Can your loved ones pay for your funeral when you die?
People often push this thought to the back of their minds, until someone dies. Who can blame them? However, as a result, families may find themselves unprepared and struggling to pay for funeral and burial costs.
If you want a proper send-off for yourself or a family member, you may want to take out burial insurance. The National Funeral Directors Association reported in 2017 that a funeral with viewing and burial packages costs a whopping $7,360. Inflation raises these costs every year.
Who can get burial insurance?
Who needs a burial insurance policy? It is offered to seniors starting at age 50 and older. It helps them to plan ahead. It can help make the concept of death less scary. But more importantly, it protects the family from out-of-pocket payments for funeral and cremation services. No one has to sacrifice their personal savings or funds intended for other purposes.
What does burial insurance cover and why is it a good investment?
- It covers funerals, cremation, cemetery costs, and other expenses.
- You can have multiple beneficiaries.
- It prepares your family for unexpected expenses.
- Insurance helps your beneficiaries avoid taking out loans with high interest rates.
- The funds from an insurance policy go to the family, not directly to the funeral home.
- Policies vary from one life insurance company to the other, and the benefits can range from $5,000 up to $25,000, or even higher from some companies.
How does it work?
- You can choose from a term or a whole life insurance policy.
- Burial insurance premiums can be as little as $10 per month.
- Payments can be made monthly or annually, whatever is convenient/sustainable.
- It does not expire, provided the premium is consistently paid.
- If the cash benefit amounts to more than the burial costs, the beneficiary can use the funds to pay for an outstanding medical bill, or any other debts.
- It does not typically require a medical examination. Most will only need to answer questions about health status to determine the coverage.
- The amount may be smaller compared to other life insurance policies, but your beneficiary will receive it almost immediately in a lump sum.
- You can add burial insurance to your existing life insurance policy.
What do funerals and burial cost?
When you break down the costs for a funeral and burial, you can see why they can cost so much. Burial insurance may cover the following (2017 prices):
- Basic Service Fee by the Funeral Home – $2,100
- Body Preparation – $250
- Casket (Metal) – $2,400
- Vault – $1,395
- Embalming – $725
- Hearse – $325
- Memorial Printing – $160
- Transfer of the Remains – $325
- Facilities and Staff for Ceremony – $500
- Facilities and Staff for Viewing – $425
- Service vehicle – $150
Funeral homes may add other services and fees for use of facilities. Additional costs, such as obituary placements, flowers, and reception food and drink, can add thousands of dollars more.
What’s the difference between burial insurance and pre-need insurance?
Pre-need insurance, also known as ‘prepaid’ insurance, can be mistaken as burial insurance, but there is actually a significant difference between the two. With pre-need protection, you allocate the funds directly to the funeral home that will provide the services and merchandise through an insurance policy. In exchange for your commitment, most funeral homes will “lock in” today’s rates on the products and services that they control, providing inflation cost protection.
Unlike burial insurance, pre-need insurance is connected to a specific funeral home. You would only get services from that provider. If many years pass, there is no guarantee the exact products purchased will be available. In that case, the funeral home would provide a comparable product. If you moved to a different city, the funds in the policy are transferrable to another funeral home. However, you would lose the inflation protection of the original policy.
How do you find the best burial insurance policy and provider?
Here are steps to help you choose the best burial insurance.
- Determine your budget.
Deciding on a policy will depend on your financial capability and preferences. It should be easy for you to allot a fraction of your income to the monthly premium. Your choice of merchandise and services will also be another factor. If you are on a budget, convey your needs to your insurance agent about the desired send-off for yourself or your family members.
- Consider cremation.
Burial insurance offers the flexibility to choose a conventional burial or lower cost cremation services. The National Funeral Directors Association estimated the cost of a funeral viewing followed by cremation at $6,260. Cremation costs may include the following (2017 prices):
- Basic Service Fee by the Funeral Home – $2,100
- Body Preparation – $250
- Urn – $275
- Cremation by a third party – $350
- Embalming – $725
- Casket (for cremation) – $1,000
- Memorial Printing – $160
- Transfer of the Remains – $325
- Facilities and Staff for Ceremony – $500
- Facilities and Staff for Viewing – $425
- Service vehicle – $150
Placement of cremated remains in a cemetery, receptions, flowers and newspaper obituaries can add to these costs. Inflation will continue to drive these fees upward every year.
- Look for quick approval.
An insurance company can only help a potential client while they are still alive. Most good insurance providers will take three days or less to approve applications.
- Choose the type of policy that you qualify for.
The policy type will depend upon your health status.
- Simplified Issue
The policy is for those with no health issues and without risks such as smoking and drinking. You must be able to provide your medical history as proof of your good health.
- Guaranteed Issue
This policy is for everyone, even for those who have health issues. Premiums for this type of policy are more expensive, as those with higher health risks may claim benefits sooner rather than later.
You can choose between two available insurance types:
- Term Life Policy
A term policy comes with a time limit and is only be available for a particular time frame or ends when you reach a specific age. If you outlive the policy term, you do not receive any benefits with a term life policy. Premiums tend to be lower.
- Whole Life Policy
A policy that does not expire and remains available until your time of death, up to age 100 or more. Premiums tend to be higher, but it offers a safer choice that’s available any time death occurs.
- Look for no medical exam.
Choose an insurance provider that will not require a medical examination of your health. Every person, sick or not, has the right to get burial insurance.
- Check for fast release of benefits.
After a death, you need cash to pay for funeral and burial expenses. Avoid insurance providers that cannot promise payouts within a week of death.
Tips to Get the Right Burial Insurance
1. Be honest with all information.
It is important to disclose all vital information regarding your current health. Lying about your information can be a cause for denial of a policy.
2. Prepare your arrangements.
It is never too soon to discuss and prepare for your funeral. You can pre-plan with a funeral home but not pre-pay. Having your information and arrangements on file with the funeral home of your choice will help take some of the weight off from your family. Choose a primary and a secondary beneficiary to receive the burial insurance funds, preferably people whom you can count on to carry out your desired arrangements.
3. Know your insurance coverage.
After talking with your agent, review your coverage and be familiar with the details. Knowing the prices and keeping up to date with your insurance agent will help insure you have enough coverage at the time of your death.
Funeral and burial insurance protects your loved ones from spending money they can’t afford after you die. Don’t make them spend their hard-earned money for your sake – you won’t be able to pay it back. Burial insurance helps them send you off on your terms, executed by your most trusted beneficiary. You can complement an existing insurance plan with burial insurance. The right insurance agent can walk you through the process of buying burial insurance.
Get the most out of the coverage you purchase during your lifetime and relax knowing your loved ones are covered financially.
