What is Burial Insurance?
Burial insurance is, essentially, a small permanent life insurance policy. Sometimes referred to as senior life insurance, funeral insurance, or final expense insurance, the point of this type of coverage is to ensure that your finances are in order if the worst should happen. At its core, this type of insurance is just whole life insurance with a few key differences.
A Savings Account, For Final Expenses
Think of burial insurance as a savings option for your final expenses. Burials, cremations and memorial services are expensive.
According to Lincoln Heritage, the average cost of a funeral in the United States can range between $7000 and $1200! The last thing you want your family to worry about is footing the bill for services after you’ve passed away.
Before you consider purchasing this type of coverage, talk to an agent and your family. It is important to discuss your final wishes thoroughly before making any financial decision.
Funeral plans are a small part of the estate planning process. Make sure your final wishes for your assets and burial are firmly communicated.
Also keep in mind: burial insurance is not the only option to achieve your final financial goals. Nor should it be. Other policy types, such as term or even whole life insurance might be a good fit for your needs. Burial insurance is a good option for those who want a small policy and cannot qualify for more traditional coverage.
A major upside to burial insurance is that it’s easy to get. Typically, you can purchase this coverage online or via phone, without an agent. Insurers ask applicants their age, smoking history and any health conditions.
Some carriers don’t require any medical questions, and guarantee coverage acceptance. These are called guaranteed issue life insurance or guaranteed acceptance. Policies like this are geared toward people who absolutely cannot qualify for any other type of life insurance.
We always recommend using an agent to find coverage; however, should you go this route there are a few things you need to know.
- Guaranteed acceptance policies don’t pay a death benefit for the first two years of the policy. Carriers do this to protect themselves. This caveat ensures that individuals applying for coverage don’t purchase a policy right before passing away and cashing out a death benefit.
- If you passes away before the two year period, any premiums you paid for the policy will be returned to your beneficiaries.
- Consider the policy size. Burial policies are often not more than $25,000. If you have other expenses you’d like covered, speak to an agent about additional options.
One of the most appealing aspects of burial insurance is that the policy sizes are small. You can purchase a policy for amounts ranging from $5,000 to $25,000. The premiums are often relatively small for policies like this as well, making coverage inexpensive.
Keep in mind: the premiums for burial insurance are a good deal, but may not be the best deal for your needs. Always speak to an agent first to go over your options and to get competitive quotes.
What’s The Catch?
The main catch with this coverage – as with any non-medical exam coverage – is that insurers will see you as high risk.
Often, many people and seniors – even those with health issues – can qualify for a larger policy without paying too much more in premiums.
The biggest catch with burial insurance is the idea that poor health disqualifies you from affordable coverage. This is a common scare tactic used by insurers. An independent agent can help you find the right policy for your needs.
Additionally, burial insurance is for specific situations. If your finances are in order, your debts are paid, and your family is taken care of but you just want to cover your funeral expenses, then this coverage is right for you. Keep in mind; however: many agents peddle this coverage simply to make a sale. A good broker will review all of your options and help you find the best policy type and size.
One alternative form of coverage is term life insurance. The downside to term life insurance is that it expires after a certain term. If you’re in bad health or past a certain age, you may have a more difficult time getting certain term coverage. Additionally, term life insurance may not offer you the type of benefit you want.
Whole life insurance is another alternative to burial insurance. These policies guarantee you coverage so long as your premiums are paid.
However, whole life insurance policies come with hefty premiums. Be sure to talk to your agent about your current and future financial needs, to figure out which coverage is best for you.
Life insurance is an essential part of creating a solid financial plan. The point of having a life insurance policy is to cover all debts and expenses after you’ve passed away.
Burial insurance is affordable, easy to get, and fast. However, it is not the first option we recommend to our senior clients.
At SrLifeInsure.com, we are about more than making a sale. We work with a number of carriers and can help you find the coverage option that suits your needs.
If you’re worried about how a medical questionnaire will impact your ability to receive coverage, you should absolutely give us a call. Burial insurance is a great option for those who cannot qualify for traditional policies.
It may very well be that we can find you a more affordable policy – with a larger benefit – just by shopping around. Give us a call today and let us help you find the right burial insurance policy.