2019 Guide to Burial & Final Expense Insurance (Companies + Rates)
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UPDATED: Mar 13, 2020
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The last thing any of us want to be worrying about in our final days is how much of a burden on the family our final expenses will be. In response, the insurance industry created burial and final expense insurance to take away the end-of-life financial stresses.
Your search for understanding the best way to get your affairs in order and financially protect your family stops here. This article will explain what burial and final expense insurance is, how it works, and where to get it.
Let’s find out if burial and final expense insurance is right for you. Also, start comparing quotes today with our FREE quote tool above.
What is burial & final expense insurance?
There are many names for burial & final expense insurance, such as burial insurance, final expense insurance, or funeral insurance. However, sometimes pre-paid arrangements get called burial insurance as well when it isn’t insurance.
That makes it essential always to clarify. Later on, in this article, there is a full description of how pre-paid arrangements are different, as well as other options besides burial insurance.
According to Investopedia burial insurance is a type of life insurance for seniors, usually 55 years and up. Some companies may have higher or lower age restrictions. It is to be used explicitly for funeral services and merchandise costs after one’s death.
Generally, insurance companies sell burial insurance, but in certain states, funeral homes are allowed to sell it as well. Underwriting is limited, and the insurance carries a low death benefit.
The death benefit usually ranges from $5,000 to $25,000, but there are policies with death benefits as low as $2,000 and as high as $50,000. A beneficiary can spend the death benefit any way they see fit.
This would not be possible in a pre-paid situation. However, some people consider burial insurance to be a predatory type of insurance targeted to people who tend to be less educated, minority, and low-income.
How does it work?
Just like any insurance policy, there are premiums to be paid; you can pay premiums can be weekly, monthly, annually, or in one lump sum. Those premiums provide coverage, in this case, for burial and final expenses. After death, a death benefit is paid out to a beneficiary.
Many burial insurance policies don’t require a medical exam but have only a few questions about age, smoking, and any severe health conditions. Let’s take a look at some sample rates for burial insurance.
|Top Burial Insurance Providers||$10,000||$20,000||$30,000|
|Mutual of Omaha||$55.76||$108.31||$160.87|
|New York Life||$85.00||$168.00||N/A|
The above table has rates from some of the top companies. The rates are based on a 65-year-old male who does not smoke. As we can see, three of these companies don’t offer policies with a death benefit as large as $30,000.
AIG, Gerber Life, and New York Life offer what is called guaranteed issue insurance. We will discuss this in detail later, but this is proof of how no medical exams can cause premiums to be more expensive.
This next table has rates for 65-year-old males who do smoke.
|Top Burial Insurance Providers||$10,000||$20,000||$30,000|
|Mutual of Omaha||$78.99||$154.77||$230.55|
|New York Life||$85.00||$168.00||N/A|
As we can see, the rates for those three companies are the same, while the other companies charge more when the policyholder smokes. These companies have level premiums, meaning the price is locked in, but the death benefit can grow as time goes on.
Pre-need insurance is a whole life policy offered by funeral providers, with payments made to an intermediary insurance company that would be responsible for paying the death benefit immediately upon death. Some states require the funeral home to be listed as a beneficiary, and others forbid it.
Each state has its laws that are detailed to varying degrees. It is definitely worth checking out the laws of your state. Restrictions on containers and processing of the remains may conflict with your wishes.
Some states such as New York, require a funeral director to be in charge of handling the remains. New York state law also states that funeral directors cannot refuse to embalm a body even if the person died of an infectious disease.
The laws are a little different down in Oklahoma. A family is able to bury its own dead without a funeral director. Also, the body does not have to be embalmed, but it must then be buried within 24-hours unless refrigeration is available.
North Carolina also does not require embalming, nor do they require a casket for cremation. Of course, an alternative container is necessary to respect the remains as it is put in the crematorium.
What does it cover?
Usually, the death benefits of a final expense policy are small compared to other life insurance. From as little as $2,000 to $50,000, the death benefit from these policies is intended to fund the final expenses.
To put this in perspective, the median cost of a funeral nowadays is $8,500. Most policies have a more narrow range for the death benefit of a burial insurance policy — typically $5,000 to $25,000.
