The Best Burial Insurance of 2020
|Hours of Research||Policies Reviewed||Policies Selected||Companies Considered||Companies Selected|
It’s understandable that not all seniors feel comfortable with the idea of planning for their own funeral. Even if you don’t have detailed wishes for the service held in your honor, however, it’s important that you plan for the cost of your funeral. The dozens of products and services required for a funeral and burial often total $8,000, and sometimes much more. By getting burial insurance, a special kind of life insurance, you can plan ahead and leave your loved ones a clear way to pay for those costs.
Although there are many different life insurance companies on the market, not all offer burial insurance on terms that are fair or helpful for you. As you search for a great company, you may come across policies that have strict health requirements you cannot meet, term life insurance policies that will expire before they can be useful to you, or policies that have premiums that rise over time. You may also come across scams that aim to take your personal information without delivering a real insurance product.
To help you understand how to analyze the many burial insurance companies and policies you may come across, we have created a guide packed with practical comparisons and answers to common questions. Read on to find definitions for common burial insurance terminology, a guide to some of the best companies and policies currently on the market, and answers to the most common burial insurance questions that you have. If you aren’t sure if burial insurance is the funeral planning tool for you, check out our Buyer’s Guide to learn about your options.
Burial Insurance Terminology
Burial insurance is a type of life insurance, and the world of life insurance uses many specialized words. The following quick definitions will be useful to you as you learn about and compare your options.
Burial Insurance by Other Names
Burial insurance is exactly the same as final expenses insurance and funeral insurance. Since it’s typically just a low death benefit form of whole life insurance, it may be called something that has no reference to funerals, yet still be suitable as a form of burial insurance. It’s worth noting that pre-paid funerals are not a form of burial insurance.
The person you tell the insurance company to give the life insurance payment (death benefit) to when you are gone. You can usually designate multiple beneficiaries.
The death benefit is the life insurance payment that your beneficiary receives when you pass away. This is always an amount that you choose in advance, and for burial insurance, it’s most commonly between $5,000 and $25,000.
Some whole life (permanent life) policies accumulate cash value based on the premiums that the policyholder pays. You can borrow against this value with interest. The cash value is distinct from the death benefit and does not pass on to the beneficiary. However, if you neglect to pay back the cash value before your death, the amount you borrowed and its interest will be deducted from the death benefit that your beneficiary receives. Cash value is purely a convenience feature, and you are never obligated to borrow against it.
Some policies impose a 2-year waiting period before they will pay out the full death benefit to the beneficiary. If you pass away during the waiting period, your beneficiary will likely, though not always, be paid 110 percent of the premiums that you paid. But, they will not receive the death benefit. The waiting period may not apply to certain accidental deaths.
Permanent life, or whole life, is life insurance that you are unlikely to outlive. These policies typically mature when you turn 100 or 121. In the unlikely case that you do live past that, the death benefit should be paid directly to you, the policyholder, though you should verify this with the company.
With the most basic form of permanent life insurance, you need to answer some health questions, which may be referred to as a “simplified underwriting” process. You can be disqualified if you are in bad health, but the strictness of this qualification varies by company. Some permanent life policies require a health exam, but we have not included these policies on our list.
All of the permanent life insurance policies we have included on our list are available to those between ages 50-75, and many are also available to younger or older applicants. However, some permanent life insurance excludes seniors. Many permanent life policies gain cash value over time. Most do not have a waiting period for benefits.
Guaranteed Acceptance, also called Guaranteed Issue, is a type of Permanent Life Insurance typically designed for those ages 50-85. Companies offering this usually claim that anyone in their stated age range will be approved with zero health questions asked. Since “Guaranteed Acceptance” is not a tightly regulated phrase, however, you will find that some companies that use it still ask about your weight, height, or other simple health questions.
Guaranteed Acceptance plans accommodate those who otherwise do not qualify for life insurance. Premiums tend to be higher for Guaranteed Life than for other forms of life insurance, and most of these policies have a 2-year waiting period for full death benefits. Many do not accrue cash value, but some do.
How We Chose the Best Burial Insurance Companies
Some life insurance policies, especially term life, mature (that is, end) while you are still living, based on your age or another measure of time. We have taken care to include only policies with a maturity age of 100 or greater that you are unlikely to outlive. In the unlikely event that you live past the high maturity age, most of these policies will directly pay you the death benefit.
