Life Insurance vs. Burial Insurance

Shawn Plummer

CEO, The Annuity Expert

Trying to decide if you need traditional life insurance or burial insurance? Both can financially cover you in the event of passing, but there are some key variations between the two. This comparison explores the pros and cons of each policy so you have all the information needed to make a choice that’s best for you and your loved ones.

Burial Insurance Vs. Life Insurance
Life Insurance Vs. Final Expense Insurance

What is Life Insurance?

Life insurance is a contract in which you agree to pay regular premium payments to an insurance company. In exchange, the company promises to pay your beneficiaries a sum (known as a death benefit) after you die. Your loved ones can use this money however they see fit.

Life insurance is essential so that your loved ones are not burdened with the financial stresses of your passing. It also provides security and peace of mind knowing that your family will be taken care of if something unexpected happens.

What is Burial Insurance?

A burial insurance policy, more commonly called final expense insurance or funeral insurance, is a whole life insurance policy that covers your funeral costs, burial expenses, and other end-of-life sundries. With the average cost of funerals sky-high, having a burial insurance policy means your loved ones don’t have to bear any extra weight financially after you pass away. Burial insurance is often recommended for those not already covered by another life insurance policy or who lack significant financial resources.

No matter which type of burial or funeral insurance you choose, it is essential to ensure that the policy’s death benefit is enough to cover your final expenses, including funeral expenses, burial costs, and other associated costs such as medical bills or estate taxes.

What are the Different Types of Burial Insurance?

There are three main types of burial insurance: simplified issue, guaranteed issue, and pre-need insurance.

What is Simplified Issue Burial Insurance?

Simplified issue is the most popular and accessible option. It requires only a few questions to determine eligibility, making it ideal for individuals who don’t have time or money to make an appointment with a life insurance agent. In addition, with simplified issue burial insurance, no medical exam is required, and you can be approved for coverage in as little as 24 hours.

What is Guaranteed Issue Burial Insurance?

If you seek life insurance but cannot qualify for traditional coverage, guaranteed issue burial insurance might be the right option. With this policy, there are no questions about your medical history or exams; you will be approved for coverage regardless of health concerns. The main downside is that, typically, there is a waiting period before the full death benefit can be paid out.

What is Pre-Need Burial Insurance?

Pre-need burial insurance is designed for individuals who already have a funeral plan and want to ensure their loved ones are not left with the financial burden of covering final expenses. With pre-need burial insurance, you will pay a one-time premium that covers the entire cost of your funeral. This type of insurance can also help relieve your family members from the stress of planning and paying for your funeral.

How Does Life Insurance Work?

A life insurance policy safeguards your loved ones in the event of your death. Getting a quote entails choosing features such as term length and the payout amount and designating a beneficiary. In addition, the insurance company will ask questions about you, your health history, and any pre-existing conditions. If everything goes according to plan and you have been paying regular premiums, the designated beneficiary will receive a one-time payment from the insurer upon your passing away. Life insurance is an investment into your family’s security, and it will give them peace of mind knowing that your final expenses are taken care of even after you are gone.

Making sure you choose the right life insurance policy for you can be daunting, but with the proper research and help from a knowledgeable agent or broker, it doesn’t have to be.

Can I Use Life Insurance to Pay For My Funeral?

A life insurance policy pays a lump sum to your beneficiary when you die. This money can cover your survivors’ funeral costs or any other financial needs. The payment is made soon after you die and doesn’t have to go through probate. Life insurance can also be used as an inheritance substitute, providing your loved ones with funds when you’re gone. Life insurance can provide the necessary resources if you have debt or other liabilities.

How Does Burial Insurance Work?

When you have a burial insurance policy, you decide on the amount of coverage and choose someone to receive the money (the beneficiary) when you die. The beneficiary should contact the insurance company immediately after the insured person’s death. The company might ask for an ID, a form, and a certified copy of the death certificate.

The company will then pay the benefit to the beneficiary in a lump sum or periodic payments. Generally, it’s recommended that you pick an experienced and qualified power of attorney who can handle the financial affairs of your beneficiaries. It’s also essential to ensure that your policy is updated regularly with any changes in your life, such as marriage, divorce, or children.

