What is burial insurance and do I need it?

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Whether you are preparing for a loved one or yourself, you may be wondering if being proactive by purchasing burial insurance coverage is really worth it. So what exactly is burial insurance, and what benefits does it offer?

Burial insurance is insurance where you choose the amount of coverage you want and then decide on a beneficiary to receive the funds once you pass away. When this occurs, your beneficiary will call the company the insurance was purchased through and begin a claim. Once the claim is processed, they will have access to funds for burial expenses. The beneficiary may need to provide identification and a certified copy of the death certificate to ensure the claim is processed correctly. 

What types of Burial Insurance exist?

When considering burial insurance, there are three main types:

  • Simplified: This type of coverage doesn’t require a medical exam, but the insurer will likely evaluate your health using a medical questionnaire. Some pre-existing conditions may disqualify you from this type of policy.
  • Guaranteed: This policy will approve everyone as it doesn’t require a medical exam or questionnaire. However, the premiums are often much higher.
  • Pre-Need: This is a contract with the funeral service provider, products and services are selected, and the money goes directly to the provider.

What does a Policy cover?

When choosing a burial insurance policy, you can expect a standard policy to cover the following:

  • Funeral expenses: The cost of a funeral varies considerably based on the type of burial chosen. On average, a funeral costs $7,640 for the viewing and burial.
  • Cremation expenses: If you choose cremation, burial policies often cover this fee which averages $3,000-$4,000.
  • Miscellaneous expenses: There are a variety of other expenses that burial insurance may cover. This includes medical bills, credit card debt, and mortgage loans that need to be settled.

The downside of Burial Insurance

Like many other things, burial insurance also has its drawbacks. The high cost of burial insurance compared to different regular life insurance types can be prohibitive to many.

In addition, many policies have a contestable period, usually two years after you start the policy. If you pass away in that period, the provider may refuse to pay your claim. If you aren’t sure about a burial insurance policy, consider a term life policy instead. They are typically far less expensive, and you can often get significantly more coverage. You could also put the monthly premium into a money market or other savings account. While it will likely take longer to reach the desired amount, you won’t have the risk of buying a policy that won’t pay out.

Although a conversation about a burial insurance policy likely isn’t the most enjoyable, in the right situations, they can significantly help your family down the road and give you peace of mind knowing they won’t be burdened by the expense of your funeral costs. Regardless of what you decide, even putting a bit aside in a savings account will help offer your family some aid when the time comes.

We specialize in educating and helping you protect what you have for the people you love the most. Contact us to learn more about how we can help. www.pecorielderlaw.com

At Pecori & Pecori, we help you protect, plan and prosper.

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