You shouldn’t be disqualified from receiving burial insurance due to minor complaints associated with age. That’s why all of the policies on our list required no or very few health questions. We excluded policies that require medical exams. Policies that include a few health questions usually have lower premiums and higher benefits than guaranteed acceptance plans that ask no questions, but you can choose the option that suits your current health.
As you age, your cost of living may rise due to your increasing need for assistance and healthcare. To help you keep costs low, we have verified that all of the policies on our list feature locked-in rates that will never increase unless you let the policy lapse or you decide to increase your death benefit amount. These policies will also never be canceled on you by the company unless you cease payments or unless you were untruthful on the application.
|Eligible Ages||Approval process||Death Benefit Size||Waiting Period for Benefits||Policy Maturity in Years||States Covered|
|AIG with TZ Insurance: Guaranteed Issue||50-85||No exam, no health questions||Up to $25,000||2 years||120||50|
|Colonial Penn: Guaranteed Acceptance||50-85 in most states||No exam, some health questions||Not Available||2 years||121||49, New York excluded|
|Colonial Penn: Permanent Whole Life||40-75||No exam, some health questions||$10,000-$50,000||None||121||49, New York excluded|
|Gerber Life: Guaranteed Issue||50-80||No exam, some health questions||$5,000-25000||2 years||121||50|
|New York Life through AARP: Permanent Life||50-80 and 45-80 for a spouse||No exam, some health questions||$5,000-50000||None||The policy never matures but you only pay premiums until age 95||48, New Jersey and Washington excluded|
|New York Life through AARP: Guaranteed Acceptance||50-80 and 45-80 for a spouse||No exam, no health questions||$2,500-25000||2 years||The policy never matures but you only pay premiums until age 95||48, New Jersey and Washington excluded|
|State Farm||50-80, 50-75 in New York||No exam, some health questions including history, weight, and height||10000||None||100+, varies by state||49, Massachusetts excluded|
|Transamerica: Immediate Solution||18+||No exam, some questions||Up to $50,000, $25,000 for those above age 76||None||121||50|
|Transamerica: 10-Pay Solution||18+||No exam, some health questions||Up to $50,000, $25,000 for those above age 76||None||121||50|
|Transamerica: Easy pay||18+||No exam, some health questions||Up to $25,000||2 years||121||40+|
Most Insurance Experience
AIG celebrated its 100th year in business in 2019, beating out all other companies on our list when it comes to industry experience. This brand has weathered many crises in the American economy and come out of them stronger, focusing on customer satisfaction and financial integrity. With over 90 million worldwide customers, AIG has the expertise and efficiency that comes with handling a constant stream of insurance claims. AIG partners with TZ Insurance to bring you this burial insurance plan.
This Guaranteed Issue policy covers those ages 50 to 85 for up to $25,000 of life insurance that can be used by family members to cover funeral and burial costs. With a sum of this size, for many families there’s also room for extra expenses such as paying small credit card or medical bills.
AIG with TZ Insurance Product Overview
|Plan Type||Guaranteed Issue|
|Approval Process||No exam & No health questions|
|Death Benefit Size||Up to $25,000|
|Waiting PeriodfFor Benefits||2 years|
|Policy Maturity in Years||121|
In partnership with TZ insurance, AIG offers several forms of life insurance, but its Guaranteed Issue policy is most suited to seniors who want to cover their own final expenses.
Pros and Cons of AIG’s Guaranteed Issue Policy
- No health questions or exam: You’ll find it very easy to qualify for this policy even if you’ve had some health problems.
- Apply through age 85: For many companies, the cutoff for applications is age 80, so AIG’s policy is more inclusive than most.
- Graded death benefit: Also known as a two year waiting period, this restricts the payout of the death benefit in the first two years after a policy begins, except in cases that meet the strict definition of accidental death.
- Annual policy fee: In addition to your premiums, you’ll need to pay a $24 fee every year to cover administrative costs.
- No online prices: If you want to view AIG insurance prices, you’ll need to submit personal details including name, contact information, and more.