LegalZoom offers affordable power of attorney services.

Life Insurance Vs. Burial Insurance (2023)

Burial insurance is generally inexpensive and can provide a sense of security to your family. You can purchase coverage for yourself or someone else, and it’s essential to know that burial insurance does not usually have any cash value until the insured person dies. No medical exams are also required when signing up for burial insurance, making it easier and less expensive to obtain.

Overall, burial insurance is an excellent way to financially protect your family in the event of death.

How Long Does Burial Insurance Last?

Burial insurance policies mostly use “whole life insurance,” a termless coverage that usually pays out at age 100. Whole-life coverage is typically more expensive than other types of insurance, but it also provides a guaranteed death benefit that can help loved ones pay for funeral expenses. Unlike term life insurance, burial insurance requires no medical examination, and applicants with health issues can usually qualify. In addition to providing peace of mind, burial insurance policies often come with living benefits such as cash value and tax-deferred savings.

What is the Difference Between Life Insurance and Burial Insurance?

Although burial and life insurance both fall under the category of protecting your loved ones, there are some critical differences between the two.

You don’t need to have a medical exam to get burial insurance. You only need to answer some questions about your health and medications. Most companies can approve your policy in just a few days if you qualify.

Also, burial Insurance is often more affordable than regular life insurance policies. The main reason is that it only offers a set amount of money instead of life insurance which can provide an infinite death benefit. Burial Insurance also typically has guaranteed acceptance, meaning you don’t have to worry about being denied coverage due to your age or health condition.

Lastly, burial insurance policies are often renewable or convertible. This means you can keep your policy as long as you want without worrying about it expiring if your health changes over time. Plus, many policies allow you to upgrade to a larger coverage amount without needing another medical exam.

A burial insurance policy can cover your final expenses once it is in force. This includes costs such as your casket and burial plot, funeral home services, a memorial service, flowers, obituaries, and other related expenses. It can also provide your loved ones with a financial tax-free death benefit to cover any lingering debts or medical bills you have left behind.

When choosing between Burial Insurance and Life Insurance, weighing your options and ensuring you’re getting the coverage that best suits your needs is essential. Each type of policy has its unique benefits and drawbacks, so it’s essential to compare and research policies before signing up for a plan.

Should I get Life Insurance or Burial Insurance?

Before choosing Burial Insurance or Life Insurance (or both), do your research first. Each company has different types of policies available, so you’ll want to compare and contrast them before making a final decision.

If you’re hoping only to cover the funeral expenses, then burial insurance is likely the better option. However, if you would like your loved ones to have additional funding for other things post-death, you may want to purchase a life insurance policy instead. Be sure that you understand all of the details and fine print before making your final decision – this way, you can be confident that it is the best insurance policy for you and your beneficiaries.

If you do not understand all the details surrounding funeral planning and how to cover final expenses, it could cause your loved ones more pain and suffering. Having a plan will make it easier for them to deal with your passing. It might be best to purchase both insurance policies to safeguard your loved ones better.

Can I get Both Life Insurance and Burial Insurance?

Yes! If you’re looking to insure yourself fully, you should purchase a term life or whole life insurance policy to replace your income in the event of an untimely death and a burial policy to cover any final expenses.

How Much Life Insurance Coverage do I Need?

A simple way to figure out how much life insurance you need is to multiply your salary by ten. Some professionals say multiplying it by 5 or 7 can also give an accurate estimate.

While that method may be straightforward, it may not be the best. The easiest way to determine how much life insurance you need is by adding up the payments you want your policy to cover (like your mortgage, student loans, daycare costs, and other debts) and then deducting any funds your family could already access (like social security, pensions or investments). The difference between the two figures is the amount of life insurance coverage you need.

You can also include future expenses in your calculations to get an even more accurate figure. For example, if you have young children, consider whether savings and other resources will cover their college tuition or if you’ll need life insurance to cover those expenses.

