Is Burial Insurance Right For You?

A large number of people use life insurance to cover burial costs. In fact, according to the 2020 Life Insurance Barometer report by the industry-supported groups LIMRA and Life Happens, 84% of life insurance policyholders quote final expenses as a reason to buy life insurance insurance.

Burial insurance is a type of life insurance specifically designed for final costs. It is sometimes referred to as funeral insurance or insurance.

Burial insurance is a whole life insurance policy sold only in small quantities, for example, from $5,000 to $25,000. These policies don't apply to individuals who raise families and need life insurance to cover major liabilities such as a hypothec, school tuition, and income substitution during their prime working years.

The only reason to purchase a Life Insurance Policy for many older consumers is paying for a funeral. Burial insurance is often distributed to persons with tight budgets and sometimes poor health who do not have any savings or other life insurance which could be used for funeral costs by a family.

But burial insurance can be costly and better options are available for you.

How Does Burial Insurance Work?

In general, burial insurance and funeral insurance policies do not require medical exams and only a few health questions can be asked – or none of them. The rates are mainly based on gender and age. In general, burial insurance is one of these whole life insurance varieties:

• Simplified life insurances: There is no-exam in the application and there are only a few health questions, but one of them can be disqualified by a "yes" answer. Simplified problem applications, for example, often ask whether you currently live in a nursing home or whether you have HIV.
• Life insurance guarantee: No health questions or medical examinations are required to apply for guaranteed life insurance coverage. You can not turn it down. You cannot turn it down.

If you pass within 2 or 3 years from purchasing the policy then your beneficiaries only receive a reimbursement of the premiums that you have paid, plus certain interest, or a minor percentage of the coverage of the policy. However, accidental deaths from the beginning of the policy such as death in an air crash are usually fully covered.

How Much is Burial Insurance?

Due to the fact that applications for burial policy require few or no medical data, the cost of coverage is high. Our research shows that a 50-year-old healthy man can be insured for a life of $100,000 for thirty years at a cost of less than $1,000 for burial insurance. For less than $10,000 burial policy, even a 50-year-old male with higher blood pressure is able to get the same term coverage.

The deal with term life insurance is that you could last longer than the policy and leave no money for a funeral or other expenses.

Burial Insurance vs. Term Life Insurance: Average Rates for a 50-Year-Old Male

Even if you have some health problems, if you don’t absolutely need lifelong coverage you’ll generally find better value with term life insurance.

How Much Does an Average Funeral Cost?

According to the National Funeral Directors Assembly, the national median costs for a funeral with a viewing and burial cost $7,640 in 2019. The cost of a sail, which typically is a cemetery, does not include this price. When a vault is included, the medium cost is $9,135.

The median national cost for an uncremeled cremation and urn was $5.150. A cremation casket, which brings the total median cost to $6,645, including an urn, is generally required.

Keep in mind that these figures do not include expenses like monuments, markers, necropolis or flowers.

Breakdown of National Median Funeral Costs

Pros & Cons of Burial Insurance

If you want life insurance policy, funeral insurance is one of the primary reasons for covering funeral expenses. But if you follow this route, there are a few drawbacks. Here are some advantages and disadvantages for burial insurance.

Pros:

• Normally, a health examination is not necessary
• In general, application asks few (if any) questions related to health
• For certain types of policies, for example "assured life insurance" you cannot be denied

Cons:

• You will not get a discounted rate if you are healthy without a health test.
• The costs of the policy can be very high with little or no health information
• Your policy will probably have "death benefit" grading, which only pays reimbursement if you die within two to three years of purchasing the policy

How Much Burial or Funeral Insurance Should I Buy?

If you want a life insurance policy that only covers burial costs, you want to make sure that you purchase sufficient insurance to cover your funeral type. Funeral costs can vary significantly according to your arrangements, including flowers and music. This is a New York Life Insurance Co. funeral cost calculator.

What’s the Difference Between Burial Insurance and Other Life Insurance?

Burial insurance is one of the many ways of life insurance. It's good to know the other options to make sure you buy the right one.

Term life insurance is the best alternative to cover a particular end-of-life obligation, such as mortgage payment or school tuition. The coverage you want and the length of the term you want will be determined. Often 5, 10, 15, 20, 25 or 30 years are used for duration choices.

Whole life insurance provides cash and lifelong coverage for life insurance policy. Your beneficiaries are guaranteed the death benefit regardless of your death. The value of cash is increasing at a forecast rate and the premiums remain the same. In general,whole life insurance is a lot more costly than term life insurance.

Universal life insurance is an option that can be less costly than whole life insurance. Not all universal life insurance policies build cash, but life can be cheaper than life insurance throughout.

Does a Beneficiary Have To Use the Life Insurance Payout for a Funeral?

While funeral and funeral coverage of final expenses, like the cost of a funeral, is generally not necessary for your life insurance recipient to use life insurance money in that respect. Your recipient may decide or go on a vacation to use the payout to cover debts and bills.

What’s a Pre-Need Plan?

Pre-need insurance is another way of paying for a funeral, but usually you pay directly to a funeral home instead of your own recipient (like your spouse). In general, you will select your own funeral arrangements and buy insurance covering your picks. Also, you lock prices at funeral homes in general like this.

Pre-needed plans are good for people wanting to select their own funeral arrangements that can help alleviate guesswork and stress and do not need to worry about their loved one's negotiating payment.

