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Everything you need to know about Burial Insurance
It can be stressful planning for a funeral, and having the money that you need to cover the costs of a funeral or a burial is vital to your own finances. There are many things that you should consider when you plan a funeral; and having the right type of burial insurance is a must, so that you can rest assured that these costs are covered. With burial insurance, you are able to lift the financial burden of a funeral from your family so that they may be a little more stress-free during their time of grief.
Burial insurance is also referred to as “final expense plans.” In essence, these policies are small life insurance plans which are designed and aimed at the handling of the late expenses that a family will need to do.
Insurers will usually only offer burial insurance to people that are between the ages of 50 and 85. You will also be able to find companies that will offer burial insurance to those that are over the age of 85.
Knowing that most people will pay premiums in retirement and on a fixed income, average burial insurance rates range from $40-$100/mo. Higher if you’re in you’re over the age of 70.
Burial insurance plans are long-lasting life insurance policies instead of term policies that will have a certain time period. Burials insurance does not have a time limit. The policy will not expire as long as the premiums are paid. These policies will also have a cash value feature where tax deferred savings can be created over time. The funds that are built up can then be borrowed against, if the policyholder wants to. If a loan has been taken from these funds and is not paid then it will come off the policy’s death benefit.
The Two Benefit Levels
1. Level Benefit – when the application is approved then the full amount of the policy will be in force.
2. Graded Benefit – the full amount of this policy is only in force once the waiting period of 24 months has passed. If death happens to the one insured then the insurers will return the premiums that have been paid and will also put interest to this money. The interest that will be paid will vary with the carriers. However, around 10% is the most general amount. After 2 years, you get the full coverage amount.
Graded Life Insurance Plans
These policies and plans are generally for those that have poor health. They are Guaranteed Issue plans and they will not ask any questions related to health, which means you will be approved for this plan. If you suffer from a severe health issue then this plan is the one for you.
Level Benefit Plan
For one to qualify for this type of plan, the applicant is able to have a minor health issue that can be controlled through medication. As these small health issues can vary, you will need to speak to your lender to see if you qualify.
Burial insurance begins with the children of parents seeking a burial plan. If you want to apply for a plan, you will be able to become the policy owner as well as the beneficiary of the policy. Your parents will need to agree and sign the policy and the insurer will contact the ones being insured so that they can explain the policy and the application. This process aids in the prevention of fraud and will also protect your parents.
The age that most insurers will start to offer burial insurance plans to is 50 years of age, however there are some carriers that will be able to issue plans for people younger than this. Age 85 is generally the maximum age of issue. However, the older you are, the more expensive burial insurance begins to get overall.
How to Select an Insurance Plan
Burial insurance is like life insurance in the regard that the policy might be issued as a term or on a whole life basis.
A term life policy will offer financial protection for a certain amount of time which is usually up to the age of 80. If no claim has been filed during that time and the policyholder is still alive then the policy will expire.
Whole life policies, on the other hand, will cover you for your entire life and is not set on when death occurs. You may be able to get burial insurance quite easily under whole life.
A simplified issue plan is a plan you may qualify for, but you will need to complete a basic medical questionnaire and meet certain requirements.
A guaranteed issue plan, on the other hand, will not require you to fill out a questionnaire or undergo a medical exam. You are also guaranteed to receive this insurance policy. If your health condition is serious then you might have to buy an insurance policy that has a graded death benefit. This will then provide coverage after the first few years of your participation.
However, if these life insurance policies are not right for you then burial insurance may just give you the right type of coverage that you need. Before you buy a burial insurance though, you should compare quotes and policies to find the one that is best suited to you.
Burial Insurance Companies
We estimate there are over 100 life insurance companies offering burial insurance products. However, there’s a select few that have the best rates with premiums guaranteed level for the rest of your life. Currently, some of the best burial insurance companies based on price and financial strength are:
Mutual of Omaha
Americo
Monumental
Transamerica
5 Star
Gerber
Royal Neighbors
Settlers Life
Homesteaders
Each of these companies will base their pricing off of your unique situation. So just because your neighbor may have Mutual of Omaha giving them the best rates, Americo might have the best rates for you. An agent will help you find the lowest priced policy
Applying for a Policy
If you are applying for burial insurance then you will usually not have to undergo a medical examination. On the application, there will be questions that need to be answered. The insurance company will want to know:
- How old are you?
- What is your gender?
- What is your height?
- What is your weight?
- What are your smoking habits?
- Do you you drink alcohol? And how often?
- What is your occupation is and income?
- Do you have any dangerous hobbies and what is your lifestyle like?
Applicants are approved quite quickly for burial insurance as there is no medical examination. Generally the insured will also be given the choice of how to pay their premiums.
Payment Plans For Premiums
They can choose to pay the premiums on a monthly basis, or they are able to pay the premium as one lump sum with burial insurance. When a lump sum is paid then the policy will directly pay out and there will not be any other premium payments to make.
Another payment option that is available is “paid up in 3, 5, 10 years”. With “paid up” payments, the individual that is insured is able to decide how long they would like to pay the premiums and the insurance company will then provide them with the coverage that is equal to the premiums they paid.
The Benefits of Burial Insurance Plans
Burial insurance is perfect for those that are looking for an alternative to the high premiums for life insurance. The benefits of burial insurance include:
- The monthly premiums are low
- The coverage that is offered is between $2500 to $35 000
- You are able to apply up to the age of 85
- You will not need to have a medical exam
- If you have a health issue you may still be able to get burial insurance
- The premiums are steady
- The policy creates a money value
What a Burial Insurance Policy Can Do
When a member of the family dies, the costs involved with their funeral and burial will then be passed to you. The financial weight of covering the funeral costs will then be passed to your family. Funerals can be quite an expense and the costs of a funeral may include:
- The funeral service
- Flowers, photos and other decorations for the service
- The costs of a funeral procession
- The cost of a casket and case
- The cost of a plot and a headstone
- Accommodation for guest, refreshments, etc.
The costs of a funeral can vary and there is always the chance of unexpected costs. Having burial insurance is a great way to plan for your death. Your loved ones will then not have to carry the financial burden of covering your funeral.
Before you take a burial insurance, you need to calculate what these final expenses are going to be. You will need to think of how you would like to be remembered, where you want to be buried, do you want to be buried or cremated, and so on and so forth. It is best to talk to a licensed funeral director so that you able to get better idea of the costs.
An immediate plan will provide a modest service at the side of the grave with a simple casket. However, the costs of the headstone, plot, and flowers are not included and should be included in the estimate for your insurance provider.
A traditional full service includes a viewing, a hearse, a formal funeral ceremony, and burial or cremation. You will need to take into consideration any other additional costs so that you are able to get an accurate estimate.
You will then want to sign up for a plan that is able to cover your estimated costs based on the type of funeral that you want.
The value of your final expense is then shown in the cost of a ceremony, casket, plot, and other such details. An accurate quote estimation is a must so you can get a complete burial insurance policy and not leave any expenses with your family.
With burial insurance, you will be able to give your family less stress and no difficult financial responsibility, so that they are able to grieve your death in peace, the way they should.