What Is Burial Insurance?

Burial insurance helps families cover the costly expenses associated with a loved one's death. It is not intended to leave large sums to a beneficiary. With average costs as low as $30 a month, depending on age, gender and health, a burial insurance policy can prevent loved ones from paying funeral expenses out of pocket.

Keep reading to learn more about how burial insurance works, the specific costs associated with funeral expenses, the pros and cons of this coverage and how it differs from other life insurance policies.

On This Page

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  How Does Burial Insurance Work?

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  How Much Does Burial Insurance Cost?

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  How Much Does an Average Funeral Cost?

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  Are There Different Types of Burial Insurance?

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  Pros and Cons of Burial Insurance

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  What's the Difference Between Burial Insurance and Other Life Insurance?

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  FAQs

How Does Burial Insurance Work?

Burial insurance, also called funeral or final expenses insurance, is a form of whole life insurance that pays out coverage to the person named as the beneficiary to cover funeral expenses. A beneficiary is a person or entity who receives the death benefits from a life insurance policy when someone has passed. With burial insurance, the beneficiary may use the payout to cover medical bills, funeral arrangements, burial costs, cremation and other related items.^[1]

Burial insurance policies are not designed to leave much after the initial expenses are paid. In this sense, they differ from life insurance, which is intended to replace lost income or serve as an inheritance, giving family members and loved ones security and stability after someone has passed. However, funds left over from a burial insurance payout can be used for additional legal costs or debt.^[2]

Additionally, many types of burial policies will allow beneficiaries to use the death benefit as they see fit, even if they opt not to use the majority of it for funeral costs.

Policies must have premiums paid consistently for the life of the policy; otherwise, the policy may be cancelled. There may also be a waiting period of several years before your insurer will pay the death benefit, depending on whether you’ve taken a guaranteed or simple burial policy. ^[3]

A simple burial policy, however, does not feature a waiting period, but does require answering a questionnaire about health and lifestyle, such as whether you smoke or have been diagnosed with a terminal illness. If approved, coverage begins on day one.^[3] We’ll cover the differences between guaranteed and simple burial insurance later on.

How Much Does Burial Insurance Cost?

The average monthly cost for burial insurance ranges from $30 to $70, but actual rates depend on age, gender, health status, coverage limits and insurer. For example, older individuals at least 70 years old and with significant health conditions could pay $70 to $120. Younger policyholders in good health may pay $20 to $50 per month instead.^[4]

Women statistically live longer than men, so their rates are generally lower when other factors, such as age, are equal.^[5] Below is a breakdown of the monthly premium costs for men and women at different ages looking to get $10,000 worth of burial insurance coverage:^[4]

How Much Does an Average Funeral Cost?

The median cost for a funeral is $8,300, which may include the casket, funeral home fees, embalming, transportation and other related expenses.^[6] However, funeral costs can vary greatly depending on individual circumstances. For example, choosing a service that includes a viewing and memorial could add nearly $3,000 to the median cost due to the added preparation of the body.^[7]

Below is a breakdown of some of the potential costs for funeral services that include a viewing and burial, showing how quickly expenses can add up without burial insurance coverage:^[6]

Are There Different Types of Burial Insurance?

There are two main options for burial insurance:

Standard Burial Insurance

Standard burial insurance is sold as whole life policies and, like those policies, features a death benefit paid out upon your passing to cover funeral expenses and other final arrangement costs, including outstanding debts or medical bills. These policies can be either guaranteed issue or simple issue.^[4]

With a guaranteed issue policy, you don’t have to take a medical exam and can get coverage regardless of your current health condition, but premiums tend to be higher. These policies typically have a two- to three-year waiting period before beneficiaries are eligible for the death benefit. If you pass away during that time, your beneficiary may receive only a partial death benefit or have the premiums refunded with interest, depending on the policy.^[3]

Simple issue policies are usually less expensive and don’t feature a waiting period — allowing you to get coverage the day you enroll. However, you’ll typically need to answer various health questions, such as whether you smoke, suffer from chronic conditions or have a terminal illness. Your application could be rejected depending on your responses and whether you’re considered a higher risk.^[3]

Pre-Need Burial Insurance

Pre-need burial insurance is offered as an alternative option to standard burial insurance, and in some cases may be offered by funeral homes directly. These policies are paid out quickly upon your passing, meaning your beneficiaries won’t need to wait long to cover burial and funeral expenses. However, unlike standard burial insurance, pre-need is paid directly to the funeral home instead of a check for beneficiaries to use as they see fit.^[4]

While the lack of discretionary spending for remaining medical bills, credit card debts and other costs a death may leave behind is a negative, pre-need burial insurance can help you cover costs for services at a cheaper rate than you may pay in the future. This is because pre-need covers the cost of the services, even if they’ve increased in price since you enrolled in the policy. For example, a pre-need policy taken out for $5,000 would still cover the cost of the funeral that had increased to $6,000 over time without the beneficiaries having to cover the $1,000 difference.^[4]

Keep in mind that this guaranteed coverage works the other way as well. For example, if you purchased $5,000 of pre-need coverage and funeral expenses only cost $4,000, your beneficiaries would not receive the $1,000 difference as a death benefit.^[4]

Pros and Cons of Burial Insurance

Below are some of the pros and cons of burial insurance:

What's the Difference Between Burial Insurance and Other Life Insurance?

Burial Insurance is a life insurance designed specifically to cover funeral expenses. Standard life insurance, on the other hand, is meant to provide broader financial support for your family after your passing, including funeral costs, replacing lost income and covering other expenses.

Below is a breakdown of some of the differences between burial insurance and standard life insurance:^[8]