Understanding Burial Insurance: A Comprehensive Guide to Financial Planning for End-of-Life Expenses

Death is an inevitable part of life, but most of us overlook the fiscal impact it can have on the loved ones that we leave behind. Funeral and burial expenses can be a significant burden on our loved ones, leading to unexpected expenses for our families in their time of grief.

Aside from other final expenses from typical monthly household debt our loved ones will also be left with the cost of funeral and burial costs. As of recently, these costs are estimated to be between $7,000 and $12,000 depending on several factors including location, type of service, casket selected, cemetery fees, and an additional expense, such as, flowers or obituaries.

Burial insurance provides crucial financial protection for your loved ones by ensuring that these costs are covered. This type of coverage prevents your family from having to dip into savings or struggle to find funds during a difficult period.

What is Burial Insurance?

Burial insurance, also referred to as final expense insurance or funeral insurance, is a type of life insurance policy designed specifically to assist with or cover the cost affiliated with funerals, burials, and other end of life expenses. Unlike tradition life insurance policies that offer coverage limits in the hundreds of thousands or millions, burial insurance generally ranges in coverage from $5,000 to $50,000.

Another key component of burial insurance that differs from term life insurance policies, is that it is written as a whole life insurance product. These types of policies are designed to be the last policy purchased, with no expiration date other than a maximum age, but this maximum age is mostly offered at age 121, meaning you can rest assured knowing that the payment will remain locked, with no increases, and you will not need to shop for another policy when approaching expiration. It is essentially, locking in the rate. Although it is possible to outlive the burial insurance policy, it is extremely not likely.

Specific Purpose and Allocation

Another key component to burial insurance is that it has a specific design. Unlike other life insurance policies that are designed to cover a wide variety of financial needs, burial insurance is earmarked specifically for funeral and burial expenses. Although this does not limit the use of the funds delivered, in the event of a loss, it does assist to provide clarity to our loved ones the intent for its use for our beneficiaries during a challenging time.

How Burial Insurance Works

Burial insurance operates similarly to other life insurance policies:

• Premiums: Policyholders pay regular premiums, typically monthly or annually to maintain coverage. It is most common to start a policy with automatic payments from a checking account, simply paying for the first month of coverage with no down payment or broker fees.


• Coverage: Upon the death of the policyholder, the predetermined amount, aka the face value (or limit of coverage), is paid out to the designated beneficiaries.


• Simplified Application: Most burial insurance policies are offered on a simplified issue basis. Unlike fully underwritten policies, there is no need for a detailed medical screening, aka paramedic examination, making these policies more accessible to a broader range of consumers. Additionally, burial insurance policies have expedited issuance, meaning applicants get notified sooner if their application has been acceptance and there has been a policy issued by the carrier with burial insurance, compared to fully underwritten policies.

Who Should Consider Buying Burial Insurance?

When end-of-life planning, financial aspects demand our attention. Burial insurance rises to the top as one of the most viable solutions that can be custom tailored to meet the specific needs of individuals and families. Prior to getting started applying for coverage, we should review to see whom is a good fit for burial insurance.

• Seniors and Mature Individuals: Securing coverage from a traditional life insurance policy later in life has challenges. Predominantly due to health concerns driving premiums. Burial insurance offers an accessible alternative for seniors and mature individuals. Featuring a simplified underwriting process, available lower limits of coverage (compared to term life), and the permanent nature of the policies (eliminating the need to shop for new coverage in the event the insured outlives their term policy) final expense, aka burial insurance, offers a great solution for those ages 50-85.


• Individuals with Limited Savings: The combined factors of available limits of coverage starting as low as $5,000 along with the fact that coverage can be secured with autopay simply by paying the first month’s premium, as opposed to a down payment or an annual premium, burial insurance is a great fit for those on a fixed income with minimal or no savings available.

How to Determine the Best Amount of Burial Insurance Coverage

Being that most policies offer options for a range of coverage between $5,000 and $50,000, consumers looking for burial insurance typically focus on getting coverage within this range. But the amount of coverage may vary based upon the intent for the use of funds.

Although some may have assets in stocks, bonds, home equity, cash to cover their final expenses, many do not. Now more than ever, given the recent economic downturn, many new applicants are simply looking for the minimal limit of coverage to ensure they do not cause their families financial hardship with the need to come out of pocket to cover burial costs and funeral expenses. In this case and that being the desired outcome, it may be in the best interest of the applicant to purchase a policy that is more in line with the minimal limits needed to cover their end of expenses, somewhere in the range of $5,000 and $15,000 depending on their desired services and burial.

More common now than ever, consumers that are shopping for coverage between the ages of 50 and 65 not only need to consider their final expenses but also need to consider providing their loved ones with a transition away from any monthly financial assistance they may have previously provided. Although often overlooked, in this case it may be beneficial to purchase a limit of between $25,000 and $50,000 in coverage.

Most importantly it will come down to the applicant themselves and any potential budget constraints. Although we may want to provide a smooth transition for our loved ones and purchase a policy with a higher face value, aka limit of coverage, this may not be within our budget. If it is, great. But if not, it is better to purchase a policy that the applicant can comfortably make the premium payments for every month, locking in coverage until age 121, or whatever stipulation your policy offers, than to purchase a policy now that has a higher payment and is at risks for potential cancellation due to non-payment. When this happens, the consumers then need to reapply for coverage, starting over, based upon their health profile, age, and lifestyle habits at the time of a new application, which could ultimately result in a substantially higher payments for the same amount of coverage, dependent on the variances in the applicant between policies.