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There are two types of burial insurance plans you can purchase — standard burial insurance or pre-need insurance. Each policy is designed for end-of-life expenses but the main difference will be who receives the death benefit proceeds. Costs for this type of life insurance will vary depending on your age, but as with other types of life insurance plans, bearing health complications, you will be able to get better rates at a younger age. Although you may already have life insurance coverage as a senior, a burial insurance policy can provide an added safety net for unexpected expenses.
What is burial insurance for seniors?
Burial insurance or final expense insurance is a life insurance policy that is designed to be used to cover end-of-life expenses. Typically, this type of plan is a whole life insurance policy with a smaller death benefit, usually less than $25,000, that will provide coverage for any expenses you leave behind after passing away. Some typical uses include:
- Memorial service
- Burial or cremation
- Casket, urn or headstone
- Outstanding debts
Since burial insurance is a whole life plan, there is no maximum coverage length — you will be covered for as long as you pay your premiums. Additionally, premiums are locked in, meaning they will not fluctuate.
Choosing the right death benefit for your burial insurance is crucial for getting the best policy possible and not overpaying in premiums. When first deciding on a burial insurance plan, you should try to estimate current prices for everything that will be needed for the funeral. After you have gotten a few quotes, you should then consider other expenses that may exist after your passing. For example, outstanding credit card debt or loans. These typical debts will, unfortunately, be passed onto your next of kin and are often forgotten during the planning process.
Once these costs have been approximated, you should match the expenses to a face value that fits your needs. You will find that most senior burial insurance plans offer between $2,000 and $50,000 in coverage. With the average cost of a funeral being around $9,000, you will have added flexibility if you want your life insurance to cover other final expenses.
Do I need a funeral plan if I already have life insurance?
Whether or not you need funeral insurance will depend on who you want the death benefit to go to and whether or not you have sufficient coverage. For example, say you have a term life insurance policy with $200,000 in coverage. You bought this policy with the intention of providing financial relief for your children’s college tuition in case you were to pass away. In this case, it would be smart to consider purchasing an additional burial insurance policy in which the death benefit could exclusively be used for your end-of-life expenses and your dependents could use the other plan for their education.
Other considerations are your current state of health and the length of your current policy. Say you have had term life insurance to provide financial protection but that policy only has 5 years left and your health is not in preferred status. Since you may not be able to renew or buy a new term plan, you may want to consider investing in a simplified issue whole life policy, which would provide coverage for the remainder of your life and only require you to fill out a health questionnaire.
Can I get a burial insurance policy with no waiting period?
It is possible to get a burial insurance plan with no waiting period. However, you may need to undergo a medical exam or fill out a health questionnaire before you are issued your coverage. All guaranteed issue whole life policies strictly require a 24- to 36-month waiting period. During this time, if you passed away, the death benefit would not be paid out and your beneficiary would be refunded the premiums. Life insurance companies set this rule to prevent sick individuals from purchasing a life insurance plan right before they pass away, thus reducing its risk exposure.
Burial insurance for seniors vs. pre-need insurance
There are two types of funeral expense insurance that you can purchase: standard burial insurance or pre-need funeral insurance. A standard burial policy is very similar to most life insurance plans. Death benefit proceeds will be paid out to your named beneficiaries who then can use that money for all final expenses or however they choose.
Pre-need funeral expense insurance, on the other hand, is more rigid and has some key differences that you should consider before choosing the best funeral insurance policy, including:
- Beneficiary: When purchasing this type of policy, you will name the funeral home as the beneficiary where any funeral arrangements would have been made prior to your passing.
- Death Benefit Proceeds: The death benefit would be paid directly to the funeral home and will equal the total cost for the funeral arrangements.
The one benefit of a pre-need insurance policy will be that you are billed for the funeral services up-front and therefore it takes out any planning your loved ones would have had to do. However, your dependents would not receive any of the death benefit proceeds and the premiums are often more expensive than other types of burial insurance.
Additionally, pre-need policies are not very flexible since the entire death benefit would cover the funeral costs. Most individuals may have debts that they have not paid off before they pass away. In this case, if you had a pre-need policy, your loved ones would be forced to pay for those expenses out of their own pockets. For this reason, we would recommend a standard burial insurance policy to most seniors, as these policies are much more flexible.
How much does burial insurance for seniors cost?
Burial insurance costs will vary depending on your age when you apply for coverage. Typically, funeral insurance coverage is best suited for people aged 50 to 85. To get the best rates for funeral insurance, we would suggest considering purchasing a policy during your early senior years.
For example, seniors in their 60s pay on average $43 per month for a policy with a death benefit of $10,000. If you were to wait until you were in your 80s, you would end up paying $136 on average, which is 68% more per month.
Burial insurance for seniors in their 60s and 70s
Seniors are able to get the best rates possible if they decide to purchase a burial insurance policy in their 60s. At this point, if you are in good health, you could alternatively decide to buy a small whole life insurance policy that will provide death benefit coverage for the rest of your life. Furthermore, if you decide to take a medical exam, you could further reduce the monthly premium you would have to pay for coverage.
Seniors in their 70s still have access to most types of burial insurance policies including standard whole life and no exam alternatives.
Burial insurance for seniors over 80
Most insurers will begin to restrict the availability of burial insurance policies once you have reached the age of 85, and you're unlikely to find a burial insurance plan with no medical exams or health questionnaires. However, you can still find coverage through reputable insurance companies. For example, Foresters offers its PlanRight whole life insurance plan, which has death benefit coverage ranging from $2,000 to $35,000 for those up to the age of 85.
Burial insurance for seniors over 90
If you are over 90 years old, it may be difficult to find an insurer willing to provide burial insurance coverage. Furthermore, it is almost guaranteed that no insurance provider will offer a plan with no health questions. At this point, average premiums can be more than $249 per month for a policy with $10,000 in coverage.
Average burial insurance rates were calculated on life insurance policies with death benefits of $10,000. Rates were pulled from five life insurance companies who offer simplified issue whole life insurance.