Best Burial Insurance Companies of 2022: How They Work

burial Insurance
Bankrate.com

Losing a loved one is heartbreaking no matter what the circumstances are. The weeks following someone’s death can be extremely difficult for those left behind as they plan a funeral and burial. The fact that burials can be costly adds to the issue. According to the National Funeral Directors Association, these expenditures average around $7,000, depending on the services chosen, which can quickly add up. The last thing a bereaved person should be concerned about is how they will pay for these services. You may want to consider obtaining burial insurance, often known as end-of-life insurance, to assist reduce some of the hardship on your family. Here’s what you should know about a burial insurance policy and how it can benefit seniors. We’ll also look at a review of the best burial insurance companies for 2022.

What is Burial Insurance?

Your loved ones will know what will happen after you die if you have your affairs in order. You may have left instructions on how you want your body to be treated, as well as notes on how you want your memorial ceremony to be organized or what you want to be engraved on a tombstone.

But all of these things are expensive, often in the thousands of dollars. If you do not want your heirs to bear those fees, you should think about purchasing burial coverage. This is a small permanent life insurance policy that pays a death benefit — typically between $5,000 and $25,000 — to meet these expenses.

Because the payout for burial insurance is tiny in comparison to many standard life insurance plans, the premiums can also be fairly low. The insurance is simple to obtain and does not need a medical checkup, even for individuals in poor health. However, a waiting period may apply, or the policy may only provide restricted benefits for the first two years.

What Does Burial Insurance Cover?

Burial insurance policies cover all of the regular costs associated with a person’s death. Unless you have managed a loved one’s estate, you may be unaware of the number of fees involved with death or how rapidly they can add up. Costs may include, according to the Federal Trade Commission:

  • Embalming or body preservation
  • A coffin
  • Flowers
  • Cremation fees
  • A burial plot
  • The cost of conveying the deceased’s body and/or cremains
  • A headstone with personalized carving
  • Minister or priest remuneration
  • Rental fees for the location of the memorial service
  • The cost of opening and closing the grave
  • Vaults and/or grave liners

How Burial Insurance Works

Burial and funeral insurance policies do not typically need a medical exam, and the application may just include a few health questions—or none at all. Rates are mostly determined by age and gender. Burial insurance is usually one of the following types of whole life insurance:

Simplified issue life insurance: There will be no medical exam and only a few health questions, but answering “yes” to any of them may disqualify you. For example, simplified issue applications frequently ask if you live in a nursing home or if you have HIV.

There are no health questions or medical exams required to apply for guaranteed issue life insurance. You cannot be refused.

The disadvantage of these simple applications is that the policy usually has a tiered death benefit. If you die within the first two or three years of purchasing the policy, your beneficiaries will only receive a return of the premiums you paid, plus some interest, or a tiny percentage of the policy’s coverage amount. Accidental deaths, such as those in an aircraft crash, are normally fully covered from the commencement of the policy.

Seniors Burial Insurance

If you are 65 or older, you may be considering end-of-life planning and getting burial insurance. However, the more the premium for the policy, the older you are. Burial insurance becomes more reasonable as you get older. Furthermore, many policies include a vesting period between the time of purchase and when the insurance is paid out. Your loved ones would not receive the death benefit if you died within the vesting period. For these reasons, it’s critical to carefully review the policy’s terms to verify it’s the right policy for you.

Is It Possible To Be Denied Burial Insurance?

Burial insurance is typically a guaranteed issue policy, which indicates that anyone who applies will be approved. There is no medical checkup, and you may not be required to answer any health-related questions.

How Much Does Burial Insurance Cost?

Because burial insurance policy applications demand little to no medical information, the cost of the coverage is exorbitant. According to our analysis, a healthy 50-year-old male can obtain $100,000 in term life insurance for 30 years for less than the cost of $10,000 in burial insurance. Even a 50-year-old man with high blood pressure can obtain the same level of term life insurance for less than the cost of a $10,000 burial policy.

Burial Insurance vs. Term Life Insurance: 50-Year-Old Male Average Rates

Insurance typeAverage cost
$10,000 in burial insurance for a healthy male, no medical exam, and no health questions$46/month
$100,000 in term life insurance for 30 years for a healthy male, a medical exam required$41/month
$100,000 in term life insurance for 30 years for a male with high blood pressure, a medical exam required$44/month
Methodology: We averaged the three lowest internet rates for a male of typical height and weight.

Even if you have certain health issues, if you don’t require lifelong coverage, term life insurance is usually a better deal.

How Much Does a Funeral Cost on Average?

