Funeral Insurance and Burial Insurance

Funerals are a significant expense for most of us, and they can arise unexpectedly. This places a financial burden on surviving loved ones during an already difficult time. Funeral insurance is a specialized type of life insurance designed to help cover the costs associated with end-of-life arrangements. Understanding how it works and its pros and cons can help you decide if it’s the right choice for you.

When considering funeral insurance, it’s essential to understand what type of insurance you are purchasing and what the coverage entails. In this article and our other funeral insurance pages, you will learn if you should buy funeral insurance, and if so, what type of policy and how much to buy. We will also inform you about the biggest mistakes people make when buying funeral insurance and how to avoid them.

This guide will clarify the benefits and options available to you when it comes to funeral and burial insurance.

Buyer’s Guide to Funeral and Burial Insurance

The best funeral insurance offers financial support for end-of-life expenses, ensuring that funds are available to prevent your family from facing financial hardship at the end of your life. But it needs to do that at an affordable price. We can help.

There’s nothing better than knowing you’ve got your affairs in order. Covering your final expenses ensures peace of mind, honors your final wishes, and supports your loved ones as you take your final journey.

Funeral, Burial and Final Expense Insurance

Funeral, Burial and Final Expense Insurance

Learn the wise way to shop for funeral insurance.

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Burial Insurance

Burial Insurance

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Final Expense Insurance

Final Expense Insurance

Learn what you need to know about final expense insurance.

Learn About Final Expense Insurance

What is Funeral Insurance?

There are two distinct types of funeral insurance: final expense insurance (also known as burial insurance) and preneed insurance. These policies offer financial security and peace of mind. They ensure your loved ones are not burdened with financial responsibilities at a stressful time. Refer to our funeral insurance shopping guide for more information on these types of policies.

Who Should Buy Funeral Insurance?

If you expect to leave behind enough money to cover your expected funeral costs and final expenses, you may not need funeral insurance. However, your family will need to have immediate access to the funds since funeral costs must be paid at the time of the funeral.

Funeral insurance is a good option to consider for the following individuals:

  • Individuals without other forms of permanent life insurance or without savings to cover funeral costs.
  • Older individuals who may find it difficult to qualify for or afford traditional life insurance.
  • Those with health conditions that might make other life insurance options unavailable.
  • People who want a specific, separate policy to ensure their funeral expenses are taken care of without burdening their family.

Even if you fall into one of these categories, you still may not be able to afford the most basic funeral insurance policy. We regularly hear from individuals who are seeking financial assistance to cover the cost of a funeral. If you fall into that category, check out our article on how to get help paying for a funeral/.

Like any financial product, funeral insurance comes with its advantages and disadvantages. In the following, we explore the pros and cons in detail to help you make informed decisions.

Pros of Funeral Insurance

1. Financial Relief for Families

One of the primary benefits of funeral insurance is that it alleviates the financial strain on surviving family members. Funerals can be expensive, with costs averaging between $7,000 and $12,000 in the United States. Burial plots, caskets, flowers, and service fees add up quickly. These costs do not include cemetery costs, which can add another $5,000 or more. By having funeral insurance, policyholders ensure their loved ones are spared from these inevitable expenses.

2. Simplicity and Accessibility

When compared with other types of life insurance, funeral insurance policies are relatively straightforward. Since they have smaller coverage amounts, typically ranging from $5,000 to $25,000, they are easier to apply for. Most funeral insurance policies do not require extensive medical exams, making them accessible to older adults or individuals with pre-existing health conditions. Guaranteed issue policies are available that do not require answering health questions.

3. Fixed Premiums

Funeral insurance policies often come with fixed premiums, meaning the amount paid monthly or annually does not increase with age or changing health conditions. This consistency makes budgeting easier and is particularly valued by individuals on fixed incomes, such as retirees.

4. Lifetime Coverage

Funeral insurance policies can be kept in force throughout your lifetime unlike term insurance which terminates at a point in time, ranging from 10 to 30 years. Since they are intended to cover the cost of your funeral and final expenses, it is essential that the coverage is available at your end of life.

5. Peace of Mind

Knowing that funeral expenses are taken care of provides emotional comfort not only to the policyholder but also to their family. It ensures that, during a time of mourning, loved ones can focus on the grieving process rather than worrying about financial complications. Peace of mind also comes from having your affairs in order.

Cons of Funeral Insurance

1. Higher Long-Term Costs

While the monthly premiums of final expense and burial insurance policies may appear affordable, they can become expensive over time. The premiums for these policies must be paid continuously to keep them in force. Depending on how long the policyholder lives, they may end up paying more in premiums than the actual cost of their funeral.

