Is Funeral Insurance Worth It and How It Works

Funeral insurance, also known as final expense insurance, can be a lifesaver for families who struggle with funeral expenses.

It's designed to cover the cost of funeral services, including burial or cremation, and other related expenses.

The average cost of a funeral in the US is around $7,000 to $10,000.

With funeral insurance, you can pay a premium each month to ensure that your loved ones don't have to worry about footing the bill.

This type of insurance can be especially helpful for people who don't have a lot of savings or assets to leave behind.

Funeral insurance can help cover a range of expenses, making it worth considering for those who want to ensure their loved ones aren't left with a hefty bill.

Funeral insurance can pay for burial plot and headstone costs, which can be a significant expense.

A burial insurance benefit is a modest payout that your beneficiaries can spend as they wish, including on funeral and burial expenses.

Some of the costs that funeral insurance can cover include vault, casket or urn, cremation, funeral home and memorial services, grave opening and closing fees, family and body transportation, and flowers and obituaries.

Here's a breakdown of some of the costs that funeral insurance can cover:

Final expense insurance can relieve the worries of your family members because it provides them with money they may need to pay expenses related to your death.

This type of insurance policy is convenient since it doesn’t require a medical exam and doesn't ask a lot of health-related questions.

The premium amount never changes, which can be helpful for budgeting. This makes it easier to plan for the future and ensure that your loved ones are taken care of.

Final expense insurance is flexible. Your beneficiaries can use the death benefit payout to help cover virtually any cost, like your funeral, medical bills, or even day-to-day expenses.

Here are some of the key benefits of final expense insurance:

Final expense insurance is generally more expensive than other types of life insurance, with lower available coverage amounts. Your age, health, and coverage amount will determine what you pay.

The costs of a funeral can be staggering, with a median cost of $8,300, according to the National Funeral Directors Association. This is the latest available data from 2023.

People who are healthy should not buy guaranteed issue policies because they will pay an unnecessarily higher price and coverage will not start on day one.

The cost of burial insurance tends to be on the pricey side, and rates go up with age. Try to buy burial insurance as soon as you know you need it.

Here's a breakdown of average monthly premiums for guaranteed issue policies - male:

Burial insurance will likely pay higher premiums or your beneficiaries will receive a lower payout. This is because you're paying for the convenience of being approved quickly and without much hassle.

Final expense insurance is a no-fuss option that eliminates the need for a medical exam. You'll simply answer some health questions to get approved.

One of the biggest benefits of final expense insurance is that your premiums are fixed and won't increase as long as your policy remains active. This means you can budget and plan with confidence.

Many life insurance products require a medical exam, but final expense insurance does not.

You'll just need to answer a few questions about your health when applying for final expense insurance.

Final expense insurance doesn't require a medical exam, which is one less thing to worry about.

This makes it a more accessible option for people who might not qualify for traditional life insurance.

Having a fixed premium is a great feature of final expense insurance, and it's reassuring to know that your premiums won't increase as long as your policy remains active.

This means you'll have predictable expenses and can budget accordingly. It's a big plus for those who value stability and don't want to worry about premium hikes.

With final expense insurance, you can rely on knowing exactly how much you'll pay each month. This can be especially helpful for those on a fixed income.

Here are some average monthly premiums for simplified issue policies by age and coverage amount:

For males, these rates are based on data from Choice Mutual, which reflects the lowest three rates for each age averaged, and is valid as of April 10, 2024.

Similarly, for females, the average monthly premiums are lower:

These rates are also based on data from Choice Mutual, and are valid as of April 10, 2024.

Guaranteed issue policies don't require medical questions, exams, or medical records. They're designed for people with serious health issues who might not qualify for regular life insurance.

You'll have to wait two to three years for benefits to be paid out. If you die during this period, your beneficiaries will get a return of your premiums, plus interest at an annual rate of 10%.

Guaranteed-issue burial policies are similar, but they're specifically created for people who are too sick to get life insurance. You'll need to be at least 50 years old to qualify.

If you die before the waiting period is up, the insurer will return your premiums to your beneficiaries. This is meant to prevent people from cashing out too early.

Beneficiaries can use the death benefit for any purpose they see fit. This flexibility is one of the key benefits of final expense insurance.

The death benefit payout can help cover a wide range of costs, including funeral expenses, medical bills, and even everyday living expenses. Your loved ones can use the money to pay bills, cover debt, or even create a legacy nest egg.

As mentioned in the article, final expense insurance can cover expenses related to a funeral service, a memorial service, embalming, a casket, cremation, placing an obituary in various newspapers, and flowers. This can be a significant help to those left behind.

Your beneficiaries can use the death benefit to pay off credit card debt, mortgage payments, or any other expenses they may have. The choice is theirs.

A summary of the uses of the death benefit is listed below:

This flexibility is one of the reasons why final expense insurance can be a valuable tool for those who want to ease the financial burden on their loved ones.

One of the main disadvantages of funeral insurance is that payouts can be relatively low, typically ranging from $2,000 to $40,000.

