Finding a suitable life insurance policy is never easy to do on your own, especially as a senior. Luckily, many life insurance companies offer a type of life insurance known as burial life insurance. These types of insurance plans have been designed with the elderly in mind.
A burial life insurance plan can help pay for funeral costs along with other smaller final expenses that could potentially be passed onto loved ones after death. These plans help eliminate this financial burden by offering lower coverage amounts compared to traditional life insurance policies.
The similarities and differences between burial insurance and traditional life insurance can cause confusion. This is especially true when there is not a significant need for a large amount of coverage.
If you’re a senior who is looking for a cost-effective way to financially plan for funeral costs, we have put together this simple guide to the benefits of burial insurance for seniors.
What Is Burial Insurance for Seniors?
As a senior, there is an excellent chance you have seen life insurance being marketed to you as one of the following:
- Burial Insurance (very commonly used term)
- Final Expense (2nd most frequently used term)
- Funeral Insurance
- Funeral Expense Insurance
- Elderly Insurance
- Senior Insurance
All of the names that are used to refer to as burial insurance for seniors equal one thing, and that is life insurance. Regardless of what you call it, burial insurance is a form of “non-participating” whole life insurance.
A whole life insurance policy is classified as permanent life insurance, which means that it will never expire as long as the premium payments are made when due.
Common Features Included with Burial Life Insurance Plans
- Whole Life Insurance – Permanent life insurance
- Affordable fixed premiums for life
- Cash values that will grow over time
- Simplified no medical exam underwriting
- Fast and simple application process
- Approval in just a few days or quicker
Burial Insurance Versus Whole Life Insurance
Although burial insurance is a form of whole life insurance, there are differences between a burial insurance policy and a traditional whole life insurance policy.
The main differences between the two options include the total obtainable amount of coverage, underwriting process, cash value potential, available policy riders, and how the death benefit payout will happen.
BURIAL INSURANCE VS. WHOLE LIFE INSURANCE
WHOLE LIFE INSURANCE
|DEATH BENEFIT AMOUNTS:||$1,000-$50,000||$25,000-$10,000,000|
|HEALTH CLASSES:||Standard Rates||Preferred & Standard Rates|
|RIDERS:||Limited Options||Multiple Options|
|COVERAGE DURATION:||Guaranteed to age 120||Guaranteed to age 120|
|UNDERWRITING PROCESS:||No Medical Exam Required||Exam & No Medical Exam Options|
|CASH VALUE POTENTIAL:||Moderate||High|
|DEATH BENEFIT PLANS:||Level, Modified & Graded||Level|
Total Coverage Amount
Burial Insurance death benefits will depend on the insurance companies offering the coverage. Typically the coverage amount can range from as low as $1,000 up to $50,000. This is often perfect for seniors, as over time, the need for larger amounts of life insurance generally diminish. As these policies are only intended to cover smaller expenses, they come with lower premiums compared to a traditional whole life insurance policy.
Whole Life Insurance death benefits allow for higher amounts of coverage. With whole life insurance, death benefits generally start as low as $25,000 and can go well into the million-dollar range. The total amount of coverage that can be purchased with whole life insurance will depend on financial justification. This means that the coverage must make financial sense based on factors such as current age, annual income, net worth, and other insurance that is current in-force.
A traditional whole life insurance policy can be quite expensive. It is an ideal life insurance coverage for younger people, as the premiums will be more affordable than if it were to be purchased in senior years. Out of all the different types of life insurance, whole life insurance is the most expensive.
Burial Insurance offers a streamlined application and underwriting process, making it easier for seniors citizens to apply for coverage. Burial insurance policies do not require a medical exam when you apply. Whether you are 50 years old or 89 years old, no exams are required at all. Qualification is based on answers to a series of medical questions that are listed on the life insurance application.
The insurance company will verify the responses to the application questions utilizing underwriting tools such as background checks, medical information checks, prescribed medication checks, and even a check of your driving record. Most applications can be completed online as well as over the phone. Since there is no medical exam required, most burial insurance policies can be approved within just a few days.
Whole Life Insurance, in some cases, can also offer the potential for a streamlined, no medical exam application process but only in certain circumstances. Most insurance companies will require a full life insurance medical exam when it involves higher amounts of coverage. The exam will consist of a blood and urine sample, blood pressure readings, height and weight, and health questions. This is all in addition to the actual life insurance application.
There are a few companies that will offer a no medical exam option, but the coverage is often limited to a maximum of $500,000 and usually has an age limit of 60 years old. After age 60, a medical exam will typically be required when applying for coverage.
Cash Value Potential
Burial Insurance is classified as non-participating whole life insurance. This means that it does not participate in receiving dividends. However, burial insurance policies do offer a guaranteed cash value account that will grow over time.
