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What is the Difference Between Burial Insurance and Pre-Paid Funeral?
While it may be a somewhat difficult topic to discuss, it is important for people – regardless of their age or health status – to have a good solid plan in place for paying for their funeral and other related “final expenses.” These costs can typically include other ancillary items, too, such as a burial plot, a headstone, flowers, transportation, and announcements – and today, depending on the service that you choose – the cost of final expenses can exceed the $10,000 figure.
As much as families want to do all that they can upon the passing of a loved one, in many cases, the expense can be a hindering factor. This is why many people have chosen to alleviate the cost for their survivors. One way of doing so is to pre-pay for one’s funeral using a pre-need funeral insurance plan. Another is to purchase a burial insurance policy.
What is Burial Insurance and How Does It Work?
Burial insurance – also often referred to as funeral insurance or final expense insurance – is a type of life insurance coverage that is geared towards paying for some or all of the costs of one’s funeral and other related costs.
These policies are typically offered to those who are considered to be seniors, and who are between the ages of 50 and 85. Unlike many regular life insurance policies, the amount of coverage that is offered on burial insurance policies is usually somewhere between $5,000 and $25,000 – so that one’s funeral and others needs can be taken care of.
In some cases, though, an insurance company may offer burial insurance coverage that has a higher amount of death benefit. This can be helpful for those who wish to provide payment options for other possible end-of-life expenses such as uninsured health care costs and / or the expense of hospice care.
In many cases, burial insurance is easier to qualify for than traditional forms of life insurance protection. One reason for this is because these policies usually have a low amount of coverage protection. The other is because there is often no medical examination that is required for the applicant in order to qualify for the policy.
With this in mind, burial insurance could be a good option for those who need life insurance coverage, but know that they may not qualify via a medically underwritten policy due to an adverse health condition. This is true as well with a guaranteed issue insurance policy.
Is Burial Insurance the Same as Pre-Paid Funeral Coverage?
Although burial insurance and pre-paid funeral insurance may seem like similar options, the reality is that they do have some differences. For example, with a pre-paid funeral plan – also often referred to as pre-paid funeral insurance – an individual will purchase a life insurance policy to cover their funeral costs.
However, unlike burial insurance, a pre-need funeral coverage policy is purchased from the funeral home where the person intends to have their services. In addition, the funeral home, rather than the individual’s heirs, will be named as the beneficiary of the policy.
This can often make it easier and faster for payment to be made directly to the funeral service provider. It can also be convenient for the decedent’s loved ones, as it is one less thing for them to worry about at an already difficult time in their lives.
There are, however, some drawbacks to purchasing pre-need funeral coverage. For instance, these policies are typically purchased for only the amount of the agreed-upon services. So as an example, if the insured and the funeral home agree to a service that costs $10,000, then the coverage will be purchased for that amount. But, if the services end up costing $13,000, then the decedent’s survivors will be responsible for making up the amount of the difference.
With that in mind, before purchasing a pre-need funeral policy, it is important to ensure that the funeral home will offer a price guarantee. That way, it won’t come as a surprise to loved ones that they are going to have to pay the overage of the tab.
Should You Have Both a Pre-Paid Funeral and Burial Insurance?
In some cases, an individual may wish to have both pre-paid funeral and burial insurance. If, for instance, an individual does not feel that the pre-need coverage will be enough to pay for their services, then purchasing a burial insurance policy can be helpful in covering the difference in price.
There are other advantages to having burial insurance – either in addition to pre-need coverage or in lieu of it. This is because burial insurance policies can offer a lot more freedom regarding how to use the policy proceeds. And, because the proceeds of burial insurance are typically paid out directly to the decedent’s survivors, the loved ones cannot just pay the cost of the funeral, but also other potential debts that the decedent may have had, such as uninsured medical costs, hospice expenses, or even items like credit card debt or personal loans. All of the proceeds from a burial insurance policy can be used by the beneficiary, too, because life insurance proceeds are free of income taxation to the recipient.
How Much Does Burial Insurance Cost?
The cost of a burial insurance policy can vary. As with other types of life insurance coverage, the premium that is charged for burial insurance will be based in part upon the age and the gender of the applicant, as well as the amount of coverage that you are purchasing. In many cases, however, the premium will not be overly costly, as the face amount of these policies is oftentimes fairly low.