This may not be enough to cover the full cost of a funeral, which can easily exceed $10,000.

If you're looking for higher coverage, you may need to consider alternative options that offer more substantial payouts.

Burial insurance, in particular, often has a total payout limit of around $50,000, which is less than what you might expect from a standard life insurance policy.

In comparison, a wider life insurance policy can pay out around $150,000 or more to your beneficiaries.

Paying for stand-alone burial insurance may not provide the coverage you need, so it's worth exploring other options, such as a life insurance policy that covers funeral expenses.

Final expense insurance can be a real benefit to your family, especially if you're on a tight budget or have a family history of medical issues.

If you have enough money set aside to cover expenses after you pass away, then you don't need final expense insurance. However, many people are unaware of the high and growing cost of funerals.

A burial insurance policy can protect your loved ones from the considerable expense of a funeral and burial, but it usually involves paying higher premiums for less of a final payout.

A guaranteed issue or other burial insurance policy can provide fast access to thousands of needed dollars at a difficult time, especially if you're in ill health or can't afford a more extensive life insurance policy.

Social Security offers a death benefit, but it's just $255, and that might not be enough to cover all the expenses.

If you have an established family, whole life insurance can be an important part of your overall retirement planning, and additional insurance to cover final expenses can help ensure that your loved ones won't be burdened with debt.

Purchasing a burial insurance policy or a small life insurance policy designed to cover final expenses can help prevent the passing of any substantial debt to surviving family members, especially if you're single.

If you're considering funeral insurance, you might want to explore alternatives that can provide similar coverage at a lower cost. Term life insurance offers temporary coverage and can be a cheaper option if you're relatively healthy and willing to take a medical exam.

Term life insurance typically has lower average life insurance rates compared to other types of coverage. This makes it a good choice for those who are in their 50s or 60s and want to cover their funeral and burial expenses without breaking the bank.

You can also consider funeral insurance, which allows you to prepay for funeral and burial costs. This can be a good choice for those who don't have any other debt or expenses to take care of when they die.

Another option is to allocate money for your funeral or burial in your will, but be aware that the funds may not be paid out to your family in time. This can be a good temporary solution, but it's not a reliable way to ensure that your loved ones are taken care of after you pass away.

If you're looking for a more permanent solution, you can consider final expense insurance, which is a type of life insurance that can provide the financial resources to cover your final expenses. This can include funeral and burial costs, as well as outstanding debts and medical bills.

Here are some alternatives to burial insurance:

To buy a burial insurance policy, you should first figure out how much your funeral and burial expenses will be, plus any other funds your family might need to pay off your debts.

You may only need a small benefit for your funeral plans if you have enough savings to cover other expenses.

To get started, shop around and contact burial insurance companies for quotes based on your particular circumstances. Most companies can give you online quotes on their websites.

Application and approval can take between a few minutes to a few days, after which you can start paying premiums and rest assured that your funeral expenses will be covered.

To buy insurance, you should first figure out how much coverage you need to provide for your beneficiaries. This will help you decide how much you'll be able to cover with your remaining income and savings.

Shopping around is key, and most companies can give you online quotes on their websites. You may only need a small benefit for your funeral plans if you have enough savings.

Application and approval can take between a few minutes to a few days. You'll need to answer a few health-related questions for a simplified-issue plan, whereas a guaranteed-issue plan doesn't require that.

Once you've decided on your policy, you can start paying premiums and rest assured that your expenses will be covered.

You have the right to buy only the arrangements you want, rather than having to accept a package with items you don’t want or care about.

Funeral directors must present their price information upon request, and you don’t have to give them any personal information first.

You should receive a general price list of all funeral and burial-related services and items.

You have the right to a written statement detailing your choices before you pay for anything.

You have the right to a written statement describing any legal requirements regarding burials or crematory goods or services.

You have the right to alternative containers instead of a casket for cremation, like cardboard or pressed wood.

You have the right to provide your own casket or urn free of charge from the funeral provider.

Here are some key rights to keep in mind when dealing with funeral expenses:

Aflac offers final expense insurance at reasonable rates, and you can get approved quickly.

You can customize your coverage with several riders, so it's a good idea to discuss your options with an Aflac agent to get a quote today.

Coverage is underwritten by American Family Life Assurance Company of New York, and policies are issued in various states with different policy numbers.

For example, in Arkansas, Idaho, Oklahoma, and Virginia, policies are issued with numbers ICC18B61JWO and ICC18B61JTO.

You can also explore other life insurance options, such as burial insurance, to find the best fit for your needs.

Aflac Final Expense insurance coverage is underwritten by Tier One Insurance Company, a subsidiary of Aflac Incorporated, and is administered by Aetna Life Insurance Company.

In California, Tier One Insurance Company does business as Tier One Life Insurance Company (Tier One NAIC 92908).

Coverage may not be available in all states, including but not limited to, Delaware, Idaho, New Jersey, New Mexico, New York, or Virginia.