Funeral Insurance Policies – What You Need to Know

Funeral Insurance PolicyYou are happy, healthy, and living your best life. Believe it or not, now may be the perfect time to think about procuring death benefits with funeral insurance. In a GoFundMe world, seeking out burial insurance today can save you and your loved one’s thousands.

What is Funeral Insurance?

Funeral Insurance is “whole life insurance” with a death benefit ranging from $6000 to $50,000. As the name implies, people tend to buy this type of policy to provide money for a funeral and burial costs for themselves and/or family members. Funeral insurance is paid as a monthly premium to the insurance company, with a beneficiary, designated by the policyholder.

Funeral Insurance Cost

As with all insurance policies, costs are typically based upon the age and health of the policyholder when the policy is started. Ranging from $40 to $155 per month, ages 52-72, respectively.

What should I look for in a funeral insurance plan?

You want to make sure that you have the necessary amount of coverage. Some policies coverages include, but not limited to, a person’s funeral expense, medical bills, and any other expenses related to death.

Typically, you want to shop for a plan just as you would any other policy.

  • Reputable Company (Trusted and highly rated)
  • Fixed Premiums (Premiums stay the same over time)
  • No Medical Exams (Just a short questionnaire)
  • Whole Life Policy (Good for your whole life)

funeral insuranceWhat Types of Funeral Insurance Plans are Available?

There are three types of plans, not all companies offer all three.

Level Funeral Insurance

Level is the best, there is 100% payout from the day the policy is started. However, there are some medical restrictions. There may be height and weight restrictions, as well as some medical conditions that may not make you eligible for this type of coverage. Some prequalifying questions for Level Death Benefit Approval may include, but not limited to:

  • Have you been in a diabetic coma
  • Have you been diagnosed by a medical professional with less than 1 year to live?
  • Receiving hospice care or living in a nursing home facility.
  • Amputation due to disease or disorder
  • Bedridden or currently hospitalized

Answering yes to these questions can disqualify you from obtaining Level Death Benefits.

Graded or Modified Funeral Insurance

Graded/Modified Funeral Insurance is the second-best type of coverage. It will only payout if you outlive the policy for a full 2 years. However, this plan does cover many high risk medical conditions, and also pays out if you die from an accident.

Guaranteed Acceptance Plan Funeral Insurance

Lastly there is the Guaranteed Acceptance plan, the one that you see on your tv late at night. The TV advertisements often promise “you can’t be turned down and this policy can never be cancelled.“
But those late-night infomercials fail to disclose that this is the most expensive plan and there is a 2 year wait on payout. However, this plan also pays out 100% for accidental deaths.

funeral insuranceWhich Type of Funeral Insurance is Best?

Level Death Benefits tend to be the most sought out type of coverage, it is a lifetime death benefit protection. There isn’t a 2 year wait for the payout, which is an attractive feature. In addition to funeral and burial costs, having the right amount of coverage can also help to pay off any extra final expense debts. Level death benefits provides a solution for just about everyone requiring some type if life insurance. Some health conditions that may be considered high risk with traditional underwriting may be approved with these policies.

Is Funeral Insurance the Same as a Pre-Paid Funeral?

Burial or Funeral Insurance is not the same as Pre-Need or Pre-Paid Funeral Arrangements. These types of policies carry out your wishes, i.e. funeral plans or arrangements, at a designated funeral firm. These plans tend to be purchased at a funeral home and the policy tends to have the funeral home as the beneficiary. These plans can be paid in a lump sum or payments. These payments can be paid to the funeral home or directly to the trust that they have set aside for you.

Should I choose Burial Insurance or Pre-Pay for my arrangements?

Pre-paying for the funeral maybe the best option. This way you chose exactly what you want, from the obituary layout to the casket. You also get to lock in the current market prices by paying in advance. Just be sure to let your loved one’s know that you have done this so they don’t pay for a funeral service elsewhere.

This option does not cover any final expenses that maybe be left after death. Such as, medical bills, mortgage, or any other debts. However, you do not have to worry about medical questions or outliving a policy for 2 years. This option also relieves your family members from the burden of making funeral decisions.

What if I have life insurance?

If you have life insurance already in place, you don’t have to have a burial insurance policy, unless you want added coverage. In which case you can add this type of a death benefit policy or increase the amount of your life insurance policy that you already have established. Whichever is the lesser of the two options. Burial Insurance is typically for persons 50-85, who may no longer qualify for the traditional life insurance policy. You may not qualify for traditional life insurance if you are:

  • Obese
  • Have limited outcome
  • Criminal history
  • Recent bankruptcy
  • Certain health conditions within a specified time window

How can I obtain burial insurance?

You do not need to find a funeral insurance company. Burial insurance is easily obtained through an insurance company. For instance, the same company that covers your home or car, may also offer burial insurance. State Farm offers a final expense policy, in which you may receive at a discount by bundling home, life and auto. Your health insurance provider may also extend burial insurance as an option, MetLife, offers guaranteed acceptance policies to those between the ages of 50 and 75. Be sure to contact your insurance company to see what options may be available to you and your family members.

Burial Insurance can be pricey and the Guaranteed Acceptance policy tends to be even more expensive. However, having these instruments in place offers your loved ones a peace of mind by knowing that they will have the funds to cover funeral expenses.