What Is Burial Insurance? The Best Final-Expense Life Insurance Companies

Burial and final-expense insurance plans are typically whole life insurance plans with modest death payouts and limited underwriting. These plans are sometimes known as burial insurance, final-expense insurance, or funeral insurance, although they all refer to the same thing. Burial insurance is largely intended for seniors who wish to ensure that their family has enough money to cover funeral expenses or pay off debts after they die.

What is burial insurance?

Burial insurance and final-expense insurance are words used to describe whole life insurance plans with death payouts of less than $50,000 that are typically geared for elderly. Coverage is available for the rest of your life, and when you die, your beneficiaries will normally get a payout that is just enough to cover the expense of your funeral.

Burial insurance policies usually have a streamlined underwriting process, with no medical exam or assured acceptance. Final-expense insurance policies are often more expensive than fully underwritten whole life insurance plans since the insurance provider receives less health information.

Final-expense whole life insurance policies generally have a cash value component, which is the amount of money you would get if you surrendered the policy to the insurer. Because a percentage of your premiums is used to support the cash value, burial insurance policies can be costly.

You may have up to three choices for paying for final-expense insurance, depending on your health and insurer:

• Lump sum: For burial insurance, particularly unwell insurance consumers may be forced to pay a lump sum premium payment. However, if you're concerned about keeping track of payments each month, this might be a useful choice, and it's sometimes preferred when children buy coverage for their parents. Because there is simply one premium payment, coverage will not lapse when your family requires it.
• Fixed period: This option is usually recommended if you are presently working and have extra cash to pay premiums, but you are concerned about your ability to cover payments after retirement. You essentially pay higher rates for permanent coverage for a 10- or 20-year term, after which the insurance is locked in for your lifetime.
• Periodically (monthly or annually): Making regular lifetime payments implies that each premium payment will be smaller, but you may pay a greater total amount depending on how long you live. It also increases the likelihood of coverage lapse if you fail to make a payment later on.

Should I buy final expense insurance?

The requirement for last expense life insurance is determined by your present financial condition and goals. The first thing to ask yourself in this procedure is if you can save $10,000 in fewer than ten years. Funerals typically cost roughly $10,000, and seniors may usually get term life insurance policies with at least ten years of coverage. Given that term life insurance policies are less expensive than burial insurance, we recommend purchasing term coverage and saving if this is an opportunity.

The next step is to determine which life insurance policies you are eligible for. The more underwriting you obtain during the application process, the cheaper your rates will normally be. If you want permanent coverage and only a death benefit to pay your beneficiaries, you have a few options for final-expense insurance:

If you're a relatively healthy senior, you should be able to get guaranteed universal life insurance. This is effectively a term life insurance policy that lasts until you reach the age of 121, or until a specific age mentioned in the policy agreement. A guaranteed universal life insurance policy will be your cheapest alternative for covering funeral expenditures because you may choose how much coverage you need and there is a short medical test. It also has the advantage of providing significantly bigger death benefits if you have a mortgage or other financial commitment to cover.

If you are unable to pass a medical exam but can still engage in routine activities without assistance, you should look into simplified issues whole or guaranteed universal life insurance. Because there is no medical exam, it is more expensive, but it is still cheap as final-expense insurance. Some insurers provide less than $100,000 in coverage, while others provide up to $500,000 in death benefits, allowing you to fulfil other financial responsibilities if necessary.

Guaranteed acceptance life insurance is the most expensive type of coverage, and we wouldn't recommend it for burial insurance unless you couldn't get any other options. If you are so ill, make a note of how long the policy's waiting period is. If you die within the waiting period, your beneficiaries will get only the sum of your paid premiums plus interest.

Burial insurance vs. pre-need funeral insurance: What's the difference?

Pre-need funeral insurance is not the same as burial insurance or funeral insurance. Here's how pre-need funeral insurance differs:

• The beneficiary is a specific funeral facility or funeral director.
• The death benefit is usually linked to the cost of a certain set of services provided by the funeral home.
• You make installment payments over a fixed period.
• If you cancel the policy, you may receive a portion of your premiums refunded or nothing at all.
• Instead of an independent agent, policies are often offered by the funeral home or an insurer affiliated with them (such as the Funeral Directors Life Insurance Company).

We do not promote pre-need funeral insurance and instead urge that you obtain final-expense coverage in whatever form best suits your health and financial position.

The cost of pre-need funeral insurance varies by state. A funeral home cannot be named as the beneficiary of a life insurance policy in several states. You should also keep in mind that, while you may check an insurance company's financial strength rating, you can't do the same for a funeral home. If you pay a funeral home and it goes out of business before you die, you will not receive your money back.

Pre-need funeral expense policies are likewise extremely rigid. You may not be able to make adjustments to the funeral later on, or if you move and need to change the funeral home. A non-guaranteed funeral insurance policy also does not lock in pricing. If the funeral home's service expenses rise and exceed the policy's death benefit, your family will be responsible for the difference. On the other hand, if prices fall, your family will not receive any more death benefit.

Best final expense life insurance companies

There are plenty of firms that offer permanent coverage if you're in good health or qualify for simple issue life insurance. However, if you're seeking for ultimate expense life insurance firms with assured acceptance, your selections will be far more limited.

We compared funeral insurance firms and discovered five with the best burial insurance pricing and coverage options:

While all of these firms provide competitive final-expense insurance estimates, we recommend AIG in particular. If you are diagnosed with a terminal or chronic illness, AIG will pay a portion of your death benefit early, making it easier to handle medical expenses related to your condition.