Burial Insurance 101

There’s a reason most people don’t spend a lot of time talking about what happens immediately after they pass away. It feels morbid, and you definitely don’t want to think about your loved ones mourning.

But there is something to be said for putting a little bit of planning into the period immediately after you die. That’s because a funeral can be much more expensive than many people expect — and you certainly don’t want to leave your loved ones shouldering a financial burden as they have to figure out life without you.

According to Statista, 84 percent of the people that buy life insurance do so to pay for their burial costs and final expenses.

Fortunately, there’s a simple product called burial insurance that can make sure your final expenses are covered. It’s usually a type of whole (or permanent) life insurance, but these burial policies are often more affordable and more straightforward than other whole life insurance plans.

To help you determine if a burial insurance policy is something you should consider, let’s first look at the expense that could land with your loved ones after you pass away.

How much does a funeral cost?

Very few people think about the costs that come with preparing their bodies for the afterlife, but they can add up quickly. The National Funeral Directors’ Association (NFDA) reports that the median cost of a funeral with a viewing and burial comes in at $7,640 — and that data was for 2019, the most recent year for which they’ve published their price list study. You should budget for a little bit more now.

Cremation can be much more affordable. NBC News reports that an extremely simple cremation can cost about $1,600, but that generally doesn’t include a viewing, if that’s something your family would want. And it could mean getting cremated in a cardboard container, which may or may not bother your loved ones.

Ultimately, there are ways to keep end-of-life expenses down. But if your family will want a burial, you should be prepared to have a decent sum set aside for that. And even if they go the cremation route, your final expenses will still likely cost more than a thousand dollars. At a time when your loved ones will already be emotionally suffering, you probably don’t want to stick them with that sudden expense. And that’s where burial policies come to the rescue.

How does burial insurance work?

What is a burial policy, exactly? With burial insurance, the cost of your end-of-life expenses gets covered by an insurance provider. Basically, you buy a burial insurance plan in a certain amount (say, $10,000) and pay a small premium, or recurring expense, for the policy. This is similar to the way you pay a premium to keep your car insurance or home/renters insurance in effect.

Assuming you always make timely premium payments, when you pass away, your burial insurance company pays your death benefit to anyone you named as your policy’s beneficiary.

We’ve thrown a lot of industry jargon at you just now, so let’s do a quick recap of words you should know when it comes to burial insurance plans:

  • Premium: The amount you pay, usually on a monthly basis, to the insurance company to keep your policy active.
  • Death benefit: The amount the insurance company will pay out (e.g., the $10,000 we talked about earlier) when you pass away.
  • Beneficiary: The person or people who will get your death benefit. You name beneficiaries when you buy your burial expense insurance. You might name your spouse and/or children as beneficiaries, for example. They’ll get your death benefit at the time of your passing.

Are prepaid burial policies a good idea, though? Theoretically, you could set aside this lump sum of money for your final expenses, right? That’s certainly true, but saving up the amount you want to leave for your loved ones can be a challenge.

Plus, with burial insurance, there’s no wondering how your funeral expenses will get covered. Even if you set money aside, your family might feel torn between using that for your funeral and other pressing expenses. With a burial policy, you essentially gift your loved ones the straightforwardness of getting a lump sum of money to cover the costs for the funeral that will bring them the most solace.

The good news about burial life insurance policies is that because the death benefits are so small, the premiums associated with them usually are, too. We’ll get more into the cost of burial insurance later, but rest easy knowing it’s not too hefty.

What is the difference between life insurance and burial insurance?

As you’re reading this, you might be wondering: what’s the difference between life insurance and burial insurance? There isn’t one, really.

Burial life insurance is usually a type of whole, or permanent, life insurance. That means that once you buy the policy, it stays in place for your entire lifetime. Whenever you pass away — whether it’s in a year or 50 — your beneficiaries will get your death benefit, and can use that burial expenses insurance to cover your funeral costs.

You don’t necessarily need to get a permanent policy to have your final expenses covered, though. Any life insurance policy will offer your loved ones a death benefit, and they can use some or all of that money for the cost of your funeral and burial or cremation. In other words, any life insurance policy can cover funeral expenses.

Unlike whole policies, term policies expire after a certain term (e.g., 20 or 30 years) if you don’t pass away by the term’s expiration. While that means your burial life insurance policy will go away after the set term, some people choose term policies to cover funeral expenses because they’re generally much cheaper than whole policies.

