Burial insurance is purchased with the intent to defray future costs associated with the death of the policyholder. The policy can cover expenses of a funeral ceremony, along with burial or cremation expenses. It can also cover some final medical or legal expenses. The policy coverage can minimize those final costs which can easily total several thousand dollars for a traditional burial. Burial insurance differs from a pre-paid funeral arrangement with a specific funeral provider, in that it functions similarly to a term life insurance policy.
The underwriting standards for burial insurance are generally less stringent than for traditional life insurance. There is usually no actual medical exam required, although the policy provider is likely to require input concerning current and recent health concerns. Coverage may include exceptions for a death occurring too soon after the initiation of the policy, as well as special situations such as suicide. The face value of a burial policy is usually lower than a more comprehensive life insurance policy, with total burial benefits ranging from about $3,000 to as high as $50,000. The non-taxable death benefit payment would be paid to the designated beneficiary named in the policy.The insurance provider may offer varying options. Some burial plans may include a cash value feature similar to whole life, as well as the possibility of a loan against the accumulated cash value. Some may require several years of level premium payments even as funeral costs rise in step with general inflation. Another plan might become fully paid with a single large premium payment.Burial insurance can be considered an integral part of the an overall financial plan by minimizing the eventual cost of death. The Social Security Administration’s lump-sum payment of $255 for decedent burials is almost negligible. A suitable burial insurance policy can minimize the cost of death and hopefully also ease the concerns of the survivors of the decedent when the inevitable eventually comes to pass.