Page Reviewed / Updated – June 5, 2022

There are two main types of burial insurance available: standard insurance and pre-need insurance. Both of these insurance options cover the cost of funeral expenses, but they differ in the way the payments are made. Seniors who are trying to choose the best burial insurance plan for their needs should consider whether they have specific wishes for their burial and whether they would prefer to make their own arrangements or have their loved ones make the funeral arrangements once the time comes.

Funerals Can Be a Costly Affair

According to the National Funeral Directors Association, the average cost of a funeral with a traditional burial is $7,848, and the average cost of a cremation is $6,971. Burial insurance, also known as funeral insurance or final expense insurance, helps families cover the expense of the ceremony, reducing the stress they face during a difficult time.

Standard Funeral Insurance Is Paid to the Beneficiaries

Standard funeral insurance is paid to the policyholders nominated beneficiaries, so they can use it to pay for final arrangements, including expenses such as:

  • Cremation or a casket
  • A burial plot
  • Flower arrangements
  • An urn or headstone
  • Transportation costs
  • Obituaries

The beneficiary may also be able to use the insurance to cover other expenses, such as medical costs or legal fees. The beneficiaries can make their own decisions about the arrangements.

Pre-Need Insurance Goes Directly to the Funeral Home

Pre-need insurance is also used to pay for the cost of a funeral, but instead of going to the beneficiary, the policyholder nominates a funeral home and declares their wishes when they take out the policy. In the event of the policyholder’s death, the funeral home is paid directly to execute the wishes of the policyholder. This gives the policyholder more control over the ceremony and reduces the responsibilities that fall to their loved ones after their passing.