Burial insurance primarily covers final disposition and end-of-life expenses, but the funds can also be used to settle the deceased’s outstanding debts. It’s a type of whole life insurance policy and is also called funeral insurance or final expense insurance.
A burial insurance policy helps ensure that loved ones have quick access to funds for funeral and/or cremation costs. This coverage is geared toward older individuals who don’t want or don’t qualify for traditional life insurance with higher limits. It can also be a suitable option for those who only need or prefer a small death benefit to cover end-of-life needs. A policy can be purchased to cover one person or an entire family.
Burial insurance policies generally provide coverage amounts ranging from $2,000 to $25,000, depending on the provider, coverage amount, the insured’s age and gender and other factors. However, some insurers offer up to $100,000 in benefits. Coverage limits typically decrease and premiums increase by age.
Many plans accept individuals up to age 80 and offer coverage for life, up to age 121. Some policies cover children, too. Depending on the policy, full coverage may begin immediately or after a waiting period. Often, though, insurers limit benefits for the first 2 years.
Burial insurance is usually guaranteed for life with no expiration as long as the premiums are paid. The insured can’t be denied coverage, nor will the company cancel the policy for health reasons.
Like a traditional whole life insurance policy, burial insurance policies can accumulate cash value. However, since the policy is usually small, there’s typically little to no extra money left after paying funeral expenses.
Some insurers offer riders to policies at no extra cost, including:
Burial insurance isn’t meant to provide large sums of money like traditional life insurance. It’s designed to cover one-time or short-term expenses, not to replace income or fund an investment plan. The main purpose of burial insurance is to pay for funeral expenses.