This Funeral Insurance Frequently Asked Questions will give you quick answers to the questions we hear the most. If you have a question that doesn’t appear below, please don’t hesitate to let us know. We also encourage you to visit our Funeral Insurance page for a comprehensive discussion of options as well as tips on how to shop for funeral insurance including useful tools for determining how much your funeral might cost and getting a quote for funeral insurance.
Q: What is funeral insurance?
A: Funeral insurance, burial insurance, and final expense insurance are all names for a small life insurance policy ($5,000-$40,000) that is designed to cover the cost of your final expenses such as funeral products and services. For more details on exactly what funeral insurance is, visit our funeral insurance page.
Q: How is pre-need insurance different from funeral insurance?
A: Pre-Need insurance is similar to funeral insurance but it is linked to a specific pre-need contract with a funeral service provider. The Pre-need contract is the statement of goods and services contract you sign with a funeral service provider when purchasing pre-need funeral insurance. It itemizes the specific funeral services and products you selected for your own funeral. Visit our Pre-Need Page for more information
Q: Do I need funeral insurance?
A: The most important benefit of funeral insurance is financial security for your family. According to the 2013 General Price List Survey by the National Funeral Directors Association, the average cost of a traditional funeral is over $8,343, including a burial vault but not including cemetery costs. A traditional funeral can easily cost $10,000 or more when you add in cemetery charges. Covering funeral costs is a heavy financial burden for most people, especially if it comes unexpectedly and at a stressful time. Having a funeral insurance policy in place protects your family against this financial hardship and avoids the added stress of paying your final expenses while dealing with their loss.
Q: How much funeral insurance do I need?
A: The value of your policy will vary depending on the type of funeral service and burial you anticipate having. Most funeral insurance policies range from $5,000-$40,000. A small, simple service or cremation will cost less than a grander service so you won’t need as large a policy. Some buyers take out modest policies and have small, simple services. The best way to get an estimate of how much money you need to have available for funeral costs is by doing some preplanning. We have several free online tools that can help you determine the cost of the type of funeral service you have in mind. (Click here to learn more about funeral planning.)
Q: Should my policy be large enough to cover more than just funeral expenses?
A: You might decide to increase the policy amount to allow for additional funeral costs and/or to cover other final expenses such as credit card bills, rent, utilities and any other bills that may be outstanding and due at the time of your funeral. You could also reduce the policy amount if you only wish to insure only a portion of your estimated funeral costs and to minimize your premium payments. For help estimating what your funeral costs might be, we recommend that you take advantage of our online planner and cost estimator.
Q: How much does funeral insurance cost?
A: The cost of funeral insurance will depend on factors such as your age, health, how much coverage you are requesting, and the type of policy you choose. A guaranteed issue policy will not take health into consideration so the cost may be somewhat higher than for a medically underwritten policy. If you are selecting an underwritten policy the price will depend on your own personal situation. For example, the premiums for someone who is age 55 and does not smoke will likely be lower than that of someone who is 70 and a smoker. The best way to find out exactly how much your premiums will be is to request a quote. You are under absolutely no obligation but will be able to find out for certain if funeral insurance is something that fits within your budget. Click here to request a quote.
Q: Do the proceeds from my funeral insurance have to be used for funeral expenses?
A: Once the holder of a burial insurance policy passes away, his or her beneficiaries may use the funds in any way they desire. In most cases, the funds are used in the way you intend but you should select your beneficiary carefully. You also want to make sure that the people you want to take care of your final farewell know what you want. If you have opted for a pre-need contract rather than straight funeral insurance, the proceeds will go directly to the funeral home you have made your arrangements with.
Q: How can I save money on funeral insurance?
A: It’s important to remember that the funeral insurance is highly regulated so it’s hard to score “deals.” In fact, if you find something that looks too good to be true then you probably need to look at it more closely. It probably isn’t what you really want or need. There are strategies you can use for lowering your premiums such as scaling back your service, locking in today’s prices through a pre-need contract, or choosing term over whole life. We highly recommend that you create a funeral plan so that you can really think about what products and services you really need. You may want to visit our page on funeral costs to learn more about what to expect with regard to how much much money you need to set aside.
Q: Where can I buy funeral insurance?
A: You can purchase a funeral insurance policy through an insurance agent or a funeral service provider such as a funeral home. Some insurance companies sell the policies directly as well. Many people prefer to use an agent since it gives them a more personalized way to get customer service. There are many online sources for funeral insurance. This website, for example, offers a portal to policies provided by Gerber Life and Mutual of Omaha. We hope that you will consider requesting a quote here since we believe the policies offered by these companies are among the best out there. Click here to request a quote.
Q: Do I need to talk to an insurance agent?
A: You may be able to do the whole process online but it is always best to talk with an agent so that you can ask questions, get clarifications, and make sure that you understand exactly what you are buying. One good strategy is to request a quote online and then talk with an agent. This way you can be certain you are getting the best policy for you at the best price. An independent agent (also called a broker) is typically self-employed and represents a variety of companies. An exclusive agent represents only one company and may actually be employed by the company he or she represents.
Q: What kind of funeral insurance do I need?
A: The type of insurance that is right for you will depend on your personal circumstances. The goal is to have a policy that will provide enough money to fund your funeral and burial. While you may need to consult your financial advisor to get a definitive answer on what your financial situation is expected to be at your end-of-life, most people find that a relatively small whole life policy will suit their needs. To learn more about the types of funeral insurance available to you we suggest that you visit our funeral insurance page.
