What is Covered by Burial Insurance?
Burial insurance can help your beneficiaries pay for the costs for your funeral and burial or cremation services. Here’s a list of expenses that beneficiaries can pay for with a life insurance payout:
- Burial plot
- Burial vault
- Caskets
- Cremation
- Flowers
- Funeral home services
- Grave opening and closing
- Headstones
- Obituary notices
- Transportation
- Urn services
Burial insurance can also be used to pay outstanding debts you leave behind after you pass away, such as:
- Credit card debt
- Legal services
- Medical bills
- Mortgage, car loan or other outstanding debt
Types of Burial Insurance
Simplified issue life insurance
When you apply for simplified issue life insurance you answer some questions about your health but you won’t be required to take a medical exam. Additional information about you is usually gathered by the insurance company through third-party sources. This might include details about your driving record and prescription drug use.
With simplified issue life insurance, you can usually find out if you’ve been approved within minutes of filing the application.
One advantage of having a simplified issue life insurance policy to pay for your funeral is that it generally costs less than a guaranteed issue life insurance. Simplified issue policies also usually have higher death benefits than guaranteed issue policies. These types of policies will usually have a graded death benefit, meaning your beneficiaries won’t get a full payout if you pass away within the first couple of years after buying the policy.
Guaranteed issue life insurance
If you buy a guaranteed issue life insurance policy to pay for your burial, you won’t have to answer any health questions, you skip the medical exam and you can’t be denied coverage.
While buying guaranteed life insurance is an incredibly easy way to get burial insurance, there are significant downsides:
- It’s a very expensive way to buy life insurance.
- It also usually has low maximum coverage amounts, such as $25,000 or less.
- You typically need to be at least age 50 to buy guaranteed issue life insurance.
- It usually has a graded death benefit.
Pre-need insurance
Pre-need insurance is available from Hendersons Funeral Home and Cremation Care where you plan to have your services. You contract with the funeral home for the services you want. The funeral director can sell you pre-need insurance when they are also a licensed life insurance agent. When you pass away, the policy’s pay out goes directly to the funeral home to pay for the arrangements you’ve selected.
Can Burial Insurance be Denied?
Burial insurance is usually a guaranteed issue policy, which means anyone who applies receives a policy. There’s no medical exam, and you might not have to answer health-related questions.
Burial Insurance vs. Pre-Need Insurance
The biggest difference between burial insurance and pre-need funeral insurance is that burial insurance makes a payout to your beneficiaries, while pre-need insurance typically pays a funeral home where you have arranged funeral details.
If flexibility is a concern, burial insurance is a better purchase. Here’s a look at the major differences between the two.