Seniors can benefit from this in cases of emergencies where fast cash is needed. If the life insurance policy has had some time to accumulate cash growth, a policy loan can be utilized to borrow from the cash value account.
Loans will have an annual interest rate that can range from 5% up to 10% depending on the insurance company. Policy loans typically do not have a time frame in which they need to be paid back, but it is essential to try to pay a little towards the outstanding balance if you. If you don’t, it can be deducted from any balance left in the cash-value account.
At the very least, be sure to pay the annual interest rate; otherwise, it can be taken out of any remaining cash value left in the policy. Policy loans are great when cash is needed, but it can harm the death benefit if there is an outstanding balance at the time of death. The insurance company will deduct any remaining balance from the death benefit to cover the outstanding loan.
Whole Life Insurance is often available in participating options. Some of the best whole life insurance companies have been able to pay out a yearly dividend to their policyholders consistently.
A dividend should be thought of like a bonus. If the insurance company has made profits, they share those profits with their policyholders in the form of a dividend. So, in addition to a guaranteed cash-value account, a whole life insurance policy can accumulate additional cash growth through dividends. It is important to understand that dividends are not guaranteed.
Available Policy Riders
Burial Insurance policies often offer a few different options to enhance the overall coverage by adding policy riders. These policy riders can be free, while others will cost an extra premium. A free policy rider commonly found on most burial policies is the accelerated death benefit rider. This rider pays out a portion of the death benefit if diagnosed with a terminal illness. This is commonly referred to as a living benefit since it allows you to access a part of your life insurance while alive.
An optional policy rider that is very popular with seniors who have young grandchildren is the Grandchild Rider. This rider allows grandparents to provide level term life insurance coverage on their grandchildren until the child has reached the age of 25. In most cases, the grandchild can convert their life insurance coverage into a permanent plan of their own when they have reached the age of 18.
Whole Life Insurance, as with burial insurance, also offers policy riders. With traditional whole life insurance, you will find yourself having several more options in terms of available policy riders. Some of the more popular policy riders available with whole life insurance include accidental death, chronic and critical illness riders, guaranteed insurability option, and waiver of premium.
Death Benefit Payout
Burial Insurance offers three types of potential death benefit payouts. The first type is for seniors citizens who are relatively healthy, with no serious history of any health. This type of death benefit plan is what is known as a level benefit plan or an immediate benefit plan.
- The level benefit plan offers full death benefit protection beginning the first day the life insurance policy goes into effect. Since this plan is based around healthy seniors, it will result in the most affordable burial insurance rates.
The second death benefit payout is what is called graded death benefit.
- The graded benefit plan is designed for seniors that may have a health condition, either present or past, that would prevent them from qualifying for a level benefit plan. Since it is a common occurrence to experience health changes with age, this plan is designed to accommodate some of those health changes. So, rather than the insurance company declining a senior with a less than favorable health history, the insurance company may offer a graded death benefit plan. This plan restricts the full death benefit payout to a specific percentage for the first two policy years. For example, if death occurs within the first policy year, the death benefit may only payout 30% of the full coverage amount. On policy year two, it may raise to a 70% payout. With most graded benefit plans, beginning policy year three, and forwards, 100% of the death benefit will be paid out.
The third death benefit payout is what is called a modified death benefit.
- The modified benefit plan is very similar to the graded benefit plan in that it has a two-three year wait before the full death benefit is payable. The most considerable difference between the graded plan and modified plan is that the payout on a modified plan if death occurs during policy years one through two, is a full return or premiums plus interest of generally 10%. After policy year three, the full death benefit is payable at the time of death.
Whole Life Insurance is very straightforward as it is only available in a level benefit plan. Rather than modifying the death benefit payout for applicants with less than favorable health, they are underwritten using a health risk classification table. If you are healthy, there is an excellent chance you will qualify for a favorable health risk classification. In return, your premium payments will be the most affordable for the coverage being applied for. However, if you have a history of health issues or currently experiencing some medical issues, you may receive a higher health risk classification. A higher risk classification can result in higher premiums.
Why Should Seniors Get Burial Insurance?
With the average senior funeral plans costing an average of $10,000 or more, it is a significant financial burden for those left to cover the costs. Burial insurance offers peace of mind in knowing that your loved ones do not need to handle this burden on their own.
In most cases, as we get older, the need for larger amounts of life insurance protection dwindles down. After all, by this time, young children will most likely be young adults, possibly starting their own families. Home mortgages may be paid off or close to being paid off. You may even be retired, so the need to replace employment income to a surviving spouse is no longer needed.
Even with a lower need for life insurance coverage in senior years, most people will still require some form of life insurance protection — this why a burial insurance plan may be the best choice for insuring these low coverage needs.