Best for Budget-Conscious Seniors
Colonial Penn has specialized in life insurance for seniors for over 60 years and was the first brand to offer a Guaranteed Acceptance insurance policy specifically for those over age 50. Both the Guaranteed Acceptance Policy and the Permanent Whole Life Policy from this company are suitable for covering your final expenses, although the company does not refer to either policy as burial insurance.
Colonial Penn gives one free month of coverage per year to those who pay annually for their policy, which can make the overall yearly cost much more affordable. This generous discount makes Colonial Penn a great choice for budget-conscious seniors. To explore exact premium prices and death benefit amounts online or over the phone, you will need to supply personal information such as full name, age, location, and more.
Colonial Penn Product Overview
|Plan Type||Permanent Whole Life||Guaranteed Acceptance|
|Eligible Ages||40-75||50-85 in most states|
|Approval Process||No exam, some health questions||No health exam, no questions|
|Death Benefit Size||$10,000-$50,000||Not available|
|Waiting Period||None||2 years|
|Policy Maturity in Years||121||121|
|States Covered||All states except New York||All states except New York|
Both the Guaranteed Acceptance and the Permanent Whole Life policies from Colonial Penn have no physical exam and are available to seniors in 49 states. Both give you the flexibility of paying your premiums monthly, quarterly, semi-annually, or annually, and those who pay annually get one free month of coverage each year. These policies have high maturity ages of 121 years, and their premiums will not change at any point for the duration of the policy. Read on to find out the important ways in which these policies differ.
Pros and Cons of Colonial Penn’s Guaranteed Acceptance Policy
The Guaranteed Acceptance plan from Colonial Penn is the company’s easiest to qualify for. We’ve explained its pros and cons below.
- No health questions or exams: If you’ve been turned down for other forms of insurance, or if you’ve been quoted high prices based on your health history, this could be the plan you need. It’s also very convenient to not have to take the time to answer health questions or undergo an exam.
- High eligibility age: You can qualify even if you’re 85, an unusually high age for getting life insurance of any kind.
- Unknown death benefit: Agents determine benefit amounts on a case-by-case basis for this policy. Compared to Permanent Whole Life from Colonial Penn, death benefits may be low, especially if you are on the higher end of the age range, but you won’t know unless you ask for a quote.
- Waiting period: The full benefits of a Guaranteed Acceptance policy are not available until the policy is two years old. If you pass away from causes other than accidental death during the two-year waiting period, your beneficiaries will receive back all or a percentage of the premiums you have paid, but they will not receive the death benefit.
Pros and Cons of Colonial Penn’s Permanent Whole Life Policy
Permanent Whole Life from Colonial Penn has some limitations on acceptance, but it has a few advantages over the Guaranteed Acceptance policy.
- Available to younger consumers: Those ages 45-75 can apply for this policy, making it perfect for getting coverage for yourself and a perhaps a slightly younger spouse.
- Accumulates cash value: You can borrow against the cash value (with interest) if the need arises.
- No waiting period: Your coverage will be effective immediately provided your premium is paid.
- A variety of death benefit sizes: Death benefits are available in increments of $10,000, up to the unusually high level of $50,000.
- Health questions: To qualify, you must answer questions about your health, and you may be disqualified based on your answers.
- Strict age limit: You cannot apply if you’re over 75.
Best for High-Cost Funerals
Fidelity Life was founded in 1896 and provides burial insurance in all states except
Wyoming and New York. With over $32 billion in life insurance policies currently in force, FidelityLife is trusted by many middle class American’s to provide financial support to their families during crucial times. In 2018 this brand received an A- (Excellent) rating from the insurance rating agency A.M. Best for financial strength.
The company’s RAPIDecision Final Expense plan features a death benefits ranging from $5,000-$35,000, though many competitors offer only up to $25,000. If you discover during your research that you want funeral items and services that will cost you beyond the average final expense, this high benefit option could be perfect for you. You may also consider it if you’d like some of the death benefit to be leftover for things like final medical bills or even the personal needs of the beneficiary.
Fidelity Life Product Overview
|Plan Type||RAPIDecision Final Expense|
|Approval Process||Health Questions and Database Search, No exam|
|Death Benefit Size||$5,000- $35,000|
|Waiting PeriodfFor Benefits||None|
|Policy Maturity in Years||121|
|States Covered||All states, except Wyoming and New York|
A RAPIDecision Final Expense policy has many advantages for the consumer, including a high maturity age and death benefits ranging from $5,000-$35,000 dollars. Read on to discover more pros and cons of this form of burial insurance.