According to the National Funeral Directors Association, the national median cost of a funeral with a viewing and burial is $7,848 in 2021. The cost of a vault, which is normally required by a cemetery, is not included in that fee. When a vault is included, the median cost is $9,420.

A cremation with a cremation casket costs $6,970 on average across the country.

Remember that these prices do not cover costs such as a monument or marker, an obituary, or flowers.

Breakdown of National Median Funeral Costs

Type of costMedian priceDescription
Casket$2,500The cost for a metal casket, your cost will vary based on the materials you choose.
Cremation casket$1,310A fully combustible container can be a traditional casket or cardboard box but cannot have any metal parts.
Cremation fee$368If the funeral home does not own a crematory and uses a third party.
Urn$295Container to hold cremated remains.
Required basic services fee$2,300Covers the funeral home’s time, storage of remains, and overhead expenses.
Embalming$775Not required by law, but a funeral home may require it if you hold a viewing.
Other preparation of the body$275May include cosmetic reconstruction, hair styling, and dressing of the deceased.
Use of facilities/staff for the funeral ceremony$515If you have the ceremony at the funeral home, you can expect to pay this fee.
Hearse$350Transporting the remains from the funeral home to the burial site.
Service car/van$150Transporting the family and guests from the funeral home to the burial site.
Printed materials$183Memorial package and guest book.
National Funeral Directors Association, median costs in 2019.

How Much Burial/Funeral Insurance Should I Purchase?

If you simply want a life insurance policy to cover funeral expenditures, be sure you obtain enough insurance to pay for the type of funeral you choose. Funeral expenditures might vary greatly based on the preparations you choose, such as flowers and music.

Burial Insurance Alternatives

Life insurance is used by many people to cover their final expenses. This can be a smart alternative, particularly if you have a substantial policy that will cover your final arrangements as well as any bills and expenses that your family will be responsible for after your death. These policies, however, have different requirements, rules, and focuses than burial or funeral insurance.

#1. Term Life Insurance

Term life insurance protects you for a limited time. Once that time period has expired, you will need to purchase another policy – usually at a considerably higher cost – to remain insured. There is no policy protection if you do not renew your coverage and die. This isn’t a smart alternative for paying for final expenses because we don’t know when we’ll die and can’t estimate if it will happen during the policy’s term.

While you can renew this sort of plan, the costs increase as you get older, so you may end up paying more than if you signed up for burial insurance. If you plan to use term life insurance to pay for your final expenses, check to see if your policy can be changed to whole life or another permanent plan. This choice becomes more expensive as you age, so the sooner you exercise it, the better.

#2. Universal Life Insurance

Most of the time, universal life insurance is not a suitable choice because it is based on interest rates. When interest rates rise, the value of these plans rises; when they fall, it costs more money — in the form of higher premiums — to keep them useful to consumers. You may be able to transfer the value of one of these plans to whole life insurance if you have one of these policies.

#3. Guaranteed Issue Whole Life Insurance

Guaranteed life insurance isn’t always the best option because it’s so pricey. There is no underwriting, thus burial insurance companies do not examine the risk of providing coverage to applicants. To compensate for the risk that the insurer is taking, everyone normally pays a substantially greater premium than they would with standard whole life insurance. Because these are frequently enticing possibilities for people who are having difficulty acquiring life insurance coverage — for example, an 80-year-old man who has had three heart attacks — these plans can be substantially more expensive than other options.

Life Insurance vs. Burial Insurance

Burial insurance is a sort of life insurance, however, its payout amount is substantially lower than that of ordinary life insurance contracts. This is because burial insurance is only intended to fund last arrangements, whereas life policies are purchased to cover a wide range of needs such as income replacement.

Although burial insurance benefits can be used for other expenses at the discretion of the beneficiary, benefit amounts are designed to cover only the last arrangements. As a result, they are often issued in amounts ranging from $5,000 to $20,000, whereas standard life insurance can provide benefits in the hundreds of thousands of dollars.

Let’s look at the best burial insurance companies of 2022.

Best Burial Insurance Companies

  • Mutual of Omaha: The best overall.
  • SBLI Life Insurance: The best option for instant-issue policies.
  • TruStage: The best for guaranteed-issue policies.
  • State Farm Life Insurance: The best option for financial stability.

#1. Mutual of Omaha Insurance Company: Best Overall

Pros

  • Policies are offered to anyone over the age of 85.
  • Some insurance includes a rider for terminal diseases.
  • A+ rating for financial strength
  • There is a death benefit of up to $40,000 available.
  • Some insurance may not provide a graduated benefit.