2. Higher Upfront and Short-term Costs

Unlike final expense and burial insurance, the total cost of preneed insurance can be determined at the time of purchase because preneed policies have a fixed payment schedule. Preneed policies can be fully paid upfront or over 1, 3, 5, or 10 years. Once fully paid, they remain in force throughout the lifetime of the policyholder. Due to the fixed term of preneed premiums, the payment amounts tend to be much higher than final expense/burial insurance policies. This makes preneed policies unaffordable for people on a limited budget.

3. Limited Coverage

The lower coverage amounts of funeral insurance can be a disadvantage for those seeking broader financial protection for their families. Expenses beyond funeral costs, such as unpaid medical bills or other debts, may not be covered. Preneed insurance policies are designed to cover only funeral costs, not necessarily other final expenses.

4. Overlap in Coverage

Some individuals may already have permanent life insurance policies that provide sufficient funds for funeral costs. In such cases, purchasing funeral insurance can be redundant and unnecessary, resulting in an inefficient use of financial resources.

5. Beneficiaries May Not Honor Your Wishes

The beneficiaries of a final expense policy can spend the death benefit money on anything. They don’t have to spend it exclusively on the policyholder’s funeral or final expenses. Therefore, you need to carefully consider who you name as a beneficiary. Preneed insurance policies are generally tied to a prearranged funeral contract with a funeral home and the funeral home is the beneficiary of the policy.

6. Confusing Marketing

Final expense plans have many alternate labels that can confuse some shoppers. The terms “burial insurance,” “funeral insurance,” and “final expense insurance” are all used synonymously by agents and insurance companies that market these plans. Be aware that all these names typically mean the same type of policy. Preneed insurance, on the other hand, is a different type of policy that is primarily marketed through funeral homes.

Planning AheadPlanning Ahead

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Planning a funeral in advance can bring peace of mind to your loved ones. By considering a prepaid funeral plan, you can alleviate the financial burden on your family during a difficult time.

Making these arrangements ahead can help ensure your final wishes are carried out smoothly. With a prepaid funeral plan, you can personalize your service and make decisions that reflect your unique preferences. This thoughtful gesture can provide comfort to those you care about most.

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What Is The Big Mistake People Make When Buying Funeral Insurance?

Too often, individuals purchase funeral insurance policies they cannot afford. This occurs most frequently with final expense/burial insurance policies. These policies are aggressively marketed on television, in the mail, and online with the lure of low monthly costs. But the advertised cheap prices are not realistic. It’s easy for buyers to over-extend themselves to obtain enough insurance to cover their expected funeral cost.

If the buyer is fortunate to live a long life, it could mean paying for many years because premiums for final expense/burial insurance policies must be paid continuously to keep them in force. Over time, it may become challenging to maintain premium payments, especially for seniors on a fixed income. As a result, the policy lapses and the premiums paid to date are not refundable, there is minimal accumulated cash value, and they are left with no coverage. Never purchase a policy beyond your means.

How to Avoid the Big Mistake in Buying Funeral Insurance!

Start by deciding how much you can afford to pay in premiums. After all, isn’t that what you do when making other major purchases? You may want a Rolls-Royce, but if you cannot afford the payments, you’ll adjust your expectations and shop for a car you can afford. The same logic applies to buying funeral insurance. You may need to lower your expectations and change certain aspects of the funeral to make it more affordable. You need to be realistic.

Why trust Funeralwise for Funeral Insurance?

Funeralwise is an independent, unbiased resource specializing in funeral planning and payment plans. We have been active since 2008 and are proud to be the largest provider of funeral-related information on the web. Visit our About Us page for more details about us and why we can be your trusted advisor when it comes to all things related to funerals, including funeral insurance. We never give, loan, or share personal information with third parties. So, you don’t need to worry; your information is safe with us. See our Privacy Policy and Terms of Service.

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Funeral insurance is a valuable tool for individuals seeking peace of mind and financial security for their end-of-life arrangements. However, it’s essential to carefully evaluate its pros and cons in relation to your financial situation, age, health, existing resources, and family considerations. Be wary of the aggressive marketing tactics employed to sell final expense and burial insurance. Understand the policy terms fully, read the fine print, and compare quotes. Seek the assistance of a trusted financial advisor or life insurance agent.

Expert Contributors to our Funeral Insurance Pages

To learn more about the full authority and expertise of Funeralwise, visit our About Us page. The Wise Guys who contributed to this page include Rick Paskin, Jennifer Lane, Molly Gorny. If you have any questions about our experience, how we can help you plan for what comes next, or about our editorial team, please email us at support@funeralwise.com.

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