Average Burial Costs

The National Funeral Directors Association (NFDA) tells us that an average funeral in 2004, including casket, was $6,500. Traditional burial services were not included in this amount. Indeed one might suspect that many expenses associated with a burial were not included in this number:  burial plots, travel costs for family, limousine service, transport of a body, flowers, headstones, etc. This number also doesn’t comprehend  outstanding medical bills, or bequests. Additionally, those living in large urban areas could easily have spent twice this amount on a burial.

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Investing In Burial Insurance

As we age healthy individuals normally think more about issues that might arise at the end-of-life, including burial arrangements and provision for debts burdening those that are left behind. Having considered insurance for our burial we may wonder if we can afford the price of a policy. We may also have concerns about our health, if existing health issues would make us impossible to insure.

Different Burial Insurance Types

There are very different forms of life insurance policy that are confusingly called Burial Insurance. Burial Insurance is sometimes referred to as Final Expense Insurance, which may be proper depending upon the policy.  It is also, usually inaccurately, referred to as Funeral Insurance. Confused? Don’t worry we’ll show you how to easily sort them out: burial insurance policy types can be easily distinguished by

a) what the proceeds may be used for,
b) who sells the policy, and
c) where it is can be bought.

How These Policies Are Alike

All Burial Insurance policies are alike in this way – every burial insurance is actually a small “face value”<u>life insurance</u>  policy designed to be easy to afford and to be easy to issue. At bottom the transaction for each policy type is the same – when the policyholder dies the “face value”, or benefit amount, is paid to whomever is named on the policy – the “beneficiary”.

Funeral Insurance is a “Pre-Need Plan”

This type of policy is aptly named and an easily distinguished burial insurance type because it quite clearly is aimed at pre-planning one’s funeral. Here an individual buys a policy of a face value sufficient to cover only the cost of his funeral. The proceeds are usable only for funeral expenses, and the named beneficiary is always a funeral home. Not surprisingly these are sold overwhelmingly in funeral homes, by funeral directors, typically to those who have recently attended funerals there.

If your circumstances are such that you need only the cost of the funeral itself then this policy type is very convenient. You can meet a funeral director choose a casket, and quickly arrange other services that need to be provided by the funeral home. Costs will be detailed, added up and a policy written for the face amount needed to cover the proceedings. If you are buying this policy type ask extensive questions and read all forms thoroughly placing your signature. You want to lock in today’s internment costs, not be surprised by additional fees later on. Also you will want know about transferring the policy to another funeral home company or to another location of the same company.

Burial Insurance = Final Expense Insurance

Burial Insurance policies and Final Expense Insurance policies are exactly the same thing; we’re going use the term burial insurance to mean both for convenience sake. Burial Insurance policies are more flexible than funeral insurance “pre-need plans” in several ways. Most important is that the proceeds may be used for any purpose – burial expenses of course, but also for outstanding debts to be paid, bequests to individuals can be specified, or just leaving a cash balance for your beneficiary is possible. Your choice of beneficiary is not limited.

Burial Insurance policies are bought from licensed insurance agents, often independent agents who specialize in this type of policy. Purchase of these policies is often completed in your own home. Designed for easy issue burial insurance can also be purchased over the Internet.

Insurance With No Physical Required

Burial insurance is designed to be readily purchased by people between the ages of 50 and 80 who are in a reasonable state of health – not perfect health mind you, just reasonable. You should attempt to obtain one of these “simplified issue” policies first as their cost will be the lowest and the face value benefits will be payable immediately.

If you don’t qualify for “simplified issue” due to an existing medical condition, and a good insurance agent can advise you about this, then “guaranteed issue” policies are available. These “guaranteed issue” policies require no physical exam and can be put in place immediately. Their cost will be somewhat higher on a monthly basis, and the face value benefit will not be payable until a waiting period has been completed. Typically the waiting period is two or three years and if the insured party passes away before that time benefits will not be paid. The good news is that all payments made will be returned, usually with interest.

What To Look For When Choosing Affordable Burial Insurance

When looking for affordable burial insurance you should ideally seek out the following:

Coverage for your lifetime
Premiums that never increase
Policy cash value grows
Full benefit paid as soon as policy is issued
Benefits are paid tax-free

In addition to the expense of burial itself many relatives have to travel on short notice, and that can get expensive. There may be debts left by the departed, medical expenses, or legal affairs that need settling which are other things to consider. No one wants to think about their loved ones passing away, however some advance planning can relieve a a good deal of the pressure during this stressful time.

Burial Insurance policies are, simply put, whole life insurance plans that are designed to be easily to apply for. Created with people aged 50 – 80 in mind these Simplified Issue policies ask just a few health questions, and most elderly people can qualify.

Guaranteed Issue plans ask no health questions at all. Instead of health questions these policies impose waiting periods to qualify applicants. With guaranteed issue policies the insured must survive two or three years before a death benefit will be paid. Should the insured not survive the waiting period these policies refund premiums and specified rates of interest. As the face values are small, affordability is a priority with the companies who provide these policies.

If possible, seek out simplified issue plans as premiums are less and the payouts don’t have waiting periods. If the applicant is ill or in a nursing home then  guaranteed plans are still a no-lose proposition – the beneficiary collects the premiums and interest even if the insured expires before the end of  waiting period.

Besides burial insurance for seniors there are other options in planning for last expenses. Money can be saved in an account set aside just for this purpose. Current savings could be placed into an earmarked account providing for a funeral.  If the money is at hand this is a good option because savings accounts earn interest! The negative often is that older people on fixed incomes have limited savings, and this money trickles away due to emergencies, medical bills or home repairs.

Another possibility is “pre-need” or “pre-paid” burial plans sold by funeral homes. These can work for some people even though they tie you to one funeral home or one funeral company. Additionally they will pay for the burial only, and not associated expenses like debts, legal fees, or airfares. Sometimes these accounts require interest payments and can end up being more costly in the long term.

Advantages and disadvantages exist with each of these approaches. If you are uncertain of what is the best course, consult with financial professionals. The best burial insurance option for you will be dependent on your individual circumstance.