Common Final Expenses That Can Occur After Passing
- Burial & Funeral Costs
- Medical Bills
Throughout this article, we established that one of the primary reasons to purchase burial insurance as a senior is to cover burial and funeral costs. But what about other expenses? Is the life insurance coverage restricted to only those costs?
The answer to this question is no.
There are no restrictions on how your beneficiary uses the death benefit proceeds. It is not uncommon for other expenses to arise, such as medical bills not covered by health insurance or Medicare.
There is even a good chance that there will be other debts such as legal bills, credit card bills, assisted living bills, loan balances, and other debts. Burial insurance can help pay for all of these expenses, so the burden is not left on a loved one.
How Can You Make Sure Your Final Wishes Are Carried Out?
Ideally, you will want to verbally communicate with your loved ones and inform them about your life insurance coverage. Discuss your final wishes and how you would like the death benefit proceeds to be used. Talk about funeral arrangements and even potential debts that will need to be taken care of.
If you would like to keep things a little more private, another option is through a last will and testament. This allows you to control how your final wishes are to be carried out through legal documents. It is essential that when using a will and last testament, be sure to name an executor. An executor’s job is to ensure that your final instructions are carried out as planned.
A third option is through pre-paid funeral planning. A pre-paid funeral plan has both pros and cons but can be an effective way of making sure all of your funeral arrangements are taken care of. This option works by working with a funeral home of your choice to pre-arranging your complete funeral plans.
If you choose to prepay your funeral expenses, there are a few things to be cautious of.
#1. If you prepay an entire funeral in advance, consider what could happen if the funeral home goes out of business. Make sure to find out what would happen to your money if this were to happen. Would your money be refunded?
#2. When choosing a funeral home, be sure to do your research. Work with a funeral home that has a long history in the business. More importantly, check online reviews to make sure you’re working with a reputable company that has positive reviews left by customers or family members of a past customer. An excellent place to view online reviews is through Google search, the Better Business Bureau, or review sites such as Dignity Memorial, which allows you to search funeral homes and reviews based on your zip code.
#3. If you’re considering moving to another state anytime in the future, pre-paying for your funeral could become a problem. Most pre-paid funeral plans are not portable and will not allow you to transfer the plan to a new funeral home.
Prepaying a Funeral the Safe Way
Prepaying your funeral can be done in a very safe manner without breaking the bank. An option we highly recommend utilizes a burial insurance policy as funeral insurance.
There are funeral homes that will work with the elderly to pre-plan for funeral expenses without having to make any payments upfront.
Instead of cash payment, some funeral homes will allow for a life insurance policy to be collaterally assigned to the funeral to pay for the cost of the funeral; this ensures that the funeral home will receive payment once the insured has passed away. Any leftover money is then paid out to the beneficiary, as long as the death benefit has covered the full cost of the funeral.
Other Types of Senior Life Insurance Plans
Are there life insurance options for seniors other than burial insurance?
Life insurance plans for seniors are not limited to only burial insurance. Many of the top insurance providers offer a variety of different senior life insurance plans such as term insurance and universal life insurance.
These options are available because it is not uncommon for seniors to require larger amounts of life insurance coverage outside of what burial insurance can provide. Term insurance, as well as universal life insurance, can both be great options for seniors who need traditional life insurance.
Why Seniors May Still Need Traditional Life Insurance Coverage
- Provide income to a surviving spouse
- Provide protection for a disabled child
- Provide funds to pay off a mortgage debt
- Provide funds to pay off large debts (credit cards, loans)
- Provide funds to pay estate taxes
If one or more of the above apply to you, consider looking into either term insurance or universal life insurance.
Term Life Insurance for Seniors
Term life insurance policies provide coverage for a set period of time, also known as contract lengths. Depending on your current age, contract lengths can be available in 10, 15, 20, 25, or 30 years. Throughout the contract, premiums will remain fixed (unless you purchase an AARP term policy, which increases every fifth policy year).
If you pass during the term period, the insurance company pays out the death benefit. When the term ends, you can generally renew coverage or convert the policy to permanent insurance.
Term life insurance for seniors can be a very affordable life insurance option. The life insurance coverage itself is the most affordable of all types of life insurance, including burial insurance. A term life insurance policy can be ideal when life insurance needs are higher, and budget is a factor.
Guaranteed Universal Life Insurance for Seniors
A second option that can be used for both funeral planning, along with providing coverage for higher insurance needs is guaranteed universal life insurance. Guaranteed universal life insurance is often available in death benefit amounts starting as low as $25,000 and as high as the millions.