- No waiting period: Once you’re approved, your coverage starts with no waiting period and the premium is guaranteed to never increase or be canceled for the life of the policy as long as you pay your premiums.
- Apply up to age 85: Many other companies don’t allow anyone over age 80 to apply, so this policy serves seniors who otherwise would not have the opportunity to receive burial insurance.
- Cash Value: Fidelity Life adds something called the Accelerated Death Benefit Rider to your policy at no cost beginning in the third year of your policy. This rider allows you to access the cash value of your policy for any personal needs. You can use up to 50 percent of this policy in advance of your death as a loan.The rider expires the year following your 85th birthday.
- Loan risks: Using the Accelerated Benefits Rider is like taking out a personal loan at the bank. You are charged interest on the money you borrow, and you must pay it back eventually. If you have not paid it in full before your death, the balance will be deducted from the death benefit, leaving less for your beneficiary.
- Health approval required: The company cautions that this policy covers individuals with some health impairments but is not designed for those with very serious health risks. If you have good or average health with some problems that do not reduce your life expectancy to within a few years, then your chances for approval are good. Approval hinges on the combination of answers from database search and your answers to health questions.
Gerber Life has provided life insurance to American families since 1967, and it currently has about 6.3 million customers in the United States, Canada, and Puerto Rico. Well-known for its longevity and financial stability, Gerber Life received an A rating from the insurance evaluator A.M. Best in 2018. Despite its heavy association with children thanks to its logo and its unique insurance policies for children, Gerber Life Insurance offers insurance to customers from a wide age range.
Keeping up with changing times, Gerber Life now offers convenient online insurance applications that take just minutes to complete. Even those who rarely use computers will find the application process simple and stress-free. Gerbers Life Insurance Guaranteed Acceptance policy can be a convenient and sensible way to provide for your final expenses.
Gerber Life Product Overview
|Plan Type||Guaranteed Life|
|Approval Process||Limited questions and no exam|
|Death Benefit Size||$5,000-$25,000|
|Waiting Period for Benefits||2 years|
|Policy Maturity in Years||121|
Gerber Life offers its Guaranteed Life policy in all fifty states to those ages 50-80. Below you can see a quick overview of its advantages, as well as some drawbacks, so that you can determine if this is the right policy for you.
- Customizable death benefit amounts: With death benefits ranging from $5,000 to $25,000, this policy can accommodate the final expense needs, low or high, of most seniors.
- Cash value: This policy accumulates a cash value as you pay your premiums. If you ever unexpectedly need an extra source of funds, you can choose to surrender your policy for its cash value, or you can keep it open and borrow against the cash value at 8 percent interest.
- Wide availability: With coverage in all 50 states, you won’t be disqualified based on your location.
- Limited health questions: Although you will not need to submit to an exam, you will need to answer some basic health questions. The company might decide that you aren’t a good candidate for their policy based on your answers, so this is not a true “guaranteed acceptance” plan.
- Loan risks: Although it’s nice to have cash value available to you in a pinch, using the cash value incurs 8 percent interest and puts the death benefit at risk. If you use this optional loan and don’t pay it back before your death, it will be deducted from the death benefit.
- Graded death benefit limit: In order to keep premiums affordable, Gerber Life usually does not pay out the full death benefit in the first two years of the policy. During this waiting period, which Gerber Life calls “a graded death benefit limitation,” any death other than an accidental death will result in the repayment of premiums with 10 percent interest to the beneficiaries instead of a full death benefit payment.
Best for Paid-Up Premiums
AARP has served American seniors 55 and older since 1958. It’s an organization born from the idea that aging is challenging, but it’s also a privilege. AARP has a long history of fighting to make aging a more positive experience by lobbying for senior-friendly legislation and by publishing helpful articles for seniors.
AARP frequently partners with other businesses to bring specific services to its members. Once such partnership is with New York Life, a company that’s been offering insurance for over 170 years. New York Life maintains its ability to meet consumer needs in part because it isn’t beholden to meet aggressive shareholder expectations. New York Life has a A++ rating for financial stability from the insurance rating agency A.M. Best.
