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
How To Shop
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
Learn the wise way to shop for funeral insurance.
Get Tips on Shopping for Funeral Insurance
Final Expense Insurance
Learn what you need to know about final expense insurance.
Learn About Final Expense InsuranceWhat 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.