The smaller size of the policy can make the payments more affordable than bigger plans. However, the more underwriting that occurs, the cheaper the rates tend to be.
Typical expenses that the death benefit is used to cover, include:
- Funeral service
- Cemetery plot & headstone
- Funeral procession
- Handling of the remains
- Staffing and facilities
Factors That Affect Your Rate
Insurance companies and their policies are far from one size fits all. Many different characteristics can affect your rates. The insurance companies’ goals are to maximize profits and the number of premiums while minimizing and assessing the risks.
Let’s take a look at these factors to help you better understand where you stand in the world of insurance. Remember that burial insurance is often more expensive due to the lack of questions asked and lack of medical exams.
Age is often the number-one factor when it comes to setting a price for life insurance premiums. The younger you are, the less likely the insurance companies will have to pay out soon. With burial insurance, age factors in a unique way.
Many companies only sell burial insurance to those considered seniors, generally 55 years and up. The fact that burial insurance is only for the elderly makes the premiums more expensive.
Gender is another factor that lies outside of our control when it comes to affecting life insurance rates. In general, women live longer than men. Insurance companies are trying to play the game with the best odds in mind.
On average, men pay 24 percent higher premiums than women. Elderly men seem to have the short end of the stick, but the more individualized factor is one’s medical history.
Before most life insurance companies agree to insure you, a medical exam — where blood pressure, cholesterol, and the condition of your heart are looked at and assessed, as well as overall health evaluation — must be performed.
Insurers may also request your full health records before insuring you. This is to check for serious conditions such as the presence of high cholesterol, (Type 1 diabetes or Type 2 diabetes), or high blood pressure, which would increase your rates.
Some of these medical conditions can be managed or minimized. However, there are pieces of one’s medical history that cannot be overshadowed or diminished. Complicated family medical history (i.e., a previous stroke, cancer) and pre-existing medical conditions of your own often increase life insurance rates.
While these are important to pay attention to when shopping for life insurance, burial insurance rarely requires a medical exam. There are sometimes a few health-related questions that can affect your rate—number one being whether you are a smoker.
As we saw in the tables a few sections above, there are companies that charge more when the insured is a smoker. There are also companies that charge the same rates regardless of being a smoker—the companies with guaranteed acceptance policies.
The questionnaires insurance companies require can seem intrusive. Why does the insurance company need to know so much about your personal life? The short and possibly dark answer is that the higher the risk of you dying, the more you will pay to cover your life.
If you devalue your life by making unhealthy choices, the insurance companies will increase the premiums of your life insurance. Habits such as smoking or excessive drinking can cause insurers to increase their rates.
Smoking is a major behavior that is evaluated by almost every life insurance company, but it is not the only one. Do you have one or many instances on your driving record relating to speeding, reckless driving, or driving while under the influence of alcohol or drugs?
That’s right. Past mistakes related to reckless behavior can come back to haunt your life insurance rates. The way you go about having fun is also examined. To all the adrenaline junkies out there, know a higher premium is a possibility.
Engaging in high-risk activities, like skydiving or racing cars, makes you a financial risk to the insurance company because of how your life could potentially be cut short. Some policies become void if death occurs via skydiving.
Whatever insurance company you go with, they will look into your life and charge you accordingly. How much weight each factor holds varies from company to company. This is why getting quotes is so important when it comes to maximizing your policy and your dollar.
Your personal life isn’t the only thing on display when the underwriting is in progress. Your work life can have just as much of an effect. Insurance companies will charge you more the more dangerous your life is while on the clock.
Our minds tend to go to law enforcement or firefighting when we think of dangerous occupations, although construction and transportation are two industries with extremely high numbers of fatal work injuries.
This means that your dream of becoming a pilot can be just as costly as being an ice road trucker or even a big city construction worker.
The longer you work at a dangerous job, the more money it might cost you. Planning ahead for retirement can be just as vital as a factor when choosing a policy. Even though many seniors that qualify for burial insurance are retired, the retirement age continues to increase.
Veteran or Active Military Status
During active military service, there is a low-cost option called the Servicemembers’ Group Life Insurance, where you are automatically enrolled under the maximum coverage if you qualify. You may deny or change the coverage, but it is available to all military members.
