Funeral Insurance Plan Types: Final Expense, Burial, and Preneed

January 2, 2022

Life policies can be purchased to cover the costs associated with a person's death. Other life expenses such as holding a memorial service, paying outstanding medical expenses, and income replacement can be some of the many benefits of obtaining funeral insurance policies.

There are many funeral insurance plan types that you should know about. Following are details on coverage for the different kinds of policies available.

Final Expense Funeral Insurance

Final expense insurance can prevent your family from having to pay out of their pockets for your funeral expenses, which can easily exceed $10,000. Therefore, it's a good idea to have it.

The death benefit can range anywhere from $2,000 to $50,000, depending on the agreed-upon policy features. The death benefit is guaranteed as long as the insured continues making timely premium payments. Unless the insured has borrowed against the policy's cash value or requested accelerated death benefits, the death benefit will not be decreased.

Upon the death of the insured, the designated primary beneficiary will receive the death benefit, which can be used to pay for funeral services and any other outstanding life expenses. In the case that anything were to happen to the primary beneficiary, a contingent beneficiary is required to be provided to receive the death benefit. A final expense policy can be split between a primary beneficiary and a contingent beneficiary.

According to Choice Mutual, most insurance underwriters will charge $30-$100 per month for a $10,000 final expense policy. Applying for final expense insurance is a fairly easy process; the intended insured just has to answer some health questions and make sure to secure a premium for the lifetime of the policy. Some policies may be subject to a waiting period of 2 years before any death benefits will be granted.

Burial Insurance

There is no real difference between burial insurance and final expense insurance; both are the same whole life funeral insurance product. In many cases, people are more familiar with the term "burial insurance" and would be more likely to search for this service.

Burial insurance can imply an affordable policy that could be designed to pay all final expenses related to the death of a loved one. A burial checklist and estimates are being provided below for insight on what costs can be expected for these kinds of final expenses.

List of Funeral Prices

Make sure to check with a number of funeral homes to compare costs with the services and estimates shown below.

Simple burial or cremation service (no viewing or ceremony):

Traditional full-service burial or cremation service:

A funeral insurance policy could cover the costs shown above so that a family does not have to dip into their savings or ask around for money and contributions. During these moments when families are already struggling to cope with the loss of a loved one, the last thing needed is the strain of having to collect money to pay for these essential services. Whether your family plans on doing an immediate service or traditional full-service viewing and funeral home arrangement, it's highly recommended that these costs be provisioned for well in advance.

Pre-Need Funeral Insurance

The benefits of pre-need life insurance cover the costs of a funeral, cremation, or burial. Additionally, other traditional funeral home services such as memorial merchandise, church services, and other burial expenses are generally covered in this kind of policy. The purpose of pre-need life insurance is specifically for funeral expenses, mostly just covering the costs of the actual final expense.

Because the primary beneficiary is the funeral home in most cases, pre-need insurance is not typically recommended. You may not have coverage if the funeral home goes out of business or if you leave the state. The Funeral Consumers Alliance (FCA) advises against pre-need buying.

In conclusion, there are many types of funeral insurance options you can use to protect yourself and your family from unforeseen financial hardship. Planning for these circumstances can be done with Elder Needs Law, PLLC. Elder Needs Law provides Medicaid Planning, Estate Planning, Elder Law, and Probate & Guardianship services.