How does burial insurance work?

You simply choose the amount of coverage you want and determine who will be the beneficiary upon your death. The beneficiary should contact the insurance company as soon as possible following the death of the insured to begin the claims process. The beneficiary may be required to provide a copy of the insurance policy along with a claims form, as well as a certified copy of the death certificate.

What does a funeral insurance policy cover?

Final expense insurance can cover the costs your loved ones will face in the event of your death, such as:

  • Funeral arrangements, including viewing and service
  • Burial costs, including interment
  • Cremation
  • Medical bills

Given the lower coverage amount, funeral insurance is not intended to leave additional money to the policyholder's beneficiary beyond the costs associated with funeral and burial services. However, the beneficiary may use any remaining funds to pay for other expenses, such as outstanding debt or legal costs. If you wish to leave behind a more substantial sum, consider a policy that holds more significant value.

How much does burial insurance cost?

Burial insurance is often considered one of the more affordable types of life insurance available, due in part to its lower coverage amounts. Funeral and burial insurance policies generally range in value from $5,000 to $35,000. In terms of cost, funeral insurance policies from eFinancial start as low as $20 per month,* and premiums can be paid either monthly or annually.

Who can get a funeral insurance policy?

Coverage is typically available for those between the ages of 50 and 85. One of the benefits of funeral insurance is that it doesn't require a medical exam to qualify. Depending on the type of policy you pursue, even those without health insurance or who have a pre-existing condition can usually obtain a policy.

What types of burial insurance are available?

There are several types of policies to consider:

Simplified issue: In this instance, the insurer evaluates your health based on a series of medical history questions, but a medical exam is not required. Certain factors may result in being denied a policy, such as pre-existing conditions, smoking, or risky activities.

Guaranteed issue: In this case, you don't need to answer any medical questions or take an exam. However, because this type of policy brings more risk to the insurer, your cost will likely be higher. This policy may also have the provision of modified benefits — meaning the full death benefit won't be available until the policy has been in effect for a certain period of time, typically 24 or 36 months. If you were to pass away due to natural causes before this waiting period, your beneficiary would only receive a limited portion of the payout. Full benefits are typically paid in the event of accidental death.

Pre-need insurance: This type of policy involves a contract with a funeral service provider. The agreement includes specific products and services you select through the funeral provider, and the money goes directly to them rather than your beneficiary.

Is burial insurance worth it?

According to the National Funeral Directors Association, the median cost of a funeral in 2019 was $7,640. So, if you're on a tight budget and can't afford a standard life insurance policy, funeral insurance can provide you with the coverage you need to handle major end-of-life expenses. However, if you have other expenses, a term life insurance policy may be more suitable.

A term life insurance policy can cover your existing debts as well as funeral costs, so you may not need a burial insurance policy on top of that. However, if your current policy only covers a portion of your final expenses, consider supplementing it with a burial policy depending on your coverage needs and ability to qualify.