What happens when you are no longer on active duty? Veterans who had an SGLI policy are eligible to switch to Veterans’ Group Life Insurance. A plus side to this is that no proof of good health is necessary. There is, however, a maximum of $400,000-worth of coverage.
If you have served in the military, there is less to worry about in terms of final expenses. It will be free for you and your family to be buried in a national cemetery.
The Veterans Affairs (VA) office will pay a burial allowance to the deceased’s survivors to cover funeral expenses. Also, if burial should take place beside a national cemetery, the VA will still cover the burial.
Burial vs Life Insurance
Even though burial insurance is technically life insurance, there are some major distinctions we should point out. In reality, burial insurance is just more restricting.
|Burial Insurance||Life Insurance|
|For seniors||For anyone|
|Low death benefit||Wide range of death benefits|
|Compensate for final expenses||Compensate for loss of income|
|Term or permanent||Term or permanent|
|Little to no underwriting||Thorough underwriting|
|No medical exam||Medical exam required|
Burial insurance covers burial and final expenses, while life insurance on a larger scale is to be used to supplement the loss of income. The death benefits from life insurance are much more significant than burial insurance death benefits.
Burial insurance may be easier to come by, but the extra amount of effort put into a life insurance policy can lead to higher death benefits for your family. It is possible to have a final expenses policy that is technically a whole life policy with its own cash value portion.
Types of Burial Insurance
The two types of burial insurance — simplified issue and guaranteed issue — are truly what makes burial insurance different than traditional life insurance.
Simplified Issue Life Insurance
For those who would not qualify for a fully underwritten life insurance policy but have only moderate health risks, there is simplified issue life insurance. This type of policy will provide you with more coverage than guaranteed issues but overall less than traditional life insurance.
Medical exams are still not often required, but there are a few health questions that insurance companies would need to have answered prior to the completion of the policy.
Guaranteed Issue Life Insurance
Guaranteed issue life insurance means that there are no exams, no questions, and acceptance is guaranteed as long as the age restrictions are upheld. Usually, people are seniors who can no longer qualify for other life insurance.
These types of policies can be more expensive because of the pool of insured. The insurance companies perceive this group of people as high-risk, and under such conditions, profit is only possible with high premiums in comparison with the coverage.
Typical death benefits for such a policy is less than $25,000. Also, that death benefit is only available in full after two years. The insurance companies consider these graded benefits.
If the policyholder dies within the first two years, the only money that gets paid out is equal to the total amount of premiums paid up until death.
Guaranteed issue life insurance is more expensive than fully underwritten whole life and does not come with a cash value portion. Therefore, it may be better to open up a savings account or trust if you can’t qualify for such a life insurance policy.
Alternatives to Burial & Final Expense Insurance
Even though taking out a loan is technically an alternative to burial insurance, it is not highly recommended. Many experts will stand by the fact that no one should not go into debt over your funeral expenses. Let’s explore some other choices.
There are many ways to shave a few dollars off the cost of final expenses. The first option is a direct cremation or burial. This means that there is no showing or ceremony prior to this process. A direct burial will still have a graveside service.
A direct cremation still allows you to have a service. The cheapest way to do such is to have the funeral at your home. At-home funerals allow for a lot of flexibility.
Unfortunately, this may add stress to the family when trying to organize everything compared to having a funeral home in charge of executing the service properly.
Green burials are another option that is cost-friendly as well as environmentally sustainable. A green burial occurs when the body is placed in a biodegradable container without the body being embalmed. There is no casket vault involved.
However, green burial cemeteries can only be found in certain states. Check out this list of known green cemeteries throughout the United States and Canada.
The state of New York allows for unfinished wood or alternative container, but it comes down to individual cemeteries. The main concern with such burials is the collapsing of the gravesite.
Another great option is actually free, and that is donating your body to science. Medical schools will cremate your body after a couple of years and send the ashes back to the family free of charge.
Planning ahead is the most important factor. Even if you decide not to pre-pay it is good to get everything picked out. That is why this approach is called pre-paid pre-need arrangements. It will include all end of life necessities such as:
- The funeral home
- Type of service
- Burial plot
The truth is that paying in advance has its downfalls. Sometimes it is called burial insurance, but it is completely different and not really insurance at all.
