What is burial insurance coverage?

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Asked November 5, 2012

1 Answer

The term "Funeral insurance" is generally applied to any type of life insurance policy which is written with the express intent of paying for the deceased persons final expenses. This might include cremation or a full funeral. It is more common to find burial insurance available as a type of whole, or permanent, life insurance plan focused on older members. A number of burial insurance policies do not require a medical exam, making this vital aspect of life insurance available to those with preexisting conditions.

As the name implies, burial insurance is a type of whole life insurance written to cover a specific cost. By taking out a burial insurance policy, the burden of your final expenses will not fall on loved ones, but it will not pay out any money to your survivors either. This type of policy is commonly written in conjunction with a complete funeral plan, often coordinated by the funeral director of your final resting place. Services, plot, and maintenance are calculated into the plan, and the contract will remain valid regardless of how much the actual costs change due to inflation or other factors. Your final expenses are locked into the policy, and the beneficiary is typically the funeral home or director.

You can also write burial insurance into any whole life insurance policy by setting aside a portion of the policy value for that purpose. Whole life insurance policies allow you to name multiple beneficiaries and divide the proceeds in any way you please. This type of policy also has the ability to build value over time and allows you to borrow against the accrued value without regard to credit or collateral. If one is available, a whole life policy is the best option, but it may not always be a choice at all.

If you have preexisting conditions which present additional risks to the insurance company, you may not be eligible for permanent life insurance, but you can still get a burial insurance policy. Burial insurance is calculated to match the risks associated with those who may not have perfect health. It compensates for the increased risk by limiting the payout value. In many cases, the insurance company also absorbs any interest the policy premiums earn, further offsetting the potential loss the company faces.

Answered November 5, 2012 by Anonymous

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