The Pros and Cons of Burial Insurance - GoodRx (2024)

If you’ve lost a close loved one, you know how painful the experience can be. You also know how much a funeral can cost.

No one wants to think about their own mortality, but planning for end-of-life expenses is a financial necessity.

Buying burial insurance is a way to pay for your funeral so your loved ones don’t have to think about finances during their time of grief. You may also be able to buy burial insurance for loved ones, including older adults.

What is burial insurance?

Burial insurance is a whole life insurance policy, which is a type of permanent life insurance. It covers end-of-life expenses, such as funeral services, burial, and cremation. It’s also known as final expense insurance and funeral insurance.

There are a few types of burial insurance, including:

• Simplified issue: The insurer may ask health-related questions, but you don’t have to take a physical exam. You could be denied for pre-existing conditions or risky behavior.

• Guaranteed issue: You don’t have to answer questions or take a physical exam; you are guaranteed coverage.

• Pre-need insurance: Funeral providers sell these policies through an intermediate insurance company. The funeral home receives the payout after your passing.

If you can’t afford traditional life insurance or don’t qualify because of your age or health issues, one of these burial insurance policies may be a good option.

How does burial insurance work?

Since burial insurance is a type of life insurance, you must designate a beneficiary and start paying premiums once you’re approved for a policy. As long as you keep making payments, your coverage won’t expire. In the event of your death, your beneficiary contacts your insurance provider to start the process of receiving funds. Your beneficiary may then use the death benefit — the payout from your policy — to cover your funeral and other expenses.

What does final expense insurance cover?

Final expense life insurance may cover many costs, including:

• Funeral arrangements

• Burial and cremation

• Medical bills

• Legal fees

• Debt

Without some type of life insurance, your loved ones must pay these expenses out of their own pockets. To assist with these costs, your spouse or children may be eligible for a Social Security Lump-Sum Death Payment (LSDP), but it’s only $255. If you are a veteran, your loved ones can apply for a veteran’s burial allowance in the case of your death. And there are COVID-19 funeral assistance programs for the loved ones of people who die from COVID-19.

How much does a burial insurance policy cost?

Death benefits from a burial insurance policy generally range from $5,000 to $25,000. Premiums for a death payout of $25,000 typically cost from $50 to $200 per month.

The amount of your burial insurance premium depends on several factors, including:

• Coverage: The higher the payout, the higher the premium.

• Gender: Men generally pay more because they have a shorter life expectancy.

• Health: If you’re in poor health, you pay more because your risk of death is higher.

• Age: As you age, you pay more because your life span shortens.

Guaranteed issue burial insurance costs more than simplified issue burial insurance. An insurer takes a risk on a guaranteed issue policy because they know nothing about your health. The cost of a pre-need burial insurance policy depends on your selected funeral home and arrangements.

To choose burial insurance that’s right for you, find out which type of policy (or policies) you qualify for. Then, decide how much coverage you can afford to pay for each month and compare policies among burial insurance companies. Some policies may not cover accidental deaths. And others may not pay full benefits within the first 2 years, which may be a deciding factor if you want a policy without a waiting period.

Who can get funeral insurance?

If you’re 50 to 85 years old, you’re likely eligible for funeral insurance. If your parents are in that age range and you have their consent, you may also be able to purchase policies for them. Many companies won’t issue life insurance after age 85 because of short life expectancy.

If you’re under 50 years old and healthy, getting a traditional whole life or term life insurance policy makes more sense. You may get more coverage from one of these policies for about the same price as burial insurance.

Is burial insurance worth getting?

The average cost of a funeral in 2021 was nearly $8,000 for a viewing and burial and $7,000 for a viewing and cremation. These expenses don’t include vault, cemetery, or headstone costs — which could add thousands more to your bill.

While it’s good to have a financial plan for the end of your life, there are pros and cons to buying burial insurance.

The advantages of these plans include:

• Not having to take a medical exam

• Helping loved ones cover expenses

• Paying less than traditional life insurance

• Having a policy that accumulates cash value

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  What Is Burial Insurance?

• Getting lifelong coverage (as long as you pay the premiums)

The disadvantages of these plans include:

• Lapsing coverage if you stop paying premiums

• Possibility of paying more in premiums than the policy will pay out

• Higher premiums and poorer benefits with plans that don’t require an exam or questions, like with guaranteed issue policies

• A smaller death benefit than with traditional life insurance

• A graded death benefit if you die within 2 to 3 years

For younger people, traditional life insurance offers better benefits for the price. But if you can’t get a policy because of your health or the cost, burial insurance is a way to ensure your end-of-life expenses are covered.

Burial insurance vs. life insurance: What are the differences?

Burial insurance is a form of life insurance, but it’s different from traditional policies. Below are the primary differences between burial insurance and traditional life insurance.

Which type of insurance is cheaper depends on your situation. If you’re advanced in age or in poor health, burial insurance will be less expensive because the payout is low. But if you’re young and in good health, you may get more for your money with a traditional whole life or term life policy.

Can you use a life insurance policy to pay for a funeral?

Yes, your beneficiary may use your traditional life insurance payout to cover the cost of your funeral. But they won’t get that money right away. It could be weeks or months after the funeral before your beneficiary receives funds.

While a funeral home may agree to delay a bill until a beneficiary has received a life insurance payout, most generally want to be paid upfront.

Can I switch my life insurance policy to burial insurance?

No, you can’t convert traditional life insurance to burial insurance. You may cancel your life insurance and get burial insurance instead. Or you can have both policies.

Suppose you don’t think your traditional whole life life insurance coverage is large enough to pay for your funeral expenses and your beneficiary’s future needs. In that case, you may want to add a burial insurance policy. As long as you qualify, you may carry both policies at the same time.

If you have a term life insurance policy, you may want to add burial insurance in case you outlive the term. For example, if your term life policy ends at age 70 and you die at age 71, your life insurance won’t pay out the policy because it has expired.

How does a beneficiary file a claim for the death benefit?

Your beneficiary notifies the insurance company of your passing to start the process of claiming your death benefit. They must provide:

• A claim form

• Your life insurance policy number or document

• A certified copy of your death certificate

Once the insurance provider verifies your death and your beneficiary’s identity, the payout should arrive within days.