The death benefit of these policies is tied directly to the cost of a particular set of services you have picked out. Essentially, the beneficiary would be the funeral home or its director. However, it is illegal in some states to have a funeral home listed as a beneficiary.
Life is unpredictable and change occurs all the time. That’s why pre-paying is unwise due to the fact that there are fixed-period payments that are inflexible. If you cancel, you might get a portion back or nothing at all.
The pre-payment arrangements are generally available through the funeral home. Funeral homes are businesses that are subject to the volatile economy. That funeral home may not even be open by the time you pass away.
Payable-on-Death (POD) Account
Another name for a POD account is Totten trust. Essentially, it is just like a regular bank account where you have complete control of your money. To reiterate, it is not a joint account.
These types of accounts are very simple to set up; the owner simply notifies the bank that they would wish to either convert their checkings or savings account into a POD account or open a new account.
The name of the beneficiary would be given on the form provided by the bank. Upon your death, a death certificate and proof of identity are all it will take for the beneficiary to get the money.
The money will never be tied up in probate court. However, there are a few potential complications, including:
- Multiple beneficiaries
- Ineligible beneficiaries
- Contradictory will provisions
A savings account allows for flexibility as to when money gets added or withdrawn by the account holder. The downfall is that such accounts are subject to probate. Another reason why a POD account is a better concept.
Having a joint account may be better than a savings account because of the absence of court time. There would need to be survivorship rights in place.
The downfall of a joint account is that the other person will have access to your money at any time with or without your consent.
Social security automatically pays out a one lump sum payment of $255. Additionally, if the deceased racked up enough credits over the years to qualify, monthly survivorship benefit payments would be made. There are certain restrictions that may apply.
There are some states that will help pay towards disability or Medicaid users funerals. Also, every state, the District of Colombia, Guam, Puerto Rico, and the Virgin Islands have victim compensation funds to help pay for DUI or murder victims.
There are many faces to trusts. In this day and age, the term “trust fund baby” is a familiar term even though it is often overused and not always as enormous and glamourous as one would like to believe.
The simple definition of a trust is an arrangement where a trustee holds property as an intermediary owner for the good of the beneficiary. Trusts can be broken down into two main types: revocable and irrevocable.
Revocable trusts can be cashed out or canceled whenever because you own the money. This kind of trust will be included in net assets.
Living trusts are revocable trusts and are becoming more popular; it is another option to avoid assets being tied up in probate.
An irrevocable trust cannot be changed or dissolved without the permission of the trustee. This kind of trust would not be included in your net assets, meaning once you transfer money into the trust, you no longer own it.
A specific type of irrevocable trust is a funeral trust plan is a signed contract along with the payment to a funeral home to cover the cost of the funeral. The payments can be in installments or one lump-sum.
How it works is the funeral director places the money into an interest-bearing trust account and serves as the trustee. Then after death, the funds are paid directly to the funeral home.
Which type is best for you?
Discussing the inevitable with your family may be uncomfortable but can be very helpful. Just remember to plan ahead, don’t pay ahead.
If you already have many assets that would need to be dealt with upon your death, I would recommend using a trust or POD account to avoid probate as well as the estate tax. The money to cover your final expenses could be in that account as well.neral
It is not the best idea to leave money in a will for final expenses because it can take a long time to acquire due to probate. It will be long past the death, and your family will have to foot the bill initially.
I want you to think about how long it would take you to save up $10,000. Could you do it in less than ten years? If not, a term life policy could be the answer. However, depending on your age you may not qualify for certain term lengths.
Burial insurance is useful when you are a senior who only needs a small amount of coverage and has a few health concerns. If you are not yet, I senior it is time to look into other life insurance policies that will set you up for success by the time you become a senior.
The only time it is a good idea to pre-pay at a funeral home is when you are facing a Medicaid spend down before going into a nursing home. Medicaid is unable to count such pre-payments as an asset.
Another reason why pre-paying is unwise is that many states do not have adequate laws in place to protect the funds invested in pre-pay plans. Also, it is common that survivors run into issues with misunderstanding contracts, having to pay additional fees or even being unaware of such plans.
