Yes life insurance does cover funeral costs, cremation and other end of life expenses. In addition to this life insurance is the best way to cover funeral expenses considering the amount of flexibility life insurance offers. In this article we will cover how life insurance policies pay for your funeral, different life policies, beneficiary designations and claims.
Table of contents
- How Life Insurance can Cover Funeral Costs & Why You Should Use It
- All The Different Types of Life Insurance Work the Same Covering Funeral Costs
- Burial Insurance is The Best Type of Life Insurance for Funeral Expenses
- Filing Claims for Life Insurance Benefits to Pay for a Funeral
- Best Burial Insurance Companies for Seniors
- Frequently Asked Questions
How Life Insurance can Cover Funeral Costs & Why You Should Use It
Now the first step to making sure life insurance can cover your funeral is by making sure you have enough coverage to pay for funeral expenses. According to the NFDA a median cost of a funeral is $7,848 which means the amount of coverage you need would be at least a $10,000 life insurance policy to cover those expenses.
Keep in mind that cost will vary by state and funeral home which means you would want to consider a $15,000 life policy or a $25,000 policy to count for inflation. Having this amount of life insurance to cover funeral and burial costs should be more than enough.
Another factor to consider is the type of policy to cover final expenses. Different life insurance policies have different nuances to them but all life insurance plans cover funeral expenses in the same way.
All The Different Types of Life Insurance Work the Same Covering Funeral Costs
All types of life insurance like term life insurance, whole life insurance and final expense insurance provide a lump sum life insurance payout to the policy beneficiary. Your beneficiary can take the life insurance benefit and pay the funeral director and funeral home to cover the costs of your funeral.
This will cover the burial or cremation in full and whatever money is left over is for your beneficiary to use as they see fit. If you do not have a specific family member to take care of your funeral you can also name other entities or people as beneficiaries.
There are quite a few options when it comes to beneficiary designation on your life policy. You can name your local funeral home that you want to carry out your final wishes as a beneficiary on your policy. This means the life insurance face amount or a portion of it (however you designate on your policy) will pay out directly to the funeral home to pay for your final expenses.
Burial Insurance is The Best Type of Life Insurance for Funeral Expenses
Now Burial insurance policies(funeral insurance, cremation insurance, final expense insurance etc.) are the best type of life insurance to cover your final expenses. Burial insurance is a type of whole life insurance it is simplified issue whole life insurance or Guaranteed Issue Life Insurance. Those are the 2 different types of burial insurance which are a small whole life policy typically between $1,000 – $50,000 in coverage.
It is permanent coverage that never expires as long as premiums are paid. In addition to this there is no medical exam required to apply for burial insurance for seniors. All you have to do is simply answer health questions for the life insurance application and the life insurance company performs a health & prescription history check.
If everything checks out according to your answers you will be approved for the policy. This is what makes funeral insurance policies perfect for seniors because most seniors over 70 or seniors over 80 will have health issues that disqualifies them from other traditional life insurance policies.
Burial insurance may offer a lower benefit amount than traditional life insurance(benefit amounts between $50,000 – $1,000,000) but your chances of being approved for coverage if you are a senior with pre-existing conditions are very high. In addition to this if you are just looking for burial or funeral insurance you do not need coverage amounts that high. Coverage amounts that high are designed for protecting assets when you die such as an estate or business etc.
Other Types of Life Insurance
Now the other types of life insurance such as universal life insurance and term life insurance can also be used to pay funeral expenses. That being said both of those types of policies are not designed for covering funerals like burial and funeral insurance are.
A term life insurance policy is cheaper than a whole life insurance policy however it expires after a certain length of time. In addition to this it can be hard to qualify for due to the required medical exam for seniors that apply. Now Universal life is similar because that type of life insurance policy is designed to build cash value to become a funding vehicle for investment and retirement.
Universal life also requires a medical exam and strict underwriting. This means if you are a senior with health conditions applying for this coverage you most likely will be denied life insurance coverage.
Guaranteed Issue Life Insurance is a Last Resort
Among the types of funeral insurance is guaranteed acceptance life insurance which has no health questions or medical underwriting. Acceptance is guaranteed however there is a two year waiting period before the insurance covers the cost of funeral arrangements.
Now finding you burial insurance with no waiting period is our top priority. This means if your health conditions are too severe this would be your last and only option. There is a return of premium plus 10% benefit if you die within those two year but the goal is to make it through those two years and your beneficiary will receive the full death benefit
Filing Claims for Life Insurance Benefits to Pay for a Funeral
Now when the time comes and the life insurance has to be used to cover funeral expenses you are going to have to file a claim with the life insurance. The process for filing a claim is simple, first you are going to want to check your loved ones life insurance policy from their files to find the phone number for the life insurance company to file a claim.
If you cannot find the policy do not worry you can also call the life insurance company and the licensed life insurance agent listed on the policy. This would be the “writing agent” they should have a copy of the life insurance application from your loved one on file so you get all of the accurate information you need.
Once you have all of your loved ones information call the claim number to file your claim with the company.
Depending on the insurance company the claim will be processed and paid out usually between 14-60 days. If the life insurance company suspects anything and decides to launch an investigation this could make the payout take longer.
Best Burial Insurance Companies for Seniors
If you need burial insurance we are going to list below the best burial insurance companies for seniors that we work with. These companies provide life insurance to pay for any kind of funeral.
- Mutual of Omaha – Mutual of Omaha Final Expense Review Article
- American Amicable – American Amicable Burial Insurance Review Article
- Aetna Accendo – Aetna Funeral Insurance Review Article
- Prosperity Life – Prosperity New Vista Final Expense Review Article
- Greek Catholic Union – GCU Funeral Insurance Review Article
- Transamerica – Transamerica Burial Insurance Review Article
- Guarantee Trust Life – GTL Final Expense Insurance Review
- Gerber Life Insurance – Gerber Funeral Insurance Review Article
- American General Insurance Company – AIG Burial Insurance Review Article
- Great Western Life Insurance Company – Great Western Burial Insurance Review Article
Frequently Asked Questions
What Type of Insurance Pays a Death Benefit to Pay for Funeral Costs?
Final Expense Insurance(burial insurance, funeral and cremation insurance) is designed to be the type of policy to provide death benefits for funeral costs. Any left over money from the death benefit is for your beneficiary to use as they see fit.