What is burial insurance?
How does burial insurance work?
Burial insurance is a type of life insurance built to help your loved ones cover a range of final expenses. These expenses may include:
- Funeral services
- Viewing costs
- Burial costs
- Cremation costs
- Transportation costs
- Outstanding debts
- Medical bills
Is burial insurance right for me?
Covering the total cost of funeral arrangements could be challenging for your family if you’re unable to leave them savings for final expenses. A mortgage payment, car loans and everyday bills could make paying for end-of-life services even more difficult. Insurance for funeral expenses could help your family prepare for costs like burial or viewing services.
A history of illness in your family or general concerns about your health worsening with age may also be good reasons to explore insurance for final expenses. Dealing with additional medical bills as you get older could impact your ability to leave money for your loved ones to handle final expenses.
Some plans offer guaranteed coverage. If you’re struggling with a medical condition or poor health, guaranteed issue burial insurance could help provide coverage. Keep in mind guaranteed burial insurance may come with higher premiums and a “graded benefit.” This means your full benefit may not be available for payout until after the graded period, which typically lasts the first two or three years of a policy.
What should you consider when purchasing insurance for final expenses?
In 2023, the median cost of a funeral with a viewing and burial in the U.S. was $8,300. The median cost of a funeral with cremation was $6,280.* While determining the right amount of insurance for burial expenses, it can be helpful to calculate the potential costs of the services you’d like.
It’s also important to find a policy that fits your family’s needs and budget. Older age typically leads to higher premiums, so keep in mind how that could impact the cost of your policy. If you have dependents or disabled loved ones, getting burial insurance with enough coverage to manage the total cost of final expenses can help maintain your family’s lifestyle.
If you know how you’d like to plan your funeral services, it may be wise to consider preneed burial insurance. Preneed burial insurance is designed to help you cover specific end-of-life services in advance. For this type of burial insurance, you typically work with a funeral director to prearrange and prefund for the services you’d like. This could be beneficial because it may help you lock in current prices and avoid inflation. At the time of need, the policy benefit will be paid directly to the funeral director to cover the cost of the services you chose.
What is the difference between life insurance and burial insurance?
Burial insurance, more commonly referred to as funeral preplanning insurance, is designed to specifically cover costs associated with the products and services requested for a funeral. The cost of preplanning insurance will vary depending on a variety of factors. That said, planning and prepaying for funeral expenses could help reduce the financial and emotional burdens families face while grieving.
On the other hand, both term life and whole life insurance are designed to help your family cover a range of expenses beyond just final services. A life insurance policy could also help cover mortgage payments, car loans and everyday bills. As a result, it may have higher premiums.
Exploring different coverage options can help you decide if burial or preneed insurance could be right for you and your family. It can be a straightforward, budget-friendly alternative to whole life or term life insurance that could help your loved ones manage the cost of funerals and other end-of-life services. In turn, that may provide relief and comfort at a time when they need it most.
*National Funeral Directors Association. Statistics. 2024. https://nfda.org/news/statistics
