This page is for what burial (final-expense) insurance is, and the policy terms to check before you buy. Our other insurance pages: Burial insurance vs. life insurance, Life insurance, burial insurance or a prepaid plan, How life insurance pays a funeral home and Waiting on a life insurance claim.
What is burial insurance?
Burial insurance is usually a smaller life insurance policy sold around final expenses.
You may also see it called:
- final-expense insurance;
- funeral insurance;
- cremation insurance.
These names can sound like separate products. In practice, what you actually get, legally and financially, comes from the policy itself.
After.com's current burial-insurance content also describes it as a life insurance product aimed at end-of-life costs. See After: Burial Insurance.
Does the money have to be spent on burial?
Usually not, just because the policy is called "burial insurance."
If the policy pays a cash death benefit to a named beneficiary, that person generally gets the money under the insurance contract.
They may use it for:
- cremation;
- burial;
- cemetery fees;
- an urn or casket;
- a memorial;
- travel;
- household bills;
- other expenses.
Read the contract to check for any real restrictions.
Is burial insurance the same as a prepaid funeral?
No.
This one is worth remembering:
Burial insurance = insurance policy.
Prepaid funeral = contract or funding arrangement for future funeral services.
With insurance, the family usually gets money.
With a prepaid plan, the family usually gets the services in the contract, or the value tied to the arrangement.
What is guaranteed-issue burial insurance?
Some final-expense policies are sold with few health questions, or with guaranteed-issue underwriting (no health questions to qualify).
That can make coverage easier to get.
The tradeoff can include:
- higher premiums for the amount of coverage;
- lower benefit limits;
- a graded death benefit;
- a waiting period before full natural-death benefits.
Those details depend on the policy.
The word "guaranteed" in "guaranteed issue" doesn't mean every cause of death gets the full face amount right away under every policy.
What is a graded death benefit?
A graded-benefit policy can pay a different amount if the insured person dies from certain causes during an early period.
For example, a policy might not pay the full death benefit for a natural death in the first two policy years. Instead, that contract might return the premiums plus interest, or pay some other limited benefit.
There's no single graded-benefit design.
Ask the insurer for the exact schedule.
What should you compare besides the monthly premium?
A $45 monthly premium tells you almost nothing on its own.
Compare:
| Question | Why it matters |
|---|---|
| Death benefit | How much money is actually paid out? |
| Premium guarantee | Can the premium go up? |
| Benefit guarantee | Can coverage change while premiums are paid? |
| Waiting/graded period | Does full coverage start right away? |
| Cash value | Does the policy build value? |
| Lapse rules | What happens if you miss premiums? |
| Beneficiary | Who actually gets the money? |
| Total premiums over time | What might the policy cost over many years? |
Can burial insurance cover cremation?
Often, yes.
If the product is a life insurance policy that pays cash, the beneficiary can generally use the money for cremation.
That's why "burial insurance" can be a confusing sales term.
After.com also uses the term "cremation insurance" for small final-expense life insurance aimed at cremation costs. See After: Cremation Insurance.
Is burial insurance better than savings?
Not automatically.
Savings give you the money right away, and you can use it however you like.
Insurance can build a bigger death benefit sooner than you could save up yourself. That depends on the policy and on when death happens.
The comparison that helps is a personal one:
- What coverage do you already have?
- How much cash is there?
- Does anyone depend on you financially?
- How much might final arrangements cost?
- Can you keep paying the premium for years?
- Are you buying insurance, or reacting to marketing built on fear?
A useful buying rule
Don't buy a final-expense policy until you can explain it to someone else in one minute.
You should be able to say:
"I pay X. The death benefit is Y. My beneficiary is Z. Full coverage begins under these conditions. If I stop paying, this is what happens."
If you can't say that yet, keep reading.
Frequently asked questions
Is burial insurance the same as whole life insurance?
Many final-expense products are small whole-life policies, but designs vary. Check the policy type instead of trusting the label.
Does burial insurance have a waiting period?
Some policies do and some don't. Look closely at guaranteed-issue and graded-benefit products.
Can burial insurance pay for cremation?
Generally yes, when it pays a flexible cash benefit to the beneficiary.
Does it pay the funeral home directly?
Not automatically. The beneficiary on the policy, and any assignment (a signed transfer of some or all of the payout), decide where the money goes.
Is burial insurance worth it?
That depends on the benefit, the premium, your health, the coverage and savings you already have, your family's needs, and the policy terms.