Planning for end-of-life expenses isn’t something most of us want to think about — but taking steps now can save your loved ones from added stress and financial strain later. Burial insurance is a simple and affordable way to ensure that essential costs like funeral services, burial fees or outstanding bills are covered when the time comes. In this post, we’ll walk through what burial insurance is, how it works and how it compares to other planning options like preneed insurance — so you can make a confident, informed decision that brings peace of mind to you and your family.
Understanding Burial Insurance: What It Is and What It Covers
Burial insurance, sometimes called final expense insurance or funeral insurance, is a type of life insurance specifically designed to cover unexpected final expenses or costs related to end-of-life care. These expenses might include funeral services, burial fees, medical bills or outstanding debts.
A closer look at key features of burial insurance
Easy to Obtain
Unlike most traditional life insurance policies, burial insurance typically doesn’t require a medical exam*, making it easier to qualify for the coverage. Depending on the type of policy, even those without health insurance or with pre-existing conditions can qualify in certain circumstances.
Simplified Application Process
The application process is also more streamlined, and approval generally doesn’t take as long as more comprehensive coverage that looks at factors like age, health and lifestyle. A quick turnaround time on approval means if you’re facing a terminal illness, you might still secure coverage and provide peace of mind for your loved ones.
Designated Beneficiary
With burial insurance, the policy owner names a beneficiary — typically a family member or loved one — who receives the payout and is responsible for distributing the funds as needed.
Payout Is Flexible
One unexpected benefit of burial insurance is that the payout isn’t limited strictly to funeral or burial costs — in fact, beneficiaries can typically use the proceeds for any purpose. However, there are limits on the amount of coverage available.
Affordable Coverage
The coverage amount for burial insurance is usually less than a traditional life insurance policy. Because the benefit is smaller, the premiums are generally more affordable. Unlike traditional policies designed for broader financial needs, burial insurance focuses on covering flexible final expenses, making it a more cost-effective option for monthly or annual payments.
How burial insurance works
Burial insurance policies are typically whole life insurance policies, meaning they remain active for the insured’s lifetime as long as premiums are paid. Coverage amounts typically range from $5,000 to $25,000, which helps cover any related funeral and burial expenses. Burial insurance policies are designed to help offset any final or unplanned expenses and provide peace of mind for families following the death of a loved one.
Unlike traditional life insurance policies, which are designed for income replacement, debt repayment and estate management, burial insurance offers more modest benefit amounts that are available quickly, sometimes in a matter of days. Many people choose to supplement their traditional life insurance plan with a burial insurance policy. This ensures their loved ones have quick access to funds, which can be especially helpful for covering immediate expenses, as some traditional life insurance policies may have waiting periods or delayed payout timelines.
who should consider burial insurance
Burial insurance is a practical choice for those who have already paid off major financial obligations — such as a mortgage, business or personal loans or even future education costs for children or grandchildren — but still want to ensure their loved ones aren’t burdened by funeral or other end-of-life expenses. If you’re looking for a more at-need funeral funding option, instead of prearranging and prepaying your funeral, this is an option for you.
Questions to Ask Your Funeral Home Provider
While both burial insurance and preneed insurance are designed to help cover end-of-life expenses, they serve different purposes and offer distinct benefits depending on your needs.
Preneed insurance is typically purchased directly through a funeral home of your choice and provides a detailed plan for your funeral service according to your preferences. A preneed policy outlines details such as the type of service and its location, as well as specific choices like music selections, readings, flowers — even attire! It also includes selections for burial or cremation, the cemetery plot or final resting place, and any special requests that reflect your personality and values.
Preneed policies often lock in today’s prices for common funeral expenses. This means that planning and funding the funeral in advance helps avoid future price increases due to inflation or rising service rates.
Preneed policies are designed to help ensure that funeral expenses and arrangements are taken care of in advance, helping reduce financial and emotional burdens on your loved ones during an already difficult time.
Burial insurance, on the other hand, offers flexibility in how the benefit is used. It is a type of life insurance purchased through an insurance company and provides a set death benefit that is generally intended to help cover end-of-life expenses, regardless of their actual costs.
Unlike preneed insurance, it does not lock in funeral prices or outline specific funeral arrangements. Instead, the payout is made directly to your named beneficiary, who may use the funds at their discretion. Your loved ones will be responsible for selecting a funeral home and making arrangements based on their preferences at the time of need.
Ultimately, the decision between burial insurance and other end-of-life planning options depends on your goals, preferences and financial situation. Burial insurance offers a simple and flexible way to help ensure your loved ones have funds available quickly to manage final expenses on their own, without a pre-chosen funeral provider or prearranged funeral plans.
By understanding how burial insurance works, what it covers and how it differs from other options, you can make a more informed decision about the type of coverage that aligns with your needs — and provides peace of mind for you and your loved ones.
This blog, including incorporated links, is not intended to be legal advice. Homesteaders recommends consulting with your own legal counsel for any questions or concerns you may have regarding the topics discussed in this post.
* For more details about eligibility and available coverage, speak with a licensed insurance professional or provider in your area.
