When a loved one passes away, it can be a difficult and emotional time for family members, and one of the last things anyone wants to think about during this trying time is how to pay for a funeral and burial expenses.
Sadly, though, these costs can be quite significant. If you haven’t prepared for this event, not only can these costs get out of control, but they’re also something that has to be dealt with quickly! Unfortunately, this rush usually increases the stress on the whole family and can often force a family to make decisions they’ll later regret.
This is often why our burial life insurance customers here at IBUSA are ones who have already gone through this experience once and have no intention of letting it happen to them again. Customers like these understand how important a small whole-life insurance policy can be when it comes to covering end-of-life expenses.
Burial life insurance Defined:
Burial life insurance, also known as “final expense insurance,” is a type of life insurance policy that is designed to cover the costs of a person’s funeral and other end-of-life expenses.
These burial insurance policies typically have smaller death benefits. They are designed to be easy to qualify for, even for people with health problems or other issues that might make it difficult to get traditional life insurance.
How does a burial life insurance policy work?
Burial life insurance works by providing a death benefit to the policyholder’s designated beneficiaries upon the policyholder’s death. The beneficiaries can use the death benefit to cover the policyholder’s funeral and burial expenses, as well as any other end-of-life expenses.
To purchase a burial life insurance policy, the individual will typically have to complete an application and go through a medical underwriting process to determine their insurability. Once the policy is issued, the individual will typically pay a fixed premium on a regular basis (e.g. monthly, annually) to keep the policy in force.
In the event of the policyholder’s death, the beneficiaries will typically have to submit a death claim to the insurance company, along with any required documentation, such as a death certificate. Once the claim is approved, the death benefit will be paid out to the beneficiaries.
How do burial life insurance policies differ from traditional life insurance policies?
Burial life insurance policies and traditional life insurance policies are similar in that they both provide a death benefit to the policyholder’s designated beneficiaries upon the policyholder’s death.
However, there are a few key differences between the two types of policies:
- Death benefit amount: Burial life insurance policies typically have smaller death benefits than traditional life insurance policies. The death benefit is usually enough to cover the policyholder’s funeral and burial expenses, as well as any other end-of-life expenses, such as outstanding medical bills or unpaid debts. Traditional life insurance policies, on the other hand, can have much larger death benefits that can be used to provide financial support for the policyholder’s family or to cover other expenses.
- Underwriting: Traditional life insurance policies generally require more extensive underwriting than burial life insurance policies. This means that traditional policies will typically require a more detailed application process, including a medical exam, and may be more difficult for people with certain health conditions to qualify for. Burial life insurance policies are usually designed to be more accessible and easy to qualify for, even for people with significant health problems.
- Premiums: Premiums for burial life insurance policies are typically higher than term life policies because the coverage is for the lifetime of the policyholder. Traditional life insurance policies can have a range of premium options, term life policies typically have lower premium than permanent policies, but in return the coverage is for a specific period of time and not for the lifetime of the policyholder.
- Purpose: Burial life insurance policies are specifically designed to cover the costs of a person’s funeral and other end-of-life expenses. Traditional life insurance policies can be used for a variety of purposes, such as providing financial support for the policyholder’s family, paying off debts, or leaving a legacy.
It is important to note that burial life insurance policies are not the only options to cover final expenses, but it is one of the most common and straightforward ways to do it. It is also important to consider other options as well, such as savings accounts, trusts, or even a prepaid funeral plan.
Who Should Consider Buying Burial Life Insurance?
Here are a few groups of people who may want to consider buying a burial life insurance policy:
- People who are concerned about leaving their loved ones with the financial burden of paying for their funeral and burial expenses.
- People who are unable to qualify for traditional life insurance policies due to health issues or other concerns.
- Elderly individuals who want to ensure that their funeral and burial expenses are covered and that they do not become a financial burden on their loved ones.
- People who do not have enough savings to cover their final expenses and want to have a plan in place.
- People who want to ensure that their final expenses are covered but do not want or need a larger death benefit.
How to Choose a Burial Life Insurance Policy
When evaluating different burial life insurance policies, it’s important to consider the following factors:
- Death benefit amount: Compare the death benefit amount offered by different policies to determine how much coverage you will need to cover your final expenses.
- Premiums: Compare the premiums of different policies to find one that fits within your budget. Remember that burial life insurance policies typically have higher premiums than term life policies.