However, it is important to remember that you might pay more in premiums than the value of the death benefit that would be disbursed.
Shopping for Burial & Final Expense Insurance
There are three options for paying for a burial insurance policy:
Lump-sum: Unhealthy policyholders may be required to make one large payment. This option ensures that the coverage will not lapse, and you do not have to remember to make periodical payments.
Some states allow children to buy burial insurance for their parents. The option of lump-sum payments is typically the way to go if you are buying for a parent.
Fixed period: There are higher rates for the first ten or twenty years, which then locks in your policy. It is for those who are working and have the income to compensate.
Periodically: Regular payments mean that the premiums are lower. This option works on a weekly, monthly, or annual basis. The downfall is that the longer you live, the more you might end up paying.
Where can you buy burial & final expense insurance?
Under some state laws, funeral homes may be licensed to sell burial insurance, but it is mainly purchased through brokers and insurance agents. If you do purchase insurance through a funeral home, make sure it is not a pre-paid arrangement.
According to the Federal Trade Commission’s Funeral Rule (1984), each funeral home must provide a copy of its General Price List (GPL). The rule mandates that all items be listed and priced individually, allowing the consumer to purchase the exact items and services that they want. Let’s take a look at what kind of items would be included on such a list.
|Burial Expense Service||Average Cost|
|Basic services (director, staff, overhead)||$2,000|
|Transfer of remains||$325|
|Other body prep||$350-$900|
|Use of facilities and staff||$450-$600|
Below are some of the top companies that offer final expense insurance:
- Mutual of Omaha – Policies from $2,000 to $40,000 that also have a cash value option. There is also an accelerated death benefit rider that will pay out early if you are diagnosed with a terminal illness, or spend more than 90 days in a nursing home and will remain there for the rest of your life.
- Assurity – No medical exam policies $5,000 to $50,000, amounts vary by age.
- Transamerica – Policies from $1,000 to $50,000, depending on your age. This is one of the best policies for older applicants who need more coverage.
- Americo – Policies in amounts from $2,000-$30,000 for those 50- to 85-years-old. Some policies have an accelerated death benefit rider which will pay up to 50% of the face value early if you are diagnosed with a terminal illness.
- Settlers Life Insurance Company – Offers both level and graded benefit plans. Level benefit plans: from $2,500 to $50,000, ages 0 to 85. Graded benefit plans: from $1,000 to $15,000, ages 40 to 80.
- Illinois Mutual – Policies are available from $5,000 to $50,000, for those 60- to 85-years-old. Two plans are available: Level and modified benefit plan.
- Foresters – Policies are available from $2,000 to $35,000, depending on your age.
- Sentinel Security Life – Offers level, graded and modified death benefit plans up to $35,000, depending on your age.
- Government Personnel Mutual Life – Policies are available for ages 50 to 85 from $3,000 to $35,000. They offer three plans: Level, graded and modified death benefit.
- United Home Life – Policies from $5,000 to $100,000, depending on your age, but are available for ages 20 to 80.
- Aetna – Policies are available from $3,000 to $35,000, for those 45- to 89-years-old. Three plans are available: level, graded and modified benefit plan.
- Royal Neighbors of America – Offers both level and graded benefit plans. Level benefit plans: from $3,000 to $25,000, ages 50 to 85. Graded benefit plans: from $3,000 to $10,000, ages 50 to 88.
- Oxford – Level benefit policies only from $5,000 to $30,000, for those 50- to 85-years-old. There are some health questions you will need to answer, but if you can qualify, this is one of the best-priced companies.
- AIG – Guaranteed issue policies up to $25,000 for those 50- to 85-years-old.
- Gerber Life – Guaranteed issue policies are available from $5,000 to $25,000 for those 50- to 80-years-old. The policy also accumulates a cash value that can be borrowed against or used to pay premiums for a period of time.
- Liberty Bankers Life – Offers both level and graded benefit plans. Level benefit plans: from $3,000 to $30,000, ages 18 to 80. Graded benefit plans: from $1,000 to $20,000, ages 40 to 80.