Ultimately, when it comes to life insurance to cover final expenses, you have options. If you’d like help choosing the right policy type and death benefit amount for your loved ones’ needs, we can help. Don’t hesitate to contact our team of insurance experts here at Sproutt.

What is covered by burial insurance?

While burial insurance is the common term for an insurance policy that covers end-of-life expenses, it’s something of a misnomer. The term “burial insurance” is widely used because people often search for this type of insurance, but there’s no rule that you need to use a burial policy to cover a burial. A burial life insurance policy can be used to cover any end-of-life expenses, including a memorial service in a funeral home, viewing, cremation, or anything else that might help your loved ones find peace after losing you, including paying some of your medical bills.

The only thing that determines what your burial policy can cover is the amount of the death benefit you choose. If you set a death benefit of $2,000, for example, you’re probably limiting your loved ones to cremation. Choosing a larger death benefit like $10,000 can give them the budget to have a nicer memorial service with flowers, musicians, or anything else they might want.

Pros and Cons of Life Insurance for Funeral Expenses

As with any life insurance policy, there are pros and cons of buying one designated for funeral expenses.

Pros include:

  • Relatively low monthly premiums
  • No medical exam, therefore easier approval
  • Permanent policy that lasts your entire lifetime

The cons for this type of policy include:

  • If you live longer than expected, you may end up paying more in premiums than the value of your death benefit
  • You may be able to qualify for life insurance with a higher death benefit

Pros and Cons of Life Insurance for Funeral Expenses-Infographic

How much is burial insurance?

As we mentioned before, burial insurance plans can be extremely affordable. The Insurance Information Institute (III) reports that premiums can be as low as $2 or $3 a week when these policies are bought early in life (an average cost of around $10/month).

That doesn’t mean you can only get burial insurance when you’re relatively young, though. In fact, because many people only start to wonder about burial cost insurance as they get older, these types of policies are often geared toward older Americans.

One thing you should know: the cost of your final burial insurance will largely hinge on whether or not you’re willing to undergo a medical exam and answer some health questions. You can get burial insurance with no medical exam, but you’ll likely pay more for it. If you can show burial insurance companies that you’re relatively healthy via a quick medical exam, you’ll be able to get the best rates available.

Lincoln Heritage recently conducted a study into burial insurance cost that highlights the way a medical exam can help you save on your burial insurance. To start, let’s look at the average monthly premiums they found for men looking for burial policies with a death benefit of $10,000:

AgeDetermined 'In Good Health' by InsurerNo Health Questions Asked

This is just one source, though. What is the average cost of burial insurance across the board? To either confirm or deny that the above rates are accurate, we looked to other sources. Lincoln Heritage also investigated rates for women and found the following averages for a $10,000 burial insurance plan:

AgeDetermined 'In Good Health' by InsurerNo Health Questions Asked

Forbes also analyzed rates and turned up fairly similar findings. Their review found that a 50-year-old man will pay about $46 a month if they don’t undergo a medical exam.

What’s the cheapest burial insurance?

The best way to find the cheapest burial insurance is to work with an insurance provider who will consider all the pertinent factors. For example, if you have a higher-than-ideal BMI but exercise every single day, your insurance provider should take the latter into account. Many insurance companies won’t, only looking at the easy-to-measure metrics like BMI. But life insurance — including burial life insurance — is changing thanks to new players in the game, like our team here at Sproutt.

Another way to find the cheapest burial expense insurance possible is to determine the right death benefit for your family’s needs. This will likely mean a conversation with your loved ones. It might feel awkward or unwelcome to sit down and talk about yourself dying. But doing so has two notable benefits.

First, it helps you figure out how your loved ones would want to celebrate your life. And that helps you choose the right burial insurance plan — with the right amount of death benefit — to give them the funeral that will bring them the most solace.

Secondly, this can help save your loved ones from wondering what you would have wanted after you pass away. By clarifying your wishes now, you give your friends and family a measure of certainty about what to do in what will be a decidedly uncertain time. Pairing that clarity with a burial life insurance policy can ensure they don’t have to deal with any additional challenges as they adjust to life without you.

Is burial insurance worth buying?

Now that you know how burial insurance works and how affordable it can be, it’s time to make the decision: should you buy this type of insurance coverage?

