People can buy burial insurance from insurance companies. Burial insurance is designed to cover the cost of a person’s cremation or burial, and many insurance providers sell burial or “final expense” plans. Seniors can purchase burial insurance as a standalone package or in conjunction with a life insurance policy, and they can choose to have the value of the policy paid to their loved ones upon their death or directly to the funeral home they wish to work with.
Life insurance providers often offer burial insurance, or “final expense insurance” as an add-on to a traditional life insurance policy or as an inexpensive option for people who either can’t afford a full life insurance policy or who are in poor health and would struggle to be granted a full policy. Most major life insurance providers offer a burial plan, so it’s important to shop around to find the best burial insurance policy for the policyholder’s circumstances.
The cost of a funeral is a key factor in the decision to purchase life insurance for around 84% of policyholders. Final expense insurance can cover the cost of a casket or cremation, an urn, a burial plot, obituaries, flowers, transportation and other general funeral expenses. In some cases, a death benefit paid out to a beneficiary can also be used to cover legal or medical expenses.
Unlike life insurance, which typically requires the person taking out the policy to go through a medical exam and declare any known health issues, burial insurance is usually more flexible. Plans tend to fall into one of two key categories:
Simplified issue plans don’t require a medical exam, but they do ask a few health-related questions to disqualify people who have certain serious medical conditions. In contrast, guaranteed issue life insurance is open to all, regardless of their health status. Guaranteed issue plans often have a “graded death benefit,” so they may pay out a smaller amount if the policyholder dies due to an existing health condition within 2 or 3 years of taking out the policy.