- American-Amicable – Immediate death benefit (level benefit) max $25,000 to age 75, max $15,000 for ages 76- to 85-years-old. They also offer a graded benefit plan to be paid after the 3rd and subsequent years.
- Fidelity Life – Policies are available from $10,000 to $150,000, for those 50- to 85-years-old. Term and whole life are offered depending on your age. The graded benefit provides full coverage starting in year 4.
- Phoenix – Policies are available from $10,000 to $75,000, for those 60- to 80-years-old. Max $50,000 for ages 70- to 80-years-old, max $75,000 for ages 60- to 69-years-old.
- Baltimore Life – Policies have a graded death benefit, which means that they pay 25% coverage in the first year, 50% coverage the second year, and 100% the third year.
Now earlier in this article, we saw sample rates for 65-year-old males from some of the top companies that sell burial insurance. Let’s take a look at their non-smoking female counterparts.
|Top Burial Insurance Providers||$10,000||$20,000||$30,000|
|Mutual of Omaha||$41.01||$78.82||$116.63|
|New York Life||$69.00||$136.00||N/A|
Again we can see some of the restrictive nature that comes with burial insurance. The death benefits are generally smaller and three of the companies do not offer policies as big as $30,000.
Since the average funeral costs about $8,500, a policy with a death benefit of $10,000 would more than suffice for final expenses. For non-smokers that range from $40 to $70 a month.
Let’s take a look at female smokers too, shall we?
|Top Burial Insurance Providers||$10,000||$20,000||$30,000|
|Mutual of Omaha||$56.00||$108.79||$161.59|
|New York Life||$69.00||$136.00||N/A|
The average range for a small $10,000 policy is $56 to $79 a month. If you live even twelve years after getting that policy you will have paid more in premiums than the policy is worth. Something to keep in mind when calculating how much to spend on insurance.
As I mentioned before, policies with graded benefits do not offer the full coverage of the policy until two years have passed without the death of the policyholder. There is also coverage limits.
Some companies only offer small death benefits, including those that do not offer more than $25,000 for burial insurance. Age of course factors into how much an insurance company is willing to say it will cover.
Changing Your Policy
Before we talk about how you can change your policy, check out this video on how to cash out a burial insurance policy that has been left to you by a loved one.
Given the nature of burial insurance, changes to a policy are infrequent occurrences. If you already have a life insurance policy there is no way to convert that policy into burial and final expense policy.
You should talk to your insurance agent about the possibility of increasing the death benefit of your existing plan before you go and get a burial insurance policy too.
Burial insurance is more flexible than pre-paid arrangements. Insurance is for the inevitable that accounts for life’s uncertainties. Whereas, pre-paid arrangements can fall victim to so many mishaps without the possibility of alteration.
More often than not, burial insurance is a type of whole life that includes a cash value portion rather than a term life policy.
The cash value of burial insurance policies essentially equal how much you would receive if you were to surrender your policy. This is another reason why it can be so expensive because it is building up this value.
In order to be eligible for the surrender value, there must not be a lapse in coverage. Also, guaranteed acceptance policies do not have a surrender value.
Intentionally or non-intentionally allowing your policy to lapse is one way to cancel your policy. This means that you no longer have a death benefit for your beneficiary upon your death.
There is a chance of receiving a partial refund if you speak with your agent about canceling. Often times there is no refund given for canceled burial insurance policies.
Pros & Cons
On a small scale, burial insurance is affordable and seems like a logical answer to your final expense questions. If we zoom out, burial insurance offers a little bit of coverage at a higher rate relative to a term life policy.
|Small, afforadable payments||Little coverage, for a higher cost|
|Provides peace of mind||More expensive long-term|
|Can be bought in addition to a traditional life policy||Predatory type of insurance|
|No medical exams, limited underwriting||More expensive due to high-risk pool of insured|
The Bottom Line
So, let us recap. Burial and final expense insurance is life insurance offered to those considered seniors, usually fifty-five and up. The death benefit from such an insurance policy is used to cover, you guessed it, burial and final expenses.
Now that you are loaded up on information about burial insurance, do you think it is the right kind of policy for you? Well, today is the day to start shopping. Start comparing quotes by using our FREE quote tool below.