Cons

  • More grievances than top competitors

For individuals looking for final expense coverage, Mutual of Omaha has a number of appealing benefits. To begin, the organization is A+ rated by AM Best, indicating that it has a great ability to fulfill its insurance duties, including paying claims. You may also apply online for speedy coverage of up to $25,000. However, you can also apply through an agent for a higher coverage level and other benefits (not all burial insurance companies offer this). You can receive a death benefit of up to $40,000 through an agent, and you may be able to buy a policy without a graded death benefit and with a terminal illness rider. Mutual of Omaha is one of the few burial insurance companies that offer the last expense coverage that does not have a graded death payout. It is also the only firm on our burial insurance companies list that provides a terminal illness rider (on some plans) and burial insurance to anyone over the age of 85.

One disadvantage of the company is that it does not perform as well as its competitors in terms of client complaints. According to the National Association of Insurance Commissioners, Mutual of Omaha got significantly more complaints than expected for a firm of its size (NAIC). All of the other burial insurance companies on this list received less.

#2. SBLI Life Insurance – Best For Immediate-Issue Policies

Pros

  • Policies with immediate issuance
  • Fewer consumer complaints than expected, given the company’s size
  • Some insurance may not provide a graduated benefit.
  • Up to $35,000 in coverage is available.

Cons

  • The graded period for policies with a graded death benefit is three years.

SBLI is a financially sound life insurance firm with few client complaints offering instant-issue burial insurance policies for up to $35,000 in coverage. What’s even better is that the corporation doesn’t impose any specific coverage restrictions on online applications. Mutual of Omaha, for example, offer final expense insurance with up to $40,000 in coverage, but only if you apply through an agent—the maximum death benefit accessible with online applications is $25,000.

You’ll know right away if you’re approved after submitting your online application to SBLI. This is one of the reasons we believe it is the finest option for instant-issue burial insurance. SBLI also offers some final expense policies that do not include a graded death benefit; if authorized, you will learn whether your insurance has one. However, if it happens, keep in mind that SBLI’s graded benefit period lasts three years, which is one year longer than every other firm on our best burial insurance companies list. That means that if you die naturally within that term, your beneficiaries will receive a lower death benefit.

#3. TruStage – Best for Guaranteed-Issue Policies

Pros

  • Simple online application
  • Fewer consumer complaints than expected, given the company’s size
  • Same-day service

Cons

  • Every policy has a two-year graded benefit.

TruStage Life Insurance Agency, whose policies are underwritten by CMFG, provides a simple final expense policy that is simple to apply for, which is why it is our pick for the finest business for guaranteed-issue life insurance. There are no health questions, the application is entirely online, and it is simply a few steps long. You will identify your beneficiaries, enter basic personal information, and make your first payment. You’re insured once your payment clears.

If you’ve previously been denied life insurance and want to get something in place without having to deal with health questions, this policy may be worth looking into. Just keep in mind that all policies have a two-year graded death benefit and a maximum death benefit of $20,000.

#4. State Farm Life Insurance – Best For Financial Stability

Pros

  • The highest ranking for financial strength
  • No. 1 in terms of client satisfaction
  • In comparison to its scale, it receives very few consumer complaints.
  • Dividends are available to policyholders.

Cons

  • The maximum death benefit of $10,000
  • You must apply through an agency.

State Farm is a massive life insurance firm. AM Best assigned it an A++ rating for financial strength, the best achievable. That suggests the credit rating agency believes State Farm has a superior ability to honor its insurance obligations, including paying claims. Additionally, State Farm was the highest-ranked firm in J.D. Power’s U.S. forecast for the 2021 Individual Life Insurance Study. Unsurprisingly, according to NAIC data, the company has had very few consumer complaints in recent years. It is also worth noting that its final expense insurance is eligible for dividends.

So why is it not our first choice for the best burial insurance company? Because the only accessible coverage quantity is $10,000, which is half of what TruStage gives and one-quarter of what you can apply for with Mutual of Omaha. Furthermore, you cannot obtain coverage online; you must speak with an agent to apply.

Burial Insurance FAQs

What is the difference between burial insurance and life insurance?

A term life insurance will expire if you outlive the policy’s term while burial insurance is typically a whole life policy that lasts until you pass away.

How long does it take for burial insurance to take effect?

The average life insurance payout can take as short as two weeks and as long as two months. However, the timetable is subject to a number of variables.

How is burial insurance paid?

The policy amounts are paid for in monthly installments directly to the funeral home. Pre-paid funeral plans provide a way for people to pay for their funeral arrangements before they pass.

References

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