- Underwriting: Consider the underwriting process of different policies and whether you will be able to qualify for the coverage you need.
- Guaranteed or Simplified Issue: Some policies are guaranteed issue which means that you will not be required to answer any health question or pass any medical exam, however, the death benefit is usually smaller and the premium is higher. Simplified issue policies usually require a few health questions but no medical exam.
- Graded death benefit. Does the policy you are considering have one? If so, how long is it? Graded death benefits are waiting periods. You must own your policy before it will begin covering the insured for natural causes of death. All guaranteed issue life insurance policies will contain one.
- Insurance company’s ratings: Look at the financial strength ratings of the insurance companies offering the policies to ensure that the company is financially stable and able to pay out claims.
- Policy terms: Review the terms of the policy, including the length of coverage, how the death benefit is paid out, and any exclusions or limitations.
- Flexibility: Look for policies that offer flexibility in premium payments, death benefits, and other options to suit your needs.
It’s also important to read the policy’s fine print and ask questions to the insurance agent or company if you have any doubts or concerns.
How to Apply for Burial Life Insurance
Applying for burial life insurance is fairly straightforward, but the process can vary depending on the specific policy and the insurance company you choose.
Here are the general steps for applying for a burial life insurance policy:
- Choose a policy: Compare different policies and insurance companies to find one that meets your needs and fits within your budget.
- Gather information: Have your personal information, including your name, date of birth, and contact information, as well as information about your beneficiaries, ready when you apply.
- Complete the application: Fill out the application provided by the insurance company. Some policies may require a medical exam, while others may not. Some policies may require answering some health questions, while others may not.
- Submit the application: Submit the completed application, along with any required documentation, such as a copy of your ID and a copy of your beneficiaries’ ID.
- Wait for approval: The insurance company will review your application and determine your eligibility for the policy. This process usually doesn’t take that long and in some situations (guaranteed issue life insurance) may be immediately.
- Pay the premium: Once your application is approved, you will be required to pay the first premium to keep the policy in force.
- Review and sign the policy: Review the policy carefully, make sure you understand the terms and conditions, and sign the policy if you agree with them.
It’s important to note that the process can vary depending on the company, some companies may require a medical exam, others may not, some may require to answer some health questions, and others may not.
Some companies may offer the policy’s approval instantly, others may take some time. It’s always a good idea to ask questions and clarify any doubts you may have with the insurance agent or company.
Clearly, we here at IBUSA think it’s a good idea to own a life insurance policy at the time of your death. And if all you need is a small amount of coverage, a burial life insurance policy might be just right for you.
That said, however, not everyone is going to agree with us, which is why we wanted to end our discussion here by listing 5 of the most common objections we hear from people who aren’t ready to purchase a burial life insurance policy, along with our rebuttals.
Common objections to buying a burial insurance policy with rebuttals
“I’m too young to think about death.”
It’s never too early to plan for the future and ensure that your loved ones are taken care of in the event of your death. Buying a burial insurance policy at a young age can also lock in lower premium rates.
“I already have life insurance.”
- Is it whole life insurance or term? If it’s a term life insurance policy, how can you be certain you won’t outlive that policy?
- Is it through your work, or do you own it yourself? If it’s through your work, what happens if you quit, get fired, or retire? What happens if you get too sick to work? will you still be able to keep this policy?
“I can’t afford it.”
Burial insurance policies can be affordable, with options available to fit a variety of budgets. Additionally, many policies have flexible payment options and do not require a medical exam.
“I don’t want to think about death.”
While it can be uncomfortable to think about death, planning for the future can provide peace of mind for both yourself and your loved ones.
By purchasing a burial insurance policy, you can ensure that your loved ones will not be left with financial burdens in the event of your death. So, don’t think about death, think about what kind of life you want your loved one’s to have after you’re gone.
“I don’t think I need it.”
Even if you believe that you don’t need burial insurance now, it’s always good to have a backup plan. You never know what the future holds, and it’s always better to be prepared than to be caught off guard.
Additionally, there are a lot of really wealthy people out there who don’t contain much of their money in liquid assets, which is why having a small life insurance policy that is paid out quickly can be quite helpful, even to those who may not “technically” need the money.
We hope that you found this article helpful. We encourage you to give us a call should you have any questions.