The AARP Life Insurance Program from New York Life has a unique feature called “paid-up premiums” on both of its life insurance policies. Paid-up premiums means that once the policyholder reaches age 95, he or she no longer pays premiums but still receives full coverage. If you expect a longer than average lifetime, this generous policy could lower your costs while offering peace of mind as you reach what could be your most expensive years for healthcare and other needs.
The AARP Life Insurance Program from New York Life Product Overview
|Plan Type||Guaranteed Life||Guaranteed Acceptance Life|
|Eligible Ages||AARP members 50-80 and their spouses ages 45-80||AARP members 50-80 and their spouses ages 45-80|
|Approval Process||Some health questions, but no exam||No health questions and no exam|
|Death Benefit Size||$5,000- $50,000||$2,500- $25,000|
|Waiting Period for Benefits||None||2 years|
|Policy Maturity in Years||You must pay premiums until 95, but your coverage continues after that with no payments||You must pay premiums until 95, but your coverage continues after that with no payments|
|States Covered||All states, except New Jersey & Washington||All states, except New Jersey & Washington|
New York Life partners with AARP to provide two different burial insurance coverage options for those who are already AARP members. The Guaranteed Acceptance policy best serves those with pre-existing health problems, while the Permanent Life policy suits those who can answer some basic health questions and still be approved.
When buying life insurance from the AARP Life Insurance Program from New York Life, you have the power to choose which policy meets your needs best. Before exploring the differences, you should know that many facets of these two whole life policies are identical.
Positive traits these policies have in common:
- Premium waiver for some nursing home confinements longer than 180 days
- Paid-up premiums after age 95
- Premium rates will never change
- No physical exam
- Accepts AARP Members ages 50-80 and spouses ages 45-80*
- 30-day refund option
*Varies by state
Pros and Cons of Permanent Life
The Permanent Life policy has a lot to offer for healthy seniors. Read on to explore pros and cons that differentiate it from the Guaranteed Acceptance Policy.
- High death benefit: The Permanent Life policy allows for a death benefit as high as $50,000, much higher than you typically need for burial insurance. This could be ideal for those who want to leave something extra for their beneficiaries after funeral expenses are paid.
- Low costs: According to AARP’s website, a 50-year-old woman can pay as little as $28 a month for $10,000 of coverage, and even if you are 80, your premium could be less than $100. Gender, age, and death benefit size determine the premium.
- No waiting period: The Permanent Life policy stands apart from the Guaranteed Acceptance policy because it has no waiting period for full benefits, except in the case of suicide.
- Some health questions: Although it requires no exam, this policy is partially underwritten with a few health questions. If you don’t meet certain health standards, you won’t qualify.
Pros and Cons of Guaranteed Acceptance Life
Guaranteed Acceptance Life is very similar to Permanent Life, but easier to qualify for and has a few extra restrictions. Our pros and cons lists can help you decide if it’s the right policy for you.
- No health questions: You’ll never need to answer a single question about your health with this plan. If you’ve had health issues that disqualify you from other life insurance policies this policy could work for you.
- Slightly elevated premiums: The insurance company assumes extra liability by not including questions, so premiums are about $10 higher than comparable Permanent Life plans.
- Smaller benefit range: With death benefits from $2,500- $25,000, the available death benefit range is half that of the Permanent Life policy.
- Waiting Period: If you pass away in the first two years you have the policy, your beneficiary will receive 125 percent of the premiums that you paid but not the death benefit. Full benefits are paid from the first day of coverage for accidental death, however.
Best for Customer Convenience
State Farm began in 1929 and has evolved over the years to accommodate the changing needs of consumers. State Farm and its subsidiaries now offer about 100 different insurance and finance products. The foundation of State Farm’s relationship to its customers is its excellent local agents, of which there are about 19,000 throughout the United States.
State Farm might be best known for its automobile insurance, but it also provides life insurance- 8 million policies of it- to a variety of customers. Getting Final Expense Insurance from State Farm can be extremely convenient because State Farm provides its customer choices in many ways. In many locations, you will have multiple agents in your town, so you’ll get to choose the office that you prefer. Payments are also flexible- you can choose to pay monthly or annually and you may receive a discount for annual payment. You can also chose to “go paperless” and pay online by registering an account that gives you access to 24/7 support, an overview of your policies, and much more.
