available by telephone. Under the FTC’s regulations, funeral directors must provide prices over the phone when you request them. Here’s the funeral price and cost checklist provided by the FTC.
- You can only purchase only what you need. Under the federal funeral rule, you can purchase products and services in separate installments for a casket funeral services and burial. It is unnecessary to agree with a funeral house’s bundle that includes services you would not like.
- Do not purchase the casket. If you plan to hold a cremation ceremony or alternative burial, like an eco-friendly burial, you may not require an actual casket. If you’d like to have an open viewing, you might be able to rent a casket from a funeral home.
- A person from your family or a friend to help you negotiate the price. It’s a good idea to get someone you trust to represent you in an emotional and stressful time-sensitive event.
- Utilize the services of a funeral concierge. A funeral concierge is there to help you understand the available funeral services and negotiates the best price at the funeral home of preference.