What is Burial Insurance & How Does It Work

Burial Insurance

Death is a bitter truth of life, and being prepared for it is a responsible act. In today’s world, everyone is concerned about the financial security of their loved ones. One of the easy ways to ensure financial support for your family during difficult times is by purchasing burial insurance. 

Burial insurance is a type of life insurance designed to cover the costs of end-of-life expenses after the death of a policyholder. Such expenses may include funerals and burials. Moreover, in this blog post, we will discuss in detail what burial insurance is and how it works. Please read the article to get the most out of it.

What is Burial Insurance?

Burial, funeral, or final expense insurance is whole life insurance. It is typically designed to cover your funeral, burial, and other end-of-life expenses. Having a burial insurance policy can assist in relieving the costs your family has to face on your death.  This policy is usually more minor in coverage than traditional life insurance and easy to qualify for. It has lower face values and comes with a simplified underwriting procedure. This makes them more accessible to individuals of all ages and those with some health issues. 

How does burial insurance work?

When buying burial insurance, you must choose the coverage amount and decide who will be the Beneficiary on your death. When you pass away, the designated Beneficiary has to contact the insurer to state the claiming process as soon as possible. However, the Beneficiary must provide identification, a claims form, and a certified copy of the death certificate.  Below is a step-by-step guide on how burial insurance work:

1- Policy Application

First, you have to apply for the policy with the help of an insurance provider. This process generally involves answering some health questions, but it’s not that complicated required for standard life insurance. However, some policies may not require a medical test, making it more convenient for those with health concerns. 

2- Select a Coverage Amount 

While applying for burial insurance, you must choose a coverage amount representing your death benefit. This amount can range from a few thousand dollars to about $25,000 based on the insurance provider and your specific requirements. 

3- Premium Payments 

Like any other insurance policy, burial insurance needs regular premium payments from you. You can pay the premiums monthly, quarterly, semi-annually, or annually, according to your preference. Furthermore, the amount you will pay depends on factors like age, health condition, coverage amount, etc. 

4- Selecting Beneficiary 

You have to designate a beneficiary or maybe a beneficiary who will get the death benefit on your demise. This can be a family member, friend, or anyone you want to choose. But it’s essential to update your beneficiary designation, specifically when your circumstances change. 

5- Claim Procedure 

When you die, your beneficiaries must file a claim with the insurer to get the death benefit. It is a relatively simple process in which the Beneficiary has to provide a death certificate and any other documentation needed. 

6- Use of the Death Benefit 

Once the claim gets approved, the beneficiaries will pay the death benefit. They can use this money to cover funeral and burial expenses, medical bills, or any other financial obligations they have to pay. 

What does the burial insurance policy cover?

A burial insurance policy is typically designed to cover the costs of expenses your family has to face in case of your sudden death. But there are no limitations on how the death benefit can be used. The beneficiaries designated have to use your payout for: 
  • Funeral arrangements like viewing and service
  • Burial costs
  • Cremation costs 
  • Medical bills 
  • Legal costs
  • Outstanding costs 

What are the available types of burial insurance?

There are three types of burial insurance and these are:
  • Simplified Issue 
In this type, the insurance company will examine your health based on a series of medical history questions, but a medical test is unnecessary. However, certain factors like smoking, risky activities, or pre-existing conditions can deny the policy. 
  • Guaranteed Issue 

You do not have to answer any query during this policy. But as such a policy brings higher risk to the insurance company, you must pay a significantly higher premium. Moreover, the guaranteed issue has the provision of modified benefits means the full death benefit will not be available until the policy is in effect for a particular period, mostly 24 or 36 months. And if you die a natural death during this period, your Beneficiary will get only a limited portion of the payout. Full benefits will be paid in terms of just accidental death. 
  • Pre-need Insurance 

It involves a contract with your funeral service provider. The contracts include specific products and services you choose via the funeral provider. And upon your death, the payout will directly go to them instead of the individual Beneficiary you may select. 

Burial Insurance for Seniors

As individuals age, planning for the inevitable becomes a crucial aspect of financial responsibility. Burial insurance for seniors serves as a tailored solution, addressing the unique needs of those in the later stages of life. Eligibility for this type of coverage typically extends to individuals between the ages of 50 and 85, offering a practical option for those who may not qualify for traditional life insurance due to age or health concerns.

Who is eligible for a burial insurance policy?

This coverage is generally available for those between 50 and 85. You might be surprised to know that burial insurance does not require any medical test or report to qualify, however, it is based on the policy type you want to pursue. 

The Bottom Line 

Burial insurance is an essential tool to help ensure that your loved ones do not have to face any burden on your death. It offers you mental peace and financial protection by providing death benefits that can be used for funeral and burial costs. Additionally, understanding what a burial insurance policy is and how it works helps you make an informed decision.

Frequently Asked Questions (FAQs)

1- Is burial insurance the same as traditional life insurance?

No, burial insurance is a type of whole life insurance specifically designed to cover end-of-life expenses such as funerals, burials, and related costs. It generally has lower face values and a simplified underwriting process compared to traditional life insurance.

2- What factors determine the premium amount for burial insurance?

Premium amounts are influenced by factors like age, health condition, coverage amount, and the chosen insurance provider. The premiums can be paid monthly, quarterly, semi-annually, or annually, providing flexibility based on individual preferences.

3- What is the age range for eligibility in obtaining burial insurance?

Burial insurance is generally available for individuals between the ages of 50 and 85. Unlike many other insurance policies, it does not require a medical test for qualification, though eligibility can depend on the type of policy chosen.