State Farm Product Overview
|Plan Type||Final Expense Insurance|
|Eligible Ages||50-80, 50-75 in New York|
|Approval Process||Some health questions, no exam|
|Death Benefit Size||10000|
|Waiting Period for Benefits||None|
|Policy Maturity in Years||100+|
|States Covered||All except Massachusetts|
Final Expense Insurance from State Farm is available in all states except Massachusetts. State Farm actually offers its Final Expense policy through two different companies. In New York and Wisconsin coverage is provided by State Farm Life and Accident Assurance Company, and the rest of the states are covered by State Farm Life Insurance Company.
The qualification process for a State Farm Final Expense (called $10,000 Whole Life in New York) policy is painless, with short, simple health questions that can be viewed beforehand online and no exam required. Read on to learn more about the pros and cons of this policy.
- Affordable premiums: Depending on your age, gender, location, and health, you could pay less than $1 a day, or $28 a month, for this plan. Premiums this low can be difficult to find.
- Adequate death benefit: At $10,000, this death benefit is close to the average cost of a funeral, which many people estimate to be between $8,000-$11,000. $10,000 is a sensible sum for most people.
- Cash value access: Your policy builds a small amount of cash value over time as you pay premiums. If you choose to, you may access this as a loan.
- Possible dividends: While not guaranteed, this policy has the potential to earn you dividends, depending on financial markets. Few other companies offer this as a feature of whole life insurance.
- Health questions: Not everyone can be approved for this policy. Your approval hinges on some basic questions about your current and past health. You can preview these questions online.
- Only one death benefit option: There’s no flexibility here. The only amount you can set as your death benefit is $10,000, regardless if you want more or less.
- Loan risks: Accessing the cash value incurs interest, and anything left unpaid is deducted from the death benefit.
Best Customer Service
Transamerica was founded in San Francisco under the name of the Bank of Italy in 1904, and has continued to evolve since then. Eventually breaking ties with the banking side of business in the 1960s, the brand has evolved over the years to focus more on insurance and retirement plans. Recently, Transamerica has been recognized by the annual Diversity Best Practices Inclusion Index for its commitment to being a fair and inclusive employer.
Transamerica is the only company on our list that offers three different options specifically for covering your final expenses. Transamerica has excellent customer service, and agents prioritize empowering the customer with information. When you call this company and connect with the right department, answering your questions will be much more important to the agent than making a sale.
Transamerica Product Overview
|Plan Type||Immediate Solution||10-Pay Solution||Easy Solution*|
|Eligible Ages||18+ with death benefit restrictions for 76+||18+ with death benefit restrictions for 76+||18+|
|Approval Process||No exam, some questions||No exam, some questions||No exam, some questions|
|Death Benefit Size||Up to $50,000||Up to $50,000||Up to $25,000|
|Waiting Period for Benefits||None||None||2 years|
|Policy Maturity in Years||121||121, but no payments after the 10th year of the policy||121|
|States Covered||50||50||About 45|
|*Many aspects of this plan, including where it is available and who is eligible, are affected by state laws.|
Like all of the companies on our list, Transamerica does not require a physical exam of any kind for its customers to qualify for life insurance. The company does partially underwrite its policies through quick questions, so you are not guaranteed to be accepted. Your rate will be based on age, weight and height, and gender. Partial underwriting keeps Transamerica’s costs very low.
Common traits include:
The three different benefit plans that Transamerica offers share a lot of common ground.
- Simple health questions for the approval process
- Locked-in rates for life
- Maturity at age 121 with full death benefit payment to the policyholder if they exceed maturity
- Accumulated cash value you can borrow against
Because borrowing against the cash value often reduces your death benefit, Transamerica does not recommend this practice to its customers as anything but a last resort.
