Page Reviewed / Updated – June 5, 2022

Burial life insurance can have a cash value. However, seniors need to understand that policies that build a cash value over time may not offer the same benefits as other life insurance products.

Unfortunately, insurance policies are complicated documents. Older adults may struggle to fully understand the terms, apply for a policy and later find out they can’t access cash the way they hoped. Knowing how cash value works with life insurance, and burial insurance specifically, allows people to make better-informed buying decisions.

Most Permanent Life Insurance Policies Have a Cash Value

Permanent life insurance is a type of life insurance that remains in effect until the insured dies or reaches an advanced age like 100 or 105 years. With nearly all permanent life insurance policies, a portion of the premium payments funds a cash account. As a result, the life insurance policy grows in value over time.

Depending on the type of policy, seniors may be able to use the cash value of the account while they’re still alive. They may have the ability to borrow against the cash value or withdraw a portion of it. If they choose to surrender their permanent life insurance policy, older adults may get the cash value minus a fee.

Burial Life Insurance Cash Value Is Limited

Burial life insurance is generally a permanent life insurance product. As a result, most policies technically build a cash value. However, the actual cash value is usually very modest. The cash value of all types of life insurance depends partially on the premiums paid and the face value of the insurance. With burial insurance:

  • Face amounts are usually $50,000 or less.
  • Policies may be as small as $5,000 or $10,000.
  • Premiums are very inexpensive.
  • Most people who purchase are seniors.

Due to these factors, the cash value of a burial insurance policy grows slowly. It’s unlikely the value will ever become large enough that an older adult could borrow against it or use it to pay for living expenses. Burial insurance policies may offer cash surrender options, but the payouts for these will be significantly less than the face amount.

Alternative to Burial Insurance

Seniors who want the benefits of a significant cash value may prefer other kinds of permanent life insurance. This table compares the features of various types of policies.

Burial Insurance

Whole Life

Universal Life

Variable Life

Typically sold for amounts of $50,000 or less

Typically sold for amounts of $100,000 or more

Typically sold for amounts of $100,000 or more

Typically sold for amounts of $100,000 or more

Fixed death benefit

Fixed death benefit

Adjustable death benefit

Adjustable death benefit

Doesn’t usually require a medical exam

Requires a medical exam

Requires a medical exam

Requires a medical exam

Small guaranteed cash value

Larger guaranteed cash value

May have guaranteed cash value, depending on the policy type

Builds cash value, but amount isn’t usually guaranteed

Fixed premiums; may cost more than whole life

Fixed premiums; usually most affordable permanent insurance

Adjustable premiums

May have adjustable premiums

Low interest rate on cash value 

Low interest rate on cash value 

Some policies invest money in securities to potentially pay higher interest

Cash values invested in securities to potentially pay higher interest

Learn more about paying for final expenses by checking out the best burial insurance plans.