According to the 2016 Life Insurance Barometer study by Limra, the most common reason for owning life insurance is to cover burial and other final expenses. It’s no surprise that many people look for burial insurance, or final expense life insurance to meet these needs.
Burial insurance was created as a way to cover the expenses that come along with passing away like burial, cremation, funeral service, casket, etc. You will hear it referred to as final expense, or funeral insurance.. With the average cost of a funeral between $7,000 and $10,000, it is important to have some form of coverage in place to prevent placing a financial burden on family members.
In this guide, I will cover:
- What is final expense /funeral insurance?
- What is covered?
- Is it worth buying?
- Importance of having coverage
- What is the difference between life insurance and burial insurance?
- Importance of buying it young.
- Parents and Seniors
- Choosing a policy
- Quotes – How much does it cost?
- What is the best company?
What is final expense?
Final expense is a form of permanent life insurance that is often used to cover the expenses associated with passing away. Things like medical costs, funeral, burial or cremation.
Since it is permanent life insurance, meaning that it does not expire, it is more expensive than term per $1,000 of coverage. Unlike term, permanent life insurance policies accumulate cash value which can later be borrowed from or surrendered for cash value. Generally speaking, a final expense permanent policy with up to $50,000 of coverage.
What is covered?
The interesting thing about this product is that “burial insurance” is just a nickname for the actual product you are buying, which is a small whole life policy. The death benefit can be used on anything, and it is not required to be spent of funeral expenses. The beneficiary of the policy is also not required to cover the cost of a funeral or related expense.
Is it worth buying?
Yes, if you currently have no means of covering the final expenses in the event of your death. Assuming a burial and related expenses are going to cost around $10,000, there are other ways to plan for this expense besides life insurance. It is important to plan for the unexpected, and a small whole life policy to cover burial expenses is a smart idea if you have no other plans in place.
The Importance of Having a Plan in Place
In the event of your untimely passing, the last thing you want to leave behind is a financially burdened family or spouse. Whether it be a retirement account, whole or term life insurance it is vital to have some form of plan in place. Remember, when the policy pays out, the death benefit goes to the beneficiary. If the beneficiary is the estate, then the money may be used to settle the deceased’s estate and not be able to cover funeral expenses.
What is the difference between whole life and burial insurance?
There is no difference. A death benefit is paid to the beneficiary after the insured has passed away assuming it is past the contestability period. As mentioned above, burial insurance is a phrase used to describe a small whole life policy, usually with a death benefit of $5,000 to $50,000. It is not to be confused with term life insurance, which can expire after the set term length but allows for more affordable rates for high coverage amounts.
Some of the alternatives are savings accounts, cash like assets, and stocks and bonds. If you don’t have any money set aside, or have considerable debt, you may want to consider a term policy with a larger death benefit.
Importance of Buying It Young
It’s no secret that the younger and healthier you are, the cheaper your life insurance price tends to be. Also, a parent passing away is less likely to have happened the younger you are. The early death of a parent can have an effect on the price you pay for life insurance.
Many millennials report that they do not have life insurance because they cannot afford it. I would suggest that you get a life insurance quote for final expense as well as term coverage to see how affordable it can be. Often times, you can buy life insurance coverage for the same price as a Netflix subscription.
For Parents and Seniors
In some cases, your elders may not be able to purchase insurance themselves. In some cases, you may be able to purchase final expense life insurance for your parents. The legal requirements vary from state to state, and you will have to have insurable interest in the insured.
For healthy seniors or parents, you will be able to get a term or final expense policy. The term policy will require a medical examination, while the final expense will not. For seniors or parents with health problems, there are graded benefit no exam life insurance policies, but the insured usually only gets partial coverage for the first two years of the policy with the full amount kicking in year 3.
Choosing a Policy
First you want to determine the amount of coverage that is necessary. With the average cost of a funeral ringing in at around $10,000, you will want at least that much. You will then want to visit reputable web sites and call a few brokerages and get quotes for what you are looking for. You can call one of our licensed agents here at NoExam.com at 888-407-0714 and they would be happy to run some burial insurance quotes.
Stay away from any agent or company that gives you obvious red flags such as not being able to explain what you are buying or using high pressure sales tactics.
How much does it cost?
With a product like Phoenix Life Insurance Remembrance, you can expect the following costs for someone who is a male nonsmoker looking for a coverage amount of $15,000.
For those ages 30-40, the premium is $360 per year, or $30 per month. For those over 40, I have included some sample rates so you can get an idea of what your rate will be.
Age 45: $36.40 Per Month
Age 50: $43.16 Per Month
Age 55: $51.51 Per Month
Age 60: $62.84 Per Month
Age 65: $81.68 Per Month
Age 70: $107.04 Per Month
Age 75: $149.07 Per Month
What are the best companies?
Here are some of the top life insurance companies that offer burial life insurance:
North American – Their LifeVue Whole Life product is available for those age 50-80 with coverage amounts ranging from $5,000 to $35,000.
Mutual of Omaha – Offers their Living Promise Whole Life product for those age 45-85 with coverage amounts ranging from $2,000 to $40,000.
Sagicor – Sagicor Life’s Sage No Lapse Universal Life is available without a medical exam for those age 18-65, over 65 must take a health exam. They offer coverage amounts starting at $25,000.
Fidelity – RAPIDecision Senior Whole Life available for those age 50-85 with coverage amounts ranging from $10,000 to $150,000.
Assurity – LifeScape Simplified Whole Life. Available for those under the age of 80 with coverage amounts ranging from $5,000 to $50,000.
Phoenix – Remembrance Life Simplified Issue whole life is available for those age 30-80 and does not require a medical exam. It has coverage amounts from $10,000 to $100,000 depending on age.
Burial Insurance and Final Expense Life Insurance by Jonathan Holloway