Q: What is the difference between “Whole Life” and “Term” insurance?
A:The term “Whole Life” generally refers to “Ordinary Whole Life,” an insurance policy that will stay in force for the length of your life as long as you pay the premiums. Most whole life funeral insurance policies are “ordinary” whole life. A “Term” life insurance policy that runs for a selected period of time, typically 1, 5, 10, 15, 20, or 30 years. It is particularly important to be aware of the type of policy you have since the payment to the beneficiary will take place only if the insured dies within the specified period. If you are buying a term policy with the intention of covering funeral costs and you should die after the expiration period, there will be no funds to cover funeral expenses.
Q: Do I need funeral insurance if I have life insurance?
A: Many people choose to purchase funeral insurance as a supplement to life insurance. Since it is designed to cover funeral and burial expenses, funeral insurance will protect your estate from being depleted by your final expenses. One key advantage of funeral insurance is that it pays out more quickly than regular life insurance. Even if you have a sizable estate or significant life insurance, your loved ones may not have the cash to cover your funeral expenses. Remember, most funeral services companies require that you pay at the time of service.
Q: Does health insurance or Medicare cover funeral costs?
A:No, no health insurance and Medicare are specifically for health coverage, they do not pay for funeral expenses. If you are looking for insurance coverage, you need some type of life insurance policy, such as funeral insurance, that pays out upon your death.
Q: How do I choose a funeral insurance company?
A: What insurance company to buy from is an important question since the wrong choice can leave you empty handed. The short answer is that you should only buy from a top rated company. One good source for insurance company ratings is A.M. Best. This highly regarded company offers independent analysis regarding company stability and ability to meet financial obligations. If you choose an insurance company with an A.M. Best top rating (AA through A) you can feel fairly confident that you are making a good choice. Once you have identified solid companies, the next step is to request quotes.
Q: How do I go about applying for funeral insurance?
A: How you apply depends on the company you are buying from. For some, you can apply by phone or hard copy. For others, you can apply online. Generally, you will request a no obligation quote and wait for a reply. If you are applying with multiple companies, you can compare quotes once you receive them and then move forward with the policy you decide is the best fit. It is generally very simple and quick. We recommend that you start by requesting a no-obligation quote from our top rated companies (click here to get started.)
Q: Will my premiums change?
A: If you are purchasing a policy that has “level premiums,” then your premiums will not change over the life of the policy. The price is based on the amount of the policy, your age and health at the time you purchase the policy. (The “premium” is the price you pay for your life insurance policy. The payment can be made monthly or annually. Prices vary between insurers and types of policies so be sure you know what you are buying and from which company.)
Q: Can my funeral insurance be canceled?
A: In most cases, a policy can not be canceled unless you stop paying your premiums. If you stop paying for any reason then the policy would automatically terminate. Keep in mind that if you stop paying then there will be no payout should you die.
Q: How long do funeral insurance policies last?
A: If you have a whole life funeral insurance policy and you pay your premiums on time, your policy will last until you pass away. At your death, the beneficiary will receive a cash payout of the value of the policy. If you have a term funeral insurance policy and you pass away prior to the expiration of the term, your beneficiary will receive a cash payout upon your death. If the term passes prior to your death, then, unfortunately, there will be no payout. In nearly all cases, a burial insurance policy can only be canceled if you stop paying your monthly premiums.
Q: Who should I choose as my beneficiary?
A: Your beneficiary is the person or person you designate as the recipient of the proceeds of a life insurance claim. In the case of funeral insurance, the person you designate as the beneficiary can decide not to use the funds to pay for the funeral so be sure to select a person you trust to carry out your wishes. You should also make sure that whoever you choose is fully aware of your wishes. Remember to review your beneficiary from time-to-time so that you can make adjustments if your circumstances change.
Q: What is a Graded Death Benefit?
A: “Graded” refers to the reduced death benefit payable if the death of the policyholder occurs within the early years of the policy. For example, a policy may only payout the total of premiums paid in if death occurs within 1 year, and then the death benefit will be an increasing percentage of the face amount until the policy matures to usually the third year.
Q: What are “Stepped Premiums?”
A: Stepped premiums are insurance premiums that are recalculated (generally once a year) to determine if the level of risk warrants a higher (or lower) premium. Age is generally the determining factor. Level premiums, on the other hand, are insurance premiums that do not change from month-to-month as you get older but are locked in at a specific rate.
Q: What is a “Funeral Service Provider?”
A: The term “Funeral Service Provider” generally refers to a funeral home but it may also refer to a funeral director, crematory, or other professionals who provide services to the funeral industry. For help selecting a funeral service provider, visit our Find A Provider Tool.
Q: What is the difference between a guaranteed issue policy and an underwritten policy?
A: With guaranteed issue policies, almost everyone is accepted regardless of age or medical history. These are also referred to as “Guaranteed Acceptance Life Insurance.” These policies are generally more expensive than underwritten policies. The policy may also be “graded.” With an underwritten policy the insurance company evaluates your medical history in order to determine if it will accept the policy. Medical underwriting may also be used to determine the price of the policy.
Q: How do I find the best funeral insurance policy for me?
A: We think that a step-by-step approach is the best way to find a funeral insurance policy that will meet your needs. Watch our short video to learn about these steps.