That, of course, begs the question: is burial insurance a good deal? We can crunch some numbers here to help you find out. Let’s take a 50-year-old male as a sample. (Since women pay less for life insurance, it’s safe to say that if burial insurance makes financial sense for a man, it most likely will for a woman, too.)

Now, back to our 50-year-old sample male. The data we explored earlier says that he’ll pay $30 a month for a $10,000 policy if the insurer determines he’s in good health. That means he’ll pay $360 a year. At that rate, it would take that man more than 27 years to save up the $10,000 he wants to leave to his loved ones to cover final expenses. And since the average male is expected to live just shy of 76 years (per the Social Security Administration), that’s cutting it too close, even if he maxes out his life expectancy.

Long story short, burial policies can help people safeguard their loved ones from a financial burden after they pass away. With this burial cost insurance, you cover the cost of your memorial service, burial or cremation, or anything else your family wants to do to say farewell and celebrate your life — and often pay less to do so than if you set aside the money yourself.

Be sure to also read our guide on how to buy life insurance for your aging parents.

Who has the best burial insurance?

The best burial insurance for you will depend on your needs, which often hinge largely on your season of life. For example, retirees might wonder, does AARP offer burial insurance? (Hint: they do, but it’s no medical exam insurance, which can mean paying more than necessary if you’re a generally healthy individual.)

It pays to shop around and compare your options. The best burial insurance for you probably isn’t the same as the best burial life insurance for your friend or neighbor. Let’s look at a couple of things you should consider as you look for your ideal policy:

Companies that specifically offer burial insurance

As we mentioned before, AARP offers life insurance with a small benefit that you can use for burial cost insurance. Gerber Life Insurance offers another burial insurance option specific to your season of life, insofar as people often buy their products for their babies.

All this said, a lot of burial insurance companies, including AARP and Gerber, focus on no medical exam life insurance. This can be great if you’re unwell and a medical exam would probably raise some red flags for your insurance company. But if you’re generally healthy, your burial insurance cost could be higher with a no medical exam option. Burial policies through insurance providers who will factor in your wellness will often be more affordable.

Beyond that, you might want to consider blending your burial insurance policy with other ways to provide for your loved ones after you’re gone.

Your other (potentially better) options

Ultimately, the question you probably want to answer is: what’s the best burial insurance? And that comes down to getting the best protection for your family at the best price.

While burial policies can ensure your loved ones aren’t burdened by your end-of-life expenses, you could potentially get even more for them without paying much more yourself.

In that Forbes study we mentioned earlier, they compared burial insurance against term life insurance. As a quick refresher, term insurance is the more affordable type of life insurance that expires after a certain number of years.

Here’s a quick overview of what the Forbes team found:Average Rates for a 50-Year-Old Male -Infographic

This is just one data sample, but it shows that you could potentially offer your family a death benefit that’s ten times larger without paying any extra money. The main difference is that you’ll be working with a term policy, which will expire after a predetermined number of years (in this case, 30). But because you may be able to convert your term policy to a whole one, you can potentially maintain this much more significant death benefit even as you reach the end of the policy term.

So, really, the question may not be which burial insurance company is best, but which company offers the best life insurance in general. With a bigger death benefit for roughly the same amount of money, you leave your family in a much better position.

Expanding beyond burial insurance

You’re probably shopping for a burial policy because you want to protect your loved ones from burdens after you’re gone. And, certainly, burial insurance plans save them from the challenge of having to come up with money for your memorial service and burial or cremation.

But what if you could do much more? With a term life insurance policy, you can get a much larger benefit to leave them — without a notably higher premium to pay. And your family could use that benefit however they want or need. It could help to pay off your mortgage, send your kids to college, eliminate credit card debt, and more. It can even help you fulfill your promises to them. If you always told them you’d take them on a European vacation, for example, they could use a portion of your death benefit to take that trip.

All told, whether you’re more comfortable with a burial insurance policy or you want to explore your other, more robust life insurance options, we can help. Get in touch with our team here at Sproutt. We can help you compare your choices, including burial policies, term policies, and whole policies. We can also help you determine the right death benefit amount for your loved ones and the future you want to create for them.

The fact that you’re looking into burial insurance means you care deeply about the people in your life and you want to leave them in the best situation possible when you pass away. And we think that level of care deserves a high level of service and access to the best life insurance products possible. For guidance to help you choose the right policy so you can rest easy knowing you’ve provided for the people who matter most to you, contact us today.

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