Burial insurance or final expense insurance is a type of funeral insurance that’s designed specifically to aid the expenses that need to be made for an end-of-life ceremony.
Allocating money for a funeral may be challenging due to factors like inflation and on average, a funeral costs between $7,000 and $12,000, which is why many older consumers choose to buy a life insurance policy.
Choosing insurance for burial isn’t a simple decision so it’s important to be in contact with an insurance provider who can assist you with picking a proper plan.
What should you consider before investing in burial insurance?
Final expense insurance is usually structured in a way where it’s sold in small amounts, such as $5,000-25,000. These payments are exclusively reserved to pay for an end-of-life ceremony.
Such insurance, however, isn’t ideal if you’re raising a family and require a bigger insurance policy, such as life insurance, to cover costs including mortgages, college tuition, and retirement funding.
This is why final expense insurance policies are usually targeted at older consumers who are on a tight budget or have serious health conditions.
How do final expense insurance plans work?
Applying for an insurance plan of this nature means that you’re able to select the amount of coverage and choose a beneficiary.
These types of plans don’t require any prior medical examinations and the rates usually depend on your age and gender.
After your passing, the assigned beneficiary can claim the money by providing a certified copy of the death certificate as proof.
Final expense insurance plans are usually one of the following:
- Simplified issue life insurance: where instead of a medical exam, a few health-related questions are asked which might result in disqualification if they’re answered with a ‘yes’. For example, “do you have HIV?” or “are you living in a nursing home?”.
- Guaranteed life insurance: where no medical-related questions or exams are required and you can’t be rejected from obtaining the plan.
What can you expect from a burial insurance plan?
With such a funeral plan, beneficiaries can use the funding to pay for the majority of the funeral expenses. This includes:
- Burial plots
- Urn services
- Funeral home services
- Obituary notices
The insurance funds can also be used to cover the following:
- Legal services
- Medical bills
- Credit card debt
- Mortgage or any other outstanding debts
What limitations can you expect from a final expense insurance plan?
The downside to an insurance plan of this sort, however, is that it will have a graded death benefit, meaning if you pass away within 2 or 3 years of buying the policy, the beneficiaries will only receive a refund of the premiums you paid.
Final expense insurance policies are also lesser in value than other policies that have an underwriting process that’s used to gauge health and risk factors.
Is investing in a burial insurance plan worth it?
Investing in a funeral plan can be beneficial depending on the health status, the amount of coverage required, and the reason a life insurance policy is needed.
If you’re looking for a particular policy that covers mortgages or acts as an income replacement, a final expense insurance plan may not be the ideal choice.
If you want a simple policy, a final expense insurance plan can benefit you in the following ways:
- Helps the family take care of all funeral costs
- Requires no medical exam for the application process
- Offers guaranteed coverage
Settle funeral expenses with the help of a burial insurance plan
If you decide that buying an insurance plan will help settle funeral expenses if required, make sure to engage with an insurance company that can provide the most suitable insurance plan for you.
Familiarize yourself with certain aspects like paying for a funeral in installments and getting the best possible return when investing in a final expense insurance plan to ensure that your loved ones don’t have to deal with any financial burden.