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What is a funeral insurance policy?

4 min read

Funeral insurance, also called burial or final expense insurance, is a type of insurance you can buy from life insurance companies to make sure that your loved ones will not be overwhelmed with bills in the aftermath of your death.

It is similar to a whole life insurance policy—but generally with a smaller amount of benefits, and an easier application process.

Unlike traditional life insurance, funeral insurance only covers end-of-life expenses. These can include but are not limited to, funeral costs, paying off final debts or medical bills, or burial costs. Funerals and related costs are expensive––usually costing between $6,000 and $10,000. This is a huge financial burden for the family, which a funeral insurance policy would greatly ease. If you are wondering whether a funeral insurance policy is right for you, here are a few things to consider.

How does funeral insurance work?

Funeral insurance (or burial, cremation, or final expenses insurance––these are all marketing terms that mean the same thing) is a whole life Insurance policy, meaning that it does not expire.

Like every insurance policy, there are many different plans out there, and you will have to choose the one that best fits your needs.

Funeral insurance policies are typically offered to those between the ages of 50 and 85. One major benefit of these policies is that they do not require any medical exams, so they are much easier to qualify for than some traditional life insurance plans. 

These policies will generally not exceed $50,000 of coverage, and they can start at as little as $5,000.

Because this money may be needed on short notice to cover funeral costs, these policies pay a lump sum almost immediately to the named beneficiary or beneficiaries, so that your family members can access the cash ASAP.

The “tradeoff” is that you can’t get as much coverage as a traditional life insurance policy, but it is a great option for someone who anticipates needing less than $50,000 for final expenses.

It is one of the most flexible options because the payout can be used however the family sees fit—there are no restrictions on how it must be spent. 

How do you qualify for a funeral insurance policy?

As mentioned above, there is usually no medical exam required to qualify for one of these policies. This is another benefit of funeral insurance—pretty much anyone can qualify for it.

Even if you do not have health insurance, or if you have a preexisting condition, you may still be able to qualify.

Even if you do not have health insurance, or if you have a preexisting condition, you may still be able to qualify.

Though you may be asked to complete a health questionnaire, it will usually not be anywhere near as extensive as the health questioning can be when applying for regular life insurance.

That said, your health is a factor in determining the type of policy you can get. A qualified insurance agent can help you find funeral insurance that you qualify for, and that is right for you. 

How much does it cost?

Again, there is a range of how much coverage these plans offer, and your premiums will depend on how much coverage you choose. Generally, the death benefit payout is somewhere between $5,000 and $25,000.

Since the payout is smaller than most regular life insurance policies, the premiums are much more affordable, starting at around $53 a month, and they can be paid monthly or annually. The average monthly payment for a burial insurance policyholder is $50-$100, but your premium will depend on the amount of coverage you need, your age, gender, and health. 

If you think funeral insurance is right for you, start looking at the policies that different insurance companies offer. If a company offers life insurance, they will offer burial insurance, too.

Remember that these policies can go by a few different names, but they all mean the same thing. The great thing about burial insurance is that it is a relatively low-cost way to make sure that your loved ones have financial support when it comes time for your end-of-life arrangements. Essentially, it’s one of many ways to care for them after you’re gone.