Guaranteed universal life, or GUL, coverage is similar to term life insurance in the sense that it also offers a fixed premium. However, with GUL the premium is fixed and guaranteed for life. So rather than having a contract that will eventually expire, such as term insurance, GUL will last forever as long as premium payments are made.
GUL insurance does not focus on much cash value, whereas a burial insurance policy offers a guaranteed cash-value account. GUL insurance in many cases, can be a much more affordable permanent life insurance option.
Guaranteed Acceptance Life Insurance for Seniors
A guaranteed acceptance (GA) or guaranteed issue (GI) life insurance policy is a third type of senior burial insurance. We will admit, It is not our top choice for life insurance coverage but it can come in handy for certain clients.
With a GA/GI policy you cannot be denied coverage regardless or past or current health. The downside is that the life insurance coverage can be pricey and there is a two-year wait before the death benefit is payable.
Pros of Burial Insurance for Seniors
Burial insurance is not the only option for seniors wanting to provide their loved ones with coverage for funeral expenses. However, it can be the best option if your specifically looking to cover burial costs along with any other smaller final expense.
- Quick underwriting process
- No medical exams required
- Fixed monthly payments
- Guaranteed coverage
- Accumulated cash value
- Small face value options
- Faster claims payouts
Applications for burial insurance are completed using a simplified no medical exam underwriting process. These policies are designed to make obtaining coverage easier for seniors, especially for those with past or present health conditions. Most applications consist of basic personal information along with a series of medical questions.
The final expense insurance is also designed to be easily obtainable. The application process is available in a paper method or electronic method, which can lead to quicker approval times. In fact, most applications can be approved in less than a week from applying.
Funeral insurance policies come with affordable fixed monthly payments that can also be paid directly through your checking account or SSI payments.
The fixed premiums and guaranteed death benefit provide protection for life. You never need to worry about your premiums rising as you age. Your death benefit also remains set and never decreases.
Your policy accumulates cash value with each payment that you make. Borrowing against your policy may help cover medical expenses during your lifetime. However, it typically takes at least a decade to accumulate a sizeable amount.
One of the main reasons to consider getting low-cost burial insurance compared to traditional insurance is the coverage amount.
Burial insurance often comes with smaller death benefit options. You can get a policy as low as $1,000 or as high as $50,000. Many traditional policies require you to buy a minimum of $25,000 or more.
Most funerals are arranged within several days after death. Family members need to receive the payout quickly to help cover the costs, as this is the primary purpose of burial insurance.
With a traditional life insurance policy, it may take months before the insurance company pays the claim.
Cons of Burial Insurance for Seniors
While burial insurance includes many benefits, it may not provide the best solution for every senior.
- Less maximum coverage
- Possible higher premiums
- Fewer available riders and add-ons
- Age restrictions that may limit options
Some companies offer additional coverage up to $50,000 but most final expense policies limit the death benefit to $25,000 or less. If you require additional coverage, you may need to consider getting a traditional life insurance policy, such as term insurance or universal life insurance.
Another potential issue is the cost of the policy. Finding a cheap senior life insurance policy is not always easy, especially those with health-related problems. The premiums for a modified, graded, or guaranteed acceptance life insurance plan are often much higher compared to a level benefit plan.
Final expense policies typically include fewer available riders. Traditional life insurance policies often include a variety of available riders and add-ons that you can use to customize your policy.
For example, you may add a waiver of premiums to some standard life insurance policies. This rider waives the premium payments if you become critically ill or disabled.
Most funeral expense policies also have age restrictions. These policies are typically only available for those between the ages of 50 and 85. Here is a closer look at how your age may impact your options.
How Much Will Burial Insurance for Seniors Cost?
Burial insurance rates for seniors will vary based on a few different factors.
- Tobacco Use
- Coverage Amount
- Benefit Type (Level, Modified or Graded)
To provide you with an idea of what you can expect to pay for burial insurance, we have put together the following rate tables for all ages classes.
Rates often change, so please be sure to use our online burial insurance quote tool to get the most up to date rates.
Burial Insurance Rate Chart for Seniors
Burial Insurance Rate Chart for Seniors
Burial Insurance Rate Chart for Seniors
Burial Insurance Rate Chart for Seniors
How to Get the Best Senior Burial Insurance Policy
Obtaining a senior burial insurance policy follows the same process as purchasing traditional insurance. You will want to work with an agent or agency such as Top Quote Life Insurance to compare senior life insurance quotes from multiple insurance companies. This way, you will be able to shop your life insurance coverage to find the best plan that will meet your specific coverage needs.
If you’re looking to get coverage quickly, it will also be an advantage to work with an agent. As long as you can set aside 30-45 minutes, you and an agent can complete an online application within minutes of finding the perfect burial insurance plan.
To recap, keep in