A loss of flexibility is a major drawback to pre-needs insurance. It may be difficult to make changes when you are locked in a contract if your family's financial needs change over time. For instance, not all pre-needed plans will move with you if you move to another state. Some of the plans that are already necessary offer "portability," so you will be moved by the policy.

Pre-needed plans generally fall within the "3-day cooling off rule" of the Federal Trade Commission (FTC) allowing for the contract to be cancelled within 3 business days. Some states allow a "free look" period longer than the three-day period of FTC and enable purchasers to cancel pre-necessary insurance and receive complete refunds. The cancellation times however vary by country. If you cancel the contract within 10 days of signing, you can, for example, receive a full refund in Massachusetts. In the first 30 days in Florida, you can get a complete refund.

Burial Insurance vs. Pre-need Funeral Insurance

Two different products are burial and pre-need funeral insurance. The biggest difference is burial insurance, which pays your beneficiaries a payment, while pre-need insurance typically pays a funeral home where funeral information is arranged.

If flexibility is an entertainment insurance, it is better to buy it. Here is an overview of the big differences.

Burial insurance:

• Bought by a life insurance firm
• Your recipient receives the payment and can spend it
• You have the flexibility to pay for a funeral in a different state when you move.

Preneed funeral insurance:

• Bought from a burial house
• Funeral options are selected and payable in advance to a funeral home
• Changes are difficult if a contract is locked
• Your plan may not be "portable," so you can't take it to a different state

How Much Does Social Security Pay for a Funeral?

If a surviving spouse lives with you, the Social Security pays a small lump sum of USD 255. If your surviving spouse did not live with you, they may be eligible if you receive some social security benefits. If you don't have a surviving wife, a child eligible can be paid.

Check for eligibility requirements with the Social Security Administration.

What Are Some Other Ways I Can Pay for a Funeral?

Here are some other options if burial insurance is not right for you.

Death-payable account (POD): A POD account allows you to put money in a funeral and name the person who can access the money after you die. A POD account is a good way to prevent funeral funds from being tied into evidence. Your recipient cannot access the cash while you're alive, but at any time you can withdraw (or add) cash to the account. Also called "Totten Trusts" are POD accounts.

Funeral trusts: This is an agreement in which money for a funeral can be set aside and a trustee named. After you pass away, the trustee can withdraw from the account to pay for the funeral.

Trusts: The life insurance policy is owned by the trust in this agreement. When you die, the trustee makes the claim and the money is distributed as you wish in the trust documents.

Savings account: You can pay for a funeral using a regular savings account, but money can be linked with proof (unlike a POD account). If you add a beneficiary to a joint savings account, you may be able to help prevent this, but remember that while you're alive they have full access to this account.

What Happens If a Family Can’t Afford a Funeral?

Federal Government Aid: You may be able to receive support from a federal program such as: If you cannot afford a burial or funeral.

• Benefits for veterans: If you are a veteran, one of 141 national cemeteries can be buried free of charge. Spouses and veterans' kids might be qualified, too. Veterans could also qualify for an allowance for burial of up to 2 000 dollars for the death of veterans on or after Sept. 11, 2001, and of 1500 dollars for the death of the veterans before Sept. 11, 2001. Review eligibility requirements with the U.S. Department of Veterans Affairs.
• Emergency Management Agency of the Federal Republic (FEMA): You may claim FEMA Funeral Assistance to help you with expenses such as a hatching or an urn, burial or cremation, and costs of a manufacturer or headstone for deaths caused by an event that has been declared to be a major catastrophe or emergency.
• Assistance from the State Government: Many states have programs to help if a funeral or burial is not possible. You must request assistance at county or municipal level in countries that have programs. Here is a list of state-based programs which Funeral wise compiles.
• Compensation programs for victims of crime: Certain countries have funds to support funeral payments for victims of violent crimes. This is a list of national crime compensation boards' national programs
• Personal credit: You can apply for personal loans through your bank, credit union or other lenders if you cannot afford funeral expenses. It's a really personal loan that you can spend any way you like although sometimes it's called a funeral loan. Personal credits are usually "unsecured," which means that there are no guarantees (like a car lien) and that high rates are generally borne by AARP that could range from 16 to 35%.
• Crowdfunding: Also known as "crowdsourcing," crowdfunding refers generally to collecting cash through public donations. Many people have collected funeral funds from websites such as GoFundMe as well as donations from churches and others.

Tips to Save on Burial and Funeral costs

Funerals may be costly, but you can go shopping. For the same kind of service in the same city, costs may vary. In a 2017 NPR survey, the funeral home charge for a cremation was more than twice as high, although both funeral houses were using the same funeral facility. A 2015 survey by the Funeral Alliance of Consumer Consumers and the Federation of America showed that the cost of a full-service funeral could range from $2,580 to $13,800.

Some tips for saving money are available here:

• Get telephone pricing information. The FTC rules require funeral directors to give you telephone prices when you ask for them. Here is a checklist of funeral costs of the FTC and prices.
• Just purchase what you want. You have the right to pick up goods and services, such as a casket, memorial service and burial, separately under federal funeral rules. You don't have to accept a package of funeral home services that you don't want.
• Don't buy a hat. You may not need a casket if you are planning a cremation or are using an alternative to a green funeral. You might rent a casket from the funeral home if you wish to have a viewing.
• Have a friend or family member assist in price negotiation. In a time-sensitive and stressful situation it is a good idea to have someone you trust speak for you.