Burial insurance and life insurance are two forms of coverage that provide financial protection for loved ones in the event of your passing. While both types of insurance can offer peace of mind and financial support, there are important differences between the two that you should understand before making a decision on the right policy for you or a loved one.

This article will explore the key differences between burial insurance and life insurance, as well as the advantages and disadvantages of each. We’ll also provide guidance on how to choose the best option for your needs and budget. Whether you’re looking to provide for final expenses or to leave a legacy for your loved ones, this article will help you make an informed decision about your insurance coverage.

Life Insurance vs Burial Insurance

Life insurance 101:  Basic Definitions

Burial insurance:

Also known as final expense insurance or funeral insurance, burial insurance is a type of coverage specifically designed to cover the costs associated with a person’s end-of-life expenses, such as funeral costs, cremation expenses, and other end-of-life expenses. It typically provides a smaller death benefit, typically ranging from $5,000 to $25,000, and is intended to cover the specific costs of a funeral and burial.

Life insurance:

On the other hand, life insurance is a broader form of coverage that is designed to provide financial support to a person’s loved ones after their passing.

Life insurance policies typically provide a larger death benefit, which can range from a few thousand dollars to several million dollars and can be used to cover a variety of expenses, including funeral costs, outstanding debts, living expenses, and more.

The death benefit can be used for any purpose and the policyholder or the beneficiaries can decide how to use it.

Advantages of Burial Insurance

Burial life insurance policies have several advantages including:

1. Easy to obtain: Burial life insurance policies typically have less stringent underwriting requirements than traditional life insurance policies, making them easier to obtain for individuals who may not qualify for other types of insurance.
2. Affordable: Burial life insurance policies typically have lower coverage amounts. And while dollar-for-dollar you may pay more for the coverage you receive, because the coverage amounts are low, these policies will generally remain affordable for many individuals
3. Provides peace of mind: Knowing that the costs of your funeral and other end-of-life expenses will be covered can provide peace of mind for both you and your loved ones.
4. Flexibility the in use of death benefit: Burial life insurance policies offer flexibility in the use of death benefit, the death benefit can be used for any purpose and not just for funeral expenses.
5. Available for those with pre-existing medical conditions: Some policies may be available for those with pre-existing medical conditions, providing a coverage option for those who may not qualify for traditional life insurance.
6. No medical exam required: Some policies don’t require a medical exam, it makes the process of getting coverage easier and quicker.
7. Guaranteed acceptance: Some policies offer guaranteed acceptance without the need to pass a medical examination.

Overall, a burial life insurance policy can provide financial protection for end-of-life expenses and peace of mind for both the insured person and their loved ones.

Disadvantages of Burial Insurance

Burial life insurance policies have several disadvantages including:

1. Limited coverage: Burial insurance policies typically have lower coverage amounts than traditional life insurance policies, which means they may not provide enough coverage to fully cover all end-of-life expenses.
2. Higher premiums: Burial insurance policies typically have higher premiums than traditional life insurance policies, so you will end up paying more for the coverage you receive than you would by purchasing an equivalent term life insurance policy.
3. Limited riders options: Burial insurance policies typically offer limited options for riders and endorsements compared to traditional life insurance policies.
4. Age restrictions: Some policies have age restrictions, meaning coverage is not available for individuals over or under a certain age.

Life insurance advantages (over a burial insurance policy)

Life insurance has several advantages over burial life insurance policies:

1. Higher coverage amounts: Life insurance policies typically have higher coverage amounts than burial insurance policies, which means they can provide more financial protection for the insured person’s loved ones.
2. Lower premiums: Life insurance policies typically have lower premiums than burial insurance policies, making them more affordable (dollar for dollar) for many individuals.
3. Cash value: Many life insurance policies have a cash value component, which means that the policyholder can access the value of the policy while they are alive.
4. More riders and endorsements options: Life insurance policies typically offer more options for riders and endorsements than burial insurance policies.
5. Flexibility in coverage: Many life insurance policies allow you to adjust the coverage amount as your needs change.
6. Long-term savings: Some life insurance policies allow you to accumulate cash value over time that can be used for future expenses or as a source of retirement income.
7. More payment terms options: Some life insurance policies offer more payment terms options, such as paying the policy over time.

In summary, Life insurance policies typically provide higher coverage amounts, lower premiums, cash value, more flexibility and more options for riders and endorsements than burial insurance policies, making them a better choice for many individuals.

Disadvantages of life insurance over a burial life insurance policy

Life insurance has some disadvantages when compared to burial insurance:

1. Stricter underwriting requirements: Life insurance policies typically have stricter underwriting requirements than burial insurance policies, which means that some individuals may not qualify for coverage.
2. Medical examination required: Some life insurance policies require a medical examination, which can be time-consuming and invasive.
3. More complex: Life insurance policies can be more complex than burial insurance policies, which can make it more difficult for some individuals to understand and choose the right coverage.
4. Longer process: The process of getting coverage can be longer and more complicated than with burial insurance.
5. Age restrictions: Some life insurance policies have age restrictions, meaning coverage is not available for older individuals.
6. More exclusions: Some life insurance policies have more exclusions than burial insurance policies, which can limit coverage in certain situations.

Choosing between Burial Insurance and Life Insurance

When choosing between a burial life insurance policy and a term life insurance policy, it’s important to consider your specific needs and goals.

A burial life insurance policy is typically a smaller policy with lower coverage amounts and is intended to cover the costs of a person’s funeral and other end-of-life expenses. It is often a good choice for older individuals or those with health conditions that make it difficult to qualify for other types of coverage.

A term life insurance policy, on the other hand, is usually larger and is intended to provide greater financial support to loved ones after the policyholder’s death. It is usually a good choice for individuals who want to provide for their loved ones financially, cover mortgages and other debts, or ensure that their children can afford college.

Ultimately, the choice between a burial life insurance policy and a term life insurance policy will depend on your specific needs and goals.

Frequently asked questions about burial life insurance vs term life insurance

What is the difference between burial life insurance and term life insurance?

Burial life insurance is a type of whole life insurance that is specifically designed to cover funeral and burial expenses, while term life insurance is a type of insurance that provides coverage for a specific period of time, typically 10-30 years.

Which is better for funeral expenses, burial life insurance or term life insurance?

Burial life insurance is specifically designed to cover funeral and burial expenses, so it may be a better choice for this purpose. However, term life insurance can also be used to cover these expenses, and it may be a more affordable option for some people.

Can I use term life insurance to cover my funeral expenses?

Yes, term life insurance can be used to cover funeral expenses. The death benefit from a term life insurance policy can be used to pay for funeral costs and other expenses.

Does burial life insurance have a cash value?

Yes, burial life insurance is a type of whole life insurance, which means it has a cash value component. This cash value can grow over time and can be borrowed against or used to pay premiums.

Are there any age restrictions for burial life insurance?

Each insurance company may have different age restrictions and qualifications for burial life insurance. Some may offer coverage for senior citizens and others may limit coverage to individuals within a certain age bracket.

How much does burial life insurance cost?

The cost of burial life insurance varies depending on factors such as the amount of coverage, the individual’s age, and health status. It’s best to get quotes from multiple insurance companies to compare costs and find the best option for you.

Can I use the death benefit from a burial life insurance policy for expenses other than funeral and burial costs?

Yes, the death benefit from a burial life insurance policy can be used for any expenses the beneficiaries choose. The death benefit can be used to pay off debts, cover living expenses, or for any other purpose.