Once you estimate the life insurance coverage amount, you can determine whether it fits within your budget and compare different policies to find one that works for you. Before taking out a policy, review all available options to ensure you get the best possible deal for your needs. Consult a financial advisor, a life insurance broker, or a life insurance company to help you evaluate different plans and make the right decision for your family.

How Much Burial Insurance Coverage do I Need?

Once you understand burial/funeral insurance and determine if you are interested in purchasing a policy, you’ll want to figure out how much coverage you will need.

In the United States, the median funeral cost is approximately $10,000. This cost encompasses the funeral service, burial, and other associated expenses. Depending on your wishes and the services you require, this cost can vary dramatically.

You’ll also want to factor in any extra funeral costs, such as catering following a memorial service or paying for a newspaper obituary. You may want to purchase additional coverage if you plan to have an elaborate funeral, such as a full-service viewing.

Choose the amount that best suits your situation when selecting funeral insurance coverage. Look into the details of each policy and compare them to ensure you are getting the most comprehensive coverage at a reasonable price. If possible, speak with an independent financial advisor who can help you determine the amount of coverage that is right for you.

How Much Does Life Insurance Cost?

The cost of a life insurance policy varies depending on the individual’s age, sex, health, type of policy, and other factors. Generally speaking, life insurance can be divided into two categories: term life insurance and whole life insurance.

Term life insurance provides coverage for a predetermined period (usually 10, 20, or 30 years). It may also include an option to convert it into a whole-life policy. Term life insurance is typically the least expensive option, but it does not accumulate any cash value, and coverage ends within the term period.

With whole life insurance, you’re covered for life and accrue cash value over time. Though a whole life insurance policy typically costs more than term life insurance premiums, the benefits may be worth the extra cost.

Age and sex are two of the most impactful yet uncontrollable influences on life insurance rates. Younger individuals have smaller premiums because they’re less likely to experience health issues. On the other hand, males often pay more for coverage because they statistically don’t live as long as females and are often employed in high-risk jobs or engage in hazardous activities– factors that render them a greater liability to insure.

Life insurance is a long-term commitment and should be taken seriously. Individuals should consider their personal needs and objectives when purchasing a term life or whole life insurance policy. Working with an experienced life insurance company, life insurance agent, or broker who can help evaluate your situation and identify the best coverage for you is crucial.

How Much Does Burial Insurance Cost?

Depending on customer characteristics such as age, gender, and health, premiums will follow a lower or higher rate. For example, elderly buyers should anticipate a heftier price tag. If customers want add-ons like an accelerated death benefit or burial expense coverage, that will also increase the cost of their policy.

Keep in mind that the state you live in is also a factor. In some states, premiums may be higher due to local taxes or regulations.

Policyholders should also be aware of the additional expenses of a burial/funeral insurance policy. For instance, many policies require customers to pay filing fees and claims processing costs. Doing your homework and reading all the fine print to ensure you understand all associated costs before signing up for a policy.

When shopping for a policy, it is important to compare not only premiums but also features and benefits offered by different providers. Some providers offer more coverage than others, so make sure you find the policy that best suits your needs and budget.

It’s also important to remember that burial/funeral insurance policies are designed to cover funeral and burial costs. If a customer passes away without any prepaid arrangements, his or her beneficiaries will still be responsible for paying the remaining expenses. That’s why it’s essential to have an additional life insurance policy and discuss end-of-life plans with your loved ones.

Next Steps…

If you are looking for a policy to cover your end-of-life expenses, you must understand the difference between life and burial insurance. Life insurance policies provide a payout in the event of the insured’s death, while burial insurance pays out a set amount of money to help cover funeral costs. It’s important to note that most life insurance policies do not pay out if the death is due to natural causes, while many burial insurance policies will.

So, which type of policy is right for you? That depends on your needs and budget.

If you want coverage for your final expenses no matter what happens, then a life insurance policy is probably best for you. However, a burial insurance policy may be suitable if you want a more straightforward solution to help with funeral costs.

If you are still unsure after reading this guide, reach out to a licensed life insurance agent, broker, or financial advisor for more advice. The Annuity Expert is all of the above so contact us below, it’s free!

Life Insurance Vs. Burial Insurance

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Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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