The premium that is charged for burial insurance can also differ from one life insurance carrier to another. What many people are not aware of is that just like other products and services that you may purchase, life insurance policies can also vary in price – sometimes substantially.
For this reason, it is always a good idea to shop around and compare more than just one or two policies before making your final decision. Doing this by going from one insurer to another can be quite time-consuming. But, by working with an independent insurance agency or brokerage, you will be able to look at numerous policies – as well as premium prices – all in just one place. This can save you a considerable amount of time during the purchase process.
Who is a Good Candidate for Burial Insurance or Pre-Paid Funeral Coverage?
There are several types of potential candidates for either burial and / or pre-paid funeral insurance coverage. Those who already know where they would like to have their funeral service performed may lead towards pre-paid funeral coverage. However, before moving forward with this purchase, it will be important to be sure that the expense of the future service will be locked in. Otherwise, loved ones may be responsible for paying the remainder of this bill.
Good candidates for burial, or final expense, insurance can include those who may want to pay off more than just their funeral costs with the proceeds of the policy. Burial insurance can also be a good option for those who have not yet decided upon where they wish their final services to be. This way, proceeds will be available to pay the cost, but no particular service provider is guaranteed to receive the funds.
Burial insurance can also offer some additional benefits, which can make it a good policy type for some. For instance, many burial insurance policies do not require an applicant to take a medical examination as a part of the approval process – and because of this, those who may have an adverse health condition may still be able to qualify (even if they have been turned down for medically underwritten life insurance in the past).
Should You Purchase Burial Insurance or Pre-Need Funeral Coverage If You Already Have Life Insurance Coverage?
Even if a person already has life insurance coverage, it may still make sense to purchase a pre-need funeral plan or a burial insurance policy. One key reason for this is because the other life insurance that is already in force may be earmarked for paying off other debts.
For example, many people will purchase a larger amount of life insurance coverage with the intent of having the proceeds used for paying off their mortgage and / or for helping a surviving spouse or partner with continuing his or her ongoing living expenses.
In the case of a couple who is receiving income from a pension plan or other similar source, there are instances where some – or even all – of the retirement income will disappear upon the death of the primary income recipient. This can, in turn, leave the surviving spouse or partner without a way to pay their future day-to-day bills. Therefore, having a life insurance policy in force can assist with this financial need – but if the proceeds were used for paying final expenses, it could significantly reduce what is left over for the beneficiary.
Therefore, by also having a pre-need funeral policy or burial insurance coverage also in place, the decedent can be assured that final costs are paid and that the other life insurance policy’s proceeds will also be used for their original intended purpose.
How to Get the Best Rate Quotes for Burial Insurance Coverage
When seeking burial insurance coverage, it is often best to work with an independent insurance agency or brokerage that has access to a number of different life insurance carriers. This is because it can allow you to more directly compare – in an unbiased manner – different policies, benefits, and premium prices, and from there, you can make your decision.
If you are shopping for burial insurance coverage, we can help. We work with many of the top life insurance companies in the marketplace today, and we can assist you with obtaining all of the important details that you need for making an informed purchase decision. We can do so for you quickly, easily, and conveniently – all from your home computer – and without the need to meet in person with a life insurance agent. To start the process, all you have to do is just simply fill out the form on this page.
Should you find that you still have any additional questions regarding burial or pre-need funeral insurance – or, even if you just have a question about life insurance in general – please feel free to contact us directly. Our experts will be happy to work with you on getting quotes, as well as in comparing the details of the various burial insurance policies that are available to you. You can contact us via phone, toll-free, by dialing 888-389-8676.
We understand that the purchase of burial insurance and or pre-need funeral insurance can be somewhat overwhelming. There are many variables to consider, and you want to ensure that you are obtaining the right type and amount of protection.
While it is something that many people do not like to discuss, having your funeral and other final expenses are already taken care of can be a gift to those whom you love. Having the funds that are needed for paying final debts can help to ensure that your loved ones will not have to ensure financial hardship going forward.
You don’t have to be in perfect health to qualify for the burial insurance that you need – and, because there is typically no in-depth medical underwriting to contend with, you can typically have your coverage approved within just days, or possibly even sooner. And, the premium for your coverage may be much more affordable than you might think. So, don’t leave your final expenses – or your loved ones’ financial futures – to chance. Contact us at BurialInsurancePlans.org today – we’re here to help.
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