Pros and Cons of Immediate Solution
- No waiting period for full benefits
- Death benefits up to $50,000
- Those over 76 can only get death benefits up to $25,000
Pros and Cons 10-Pay Solution
- Premiums are highest of any Transamerica burial insurance products, and may be $100 or more
- Premiums are only owed for 10 years, after which point you are covered for life without any more premiums
- No benefits waiting period
- Death benefits up to $50,000
- Those over 76 may have their death benefits capped at $25,000
Pros and Cons of Easy Solution
- Lower premiums than the other Transamerica policies
- Two year waiting period for full death benefits
- Stricter approval process than other Transamerica policies
- Not available in all states
- Death benefit cap of $25,000
There are many options for burial insurance, and finding the right one for you can be an intimidating task. It’s important to approach all companies with a clear idea of your own needs so that you can quickly eliminate from your list the companies that don’t meet your standards. Within this buyers guide, you’ll find practical steps you can take to clarify your personal search parameters and make the most out of your burial insurance.
Step 1: Determine if burial insurance makes sense for you
Burial insurance is a great choice for many seniors, but depending on your means, family dynamics, how far ahead you start planning, you have several other options for planning for your final expenses. With some alternatives, you may actually save money in the long run, but only if you begin saving far in advance. Most of these options don’t require monthly payments, but they do require significant upfront costs.
Common burial insurance alternatives:
A joint savings account: For this option, you can simply put aside between $5,000 and $25,000 in a joint bank account. Give a trustworthy family member full access to this account so that when you pass away he or she will still have equal rights to withdraw funds without red tape. The family will be able to immediately cover your final expenses. This can be a risky option in that access to the cash is completely unrestricted.
An irrevocable funeral trust: Set aside between $5,000-$15,000 (this varies by state law) in an irrevocable funeral trust (also called IF Trust, IFT, and Irrevocable Burial Trust) that passes to the complete control of the beneficiary you name. An irrevocable trust removes that money from your countable assets, which can help you qualify for Medicaid. You will never again be able to access that money for yourself, however.
A pre-paid funeral: With this option, you pay a funeral home or cemetery ahead of time for a pre-selected funeral package. Before buying, ask exactly what’s included, what happens if you move out of the area, if the company goes out of business, or if you want to cancel the policy. The Federal Trade Commission provides valuable tips for exploring this option. In some cases, you might make payments, but usually you’ll pay for this all at once.
All of these alternatives to burial insurance assume that you either have money on hand or are young enough to save it. When that’s not the case, burial insurance is your best option. You only need to pay small amounts of money at a time for burial insurance, and the death benefit will cover your final expenses. In some cases, the death benefit may even be large enough to leave extra money for the personal use of your beneficiary.
Step 2: Determine the size of death benefit that you need
Funeral costs are often calculated separately from cemetery costs, and ideally, you want to cover both for your loved ones’ sake. Estimates on funeral and burial costs vary widely, but the minimum number is frequently about $8,000. Insurance companies usually offer death benefits between $5,000-$25,000, so you should be able to find a policy that meets your needs.
You can call companies in your area to get an idea of what your funeral and burial preferences are likely to cost. You may want to factor in inflation when making your final death benefit decision.
The following lists can give a snapshot of costs to consider:
- Funeral home fees for the funeral or showing
- The casket or urn
- Cremation, embalming, casket sealing, and related services
- Printed materials
- Transporting the body from near or far
- The graveside service
- Fees for opening and closing the grave
- A plot or cremation niche
- A vault or liner inside the grave
- A marker or headstone
The Federal Trade Commission provides an expanded checklist you may also find helpful.
Step 3: Calculate how much of a premium you can fit into your budget
For a death payout of $25,000, you may find that premiums commonly cost anywhere from $50-$200. Your gender, age, location, and health can heavily influence this, however, and a smaller or larger death benefit will also impact your premium. Look at your budget and decide what your upper limit on premiums is so that you won’t feel pressured when looking at sales materials. If you can qualify, a policy that requires some health questions is almost always more affordable than a guaranteed acceptance policy.
Step 4: Compare policies from at least three companies
You can often find prices online, but you’ll want to call or meet with an agent to get into the details of most policies. Ask about premiums, as well as the following questions:
- Is there a waiting period for benefits?: Many policies won’t pay the full death benefit until you’ve had the policy over two years. It’s best to find a policy that has no waiting period, but if that’s not possible in your area or for a premium that you can afford, then ask each company about the details of the waiting period and choose the one that’s the most generous.
