What is burial insurance?
Also known as funeral or final expense insurance, burial insurance is a type of whole life insurance policy designed to cover common end-of-life expenses, such as funeral or cremation expenses and medical bills. Because the average cost of a funeral in Texas ranges from $10,000 to $15,000, having a burial insurance policy can help take financial strain off your loved ones.
How does burial insurance work?
Like other insurance policies, you simply select the amount of coverage you want and choose a trusted beneficiary to receive the policy proceeds when you pass. The claims process should begin as soon as possible after your passing to ensure policy procedures are followed and the payout is timely. A certified copy of the death certificate, which can be obtained from the county in which you resided, will likely be required by the insurance carrier, as well as appropriate identification.
What does burial insurance cover?
These policies are designed to cover the costs your loved ones will face when you pass, and there are no restrictions on how the proceeds can be used. Among other expenses, your beneficiary could use the payout to cover the following:
- Funeral arrangements and memorial services
- Burial or cremation costs
- Medical bills
- Outstanding debts, including mortgages and credit card debt
- Legal costs, including probate costs and attorney fees
How much does burial insurance cost?
Burial insurance is one of the more affordable types of life insurance available, due in large part to its lower coverage values. Typical policies range from $5,000 to $35,000 in face value, with monthly premiums for lower value policies starting in the range of $50-60. The cost of a policy is generally based on your age, gender, policy amount, and general health, although many carriers offer no medical exam policies at higher premiums.
What types of burial insurance are available?
There are a few different policies to consider:
- Simplified issue: With this policy, the insurer asks for your medical history but does not require a medical exam. However, pre-existing conditions or risky activities, including smoking, may result in the denial of the policy.
- Guaranteed issue: Here, there is no medical questionnaire or exam, but because this type of policy carries more risk for the insurer, the cost is generally higher. Full benefits are typically paid in the event of accidental death anytime after the effective date of the policy, but payout may be limited in the case of death from natural causes if it occurs before a certain amount of time has elapsed, typically 24-36 months.
- Pre-need insurance: With this policy, an agreement is made directly with your funeral service provider to arrange for specific products and services that you select ahead of time. The policy’s payout is made directly to the provider rather than a beneficiary you might select.
Does term life insurance cover funeral costs?
Yes, proceeds from a term life insurance policy can be used for funeral costs and other expenses, just like burial insurance. So if you already have a term policy with sufficient value to cover end-of-life expenses, you may not need to invest in a separate burial insurance policy. However, your term life policy may expire before you pass, and without another policy in place, your final expenses would be uncovered. In that context, burial insurance provides assurance that your funeral costs will be covered no matter when you pass.
Is burial insurance worth it?
If you aren’t able to afford a standard whole-life insurance policy, burial insurance can provide you with coverage for your final expenses at a reasonable price. Given the high cost of funeral services, being able to relieve your family of the financial stress of your passing at a relatively low cost can be well worth it. But if you already have money set aside for your end-of-life expenses and you want an affordable policy designed to support your loved ones if you die unexpectedly, a term life insurance policy may be more suitable than burial insurance.