What is Burial Insurance and Do You Need it?

Almost everyone has heard of using life insurance to help pay for funeral and other end of life costs, but there is another insurance that not as well know designed to specifically cover those expenses. Burial insurance policies exist for the sole purpose of covering the costs associated with your final expenses. But what exactly is burial insurance and why do you need it?

Around 84% of people purchasing life insurance do so with the intention of using at least part of the payout to cover funeral costs. Life insurance can be expensive, and you may not be able to qualify based on your age or health. Burial insurance is an alternative type of policy that is easier to qualify for. It will specifically cover the costs associated with a funeral and burial.

What is burial insurance

Burial insurance is a whole life policy typically sold in amounts of $5-$25,000. Unlike life insurance, it is not meant for people who have a family and want to use the policy to help cover lost wages or assist with expenses in the event of death. Burial insurance policies are specifically for people who may not have savings to cover their funeral costs or who are in poor health and do not qualify for traditional life insurance polices.

How does burial insurance work

Burial insurance rarely requires a health exam and you may not even have to answer any health related questions on the application. There are two types of burial insuracne:

• simplified life insurance: there is no medical exam and only a few health questions. Answering yes to any of them will disqualify you. Generally you will be asked things like are you living in a nursing home or do you have HIV.
• guaranteed issue life insurance: there are no health questions to answer, no medical exam, and you cannot be turned down

One downside to these policies is they have a grade benefit. This means that if you pass away within a few years after purchase, the beneficiary will only receive the premiums paid in to the policy plus a small amount if interest. Typically death by accident is fully covered.

How much does it cost

You will find that they cost for burial insurance is almost the same as a traditionally life insurance policy but the benefits are much smaller. Consider the following chart for a healthy, 50 year old man of average weight:

Insurance type	Average cost
$10,000 policy with no medical exam or health questions	$46/month
$100,000 term life policy for 30 years with medical exam required, no health issues	$41/month
$100,000 term life policy for 30 years with medical exam required, high blood pressure	$44/month

As you can see, the cost of each of the policies is about the same but you get a much better policy purchasing traditional life insurance. Even if you have a few health conditions, traditional life insurance is a better overall deal.

How much does a funeral cost

In 2021, the average cost of a funeral was $7,848. This does not include a vault or cemetery plot. The average cost after including the burial location was $9,420. For a cremation, the average cost was $6,970. These figures do not include things such as flowers, obituary services or monuments.