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Understanding the Pros and Cons of Burial Insurance Policies

If you watch daytime or late-night TV, you have probably seen plenty of advertisements for a product called senior life insurance. These are also called burial life insurance, burial policies, and final expense insurance. Final expense insurance is the most descriptive name for what these policies are intended for, but they are actually a type of permanent life insurance with no exam required.

What are final expenses: Final expenses include the cost of burials and funerals, and the National Funeral Director’s Association says that these average over $8,000 in the United States. After a family member passes away, families may also have other expenses that they need to deal with. These could include settling financial accounts, clearing out a home, transporting the body, and even taking care of guests who come to mourn the funeral. In any case, these final expenses can put a big strain on a middle class family.

How Does Burial Life Insurance Pay Final Expenses?

The beneficiary to a burial life insurance policy is usually a adult child of an elderly person. In some cases, there may even be more than one beneficiary. These are the people who will be responsible for funeral arrangements, settling debts, and handling the estate. The senior life insurance policy pays cash to the beneficiary, and that individual is free to use the money in any way that he or she needs to. If there is money left over after obligations have been taken care of, that beneficiary is free to keep the rest of it to spend or save as she pleases.

Kinds of Burial Policies

It is important to note that there are two basic kinds of senior life insurance policies. Picking the right one assures you of the best possible price and benefits:

  • Simplified issue: These policies do require the answers to a few health questions, but these questions are only intended to decline the most seriously ill senior citizens.
  • Guaranteed issue: These are promoted very heavily on TV, and they ask absolutely no health questions at all.

Guaranteed issue and waiting periods: Getting life insurance for senior citizens without answering any health questions might seem like the best deal. But when life insurance companies don’t require any answers to health questions, they will impose waiting periods before the full amount of the death benefit will be payable to the named beneficiary.

Typically, this life insurance waiting period lasts for 24 to 36 months. Before it expires, a guaranteed issue life insurance policy will usually either do one of two things. They may offer to refund all premiums paid before the insured person passed away, and companies usually also pay interest on this sum. They may also offer to pay some percentage of the policy’s face value, and this face value increases over time. After the waiting period ends, the policy will pay the entire face value.

With simplified issue, when the applicant does need to answer a few health questions, the death benefit is immediately payable and life insurance premiums are usually also cheaper. If possible, it is better to qualify for senior life insurance by answering questions. Neither type of senior life insurance policy requires an insurance physical.

How Much Do Burial Policies Cost?

The price is based upon the age and location of the applicant. Sometimes there are also different rates for smokers and nonsmokers. Of course, insurers are free to set their own rate, so it is always important to compare senior life insurance rates.

This is an example burial policy price quote for a mythical applicant from a mythical insurance company in Arizona who is a 65-year-old woman who does not use tobacco products:

  • Death benefit of $10,000: $41
  • Death benefit $20,000: $79

You can see that it might be a lot easier to afford to pay forty bucks a month for a burial policy than to come up with $10,000 in one lump sum of money to pay a funeral home and handle other final expenses. Of course, these are only example life insurance quotes, and the actual price will depend upon available insurance companies in your city and other factors.

Who Qualifies for Burial Policies?

Insurance companies usually offer these products to applicants between the ages of about 50 to about 80 or even 85 years old. Rates steadily increase with age, so it’s cheaper for younger people to buy a policy than it is for older seniors.

Who pays for burial policies? While the applicant has to help with the application, he or she does not have to own the policy or even pay for it. Very often, the adult child of a senior will offer to pay the premiums because he or she is the one who will end up being responsible for funeral arrangements and other types of final expenses.

Senior Life Insurance with Higher Face Values

In some cases, seniors may need more than $5,000 or even $25,000 worth of coverage, and these are the limits of typical burial life insurance policies.  There are bigger whole life and even term life insurance policies for senior citizens.  Baby Boomer Concerns already covered some of this on the article with the title of Life Insurance Over 50.

However, insurers will probably want to ask a lot more health questions and may even require a life insurance physical. It is still possible to find term life with no exam up to about age 65, but after that, insurers start getting a bit picker about who they will cover for hundreds of thousands of dollars worth of life insurance.

This is an overview of the pros and cons of burial life insurance:

  • Because the face value is fairly modest, premiums are affordable for many senior citizens and their adult children.
  • Compared to other types of life insurance, premiums may be higher than they would be for fully-underwritten life insurance.
  • Burial policies are very easy to apply for, and they accept seniors with medical issues.
  • These policies pay cash, so they may provide an advantage over pre-planning for funeral expenses in another way.
  • Most companies accept applications over the phone or the Internet.
  • Consumers should shop around to compare burial policy quotes and find quality insurance companies.





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