- Will my beneficiaries have to deal with taxes?: Most death benefits will be tax-free, but you should still ask about this in case this insurance company has a special kind of policy. You don’t want your beneficiary to be dealing with a large income tax that could significantly reduce their ability to pay for the funeral you planned.
- How many fees are associated with this policy?: Finding a policy with no administrative fees is rare, but you’ll want to find a company that’s transparent about what fees they charge. Ask, but also be prepared to go over the fine print before signing anything. Sometimes fees will be deducted from the cash value of the policy monthly.
- When does the policy mature, and what happens at maturity?: Even whole life policies can reach maturity, though it’s unusual that they will before you pass away. Ask how payment works if you do outlive the maturity of your policy. You’re likely to face taxes if as the policyholder you receive the death benefit because the policy reached maturity.
- Are there any discounts available? Many companies allow for monthly, quarterly, semi-annual, and annual payments. They may discount less frequent or automatic transfer payments.
- Will my premium ever rise? Companies who follow best practice for this kind of policy will lock-in your premium from the beginning as long as you do not cease making payments or change the coverage amount. Verify that the company will not raise your prices over time.
Step 5: Fully inform your beneficiary of your decision
Occasionally seniors set up life insurance policies that are never cashed out because their beneficiaries don’t have enough information to receive the payment. This can happen if, for example, you tell your beneficiary about the policy, but forget to tell them the name of the company, or if you tell your family you have a policy but they don’t know who you designated as the beneficiary.
To avoid confusion and make claiming the death benefit easier, you can make multiple copies of your policy information. File one copy along with other important documents in your home and tell the beneficiary where it is. You can also give your beneficiary a copy and consider leaving a copy with your lawyer if applicable to your situation. Discuss with your loved ones what kind of funeral the funds are likely to cover so that they know how to make the most of the payment when it comes.
Frequently Asked Questions
What is a death benefit?
The life insurance company pays the death benefit to your beneficiary following your death. You may be able to name multiple beneficiaries, and it may be wise to do so in case one passes away. In the case of burial insurance, you should make the death benefit as close to what you think your final expenses will be unless you want to leave extra for the beneficiary’s use. The death benefit is typically tax-free, especially if the insured person is also the policy owner.
Can the insurance company cancel my policy?
With most burial insurance, your policy cannot be canceled unless you neglect paying your premiums or unless you misrepresented information on your application.
Your policy may, however, mature if you reach age 100 or 121. When your policy matures, the full death benefit should be offered to you, the policyholder. This situation is not ideal since you will have to pay taxes on the benefit, whereas if it were passed to the beneficiary upon your death it would have been tax-free in most cases.
Does my policy have cash value?
Your policy may gain cash value over time. Although a heavily advertised aspect of whole life insurance, the actual value may be quite low in proportion to the policy size. Many policies allow you to borrow against the cash value of your policy at interest. If you don’t pay the borrowed amount and the interest back, this debt will be deducted from the death benefit that your beneficiary receives. Cash value is only available while you are alive and does not add to the death benefit.
What’s a limited benefit period?
Insurance companies sometimes use a two-year limited benefit period to cut their costs, especially if they are offering a guaranteed acceptance policy which is a high financial risk for their business. This waiting period may also be called a graded death benefit.
During the waiting period, the beneficiaries of those who pass away within these two years won’t receive the full death benefit. Instead, they might receive a percentage of it, receive back all or a portion of the premiums that were paid, or some other arrangement of partial compensation.
When exploring companies, make sure you clearly understand if there is a limited period and exactly what the payout will be if you pass during that period.
Do burial insurance companies charge hidden fees?
Some burial insurance companies include fees for administrative costs, and you may miss them in the fine print, so it’s good to ask specifically about fees as you shop. Examples of common insurance fees to ask about include surrender charge fees and policy fees, but there may be others or they may go by different names. If you do find out about a fee, ask if it’s one-time or repeating.
What happens if I can’t afford my premium anymore?
If you cannot afford your premium anymore, you will have to surrender the policy. You may receive some of the cash value of the policy back, but it will likely be less than you’ve paid in premiums. You will not receive the death benefit. A surrender charge may apply.
What factors affect my premium?
For burial insurance policies, premiums are usually based on your gender, age, location, and sometimes health when you apply. The death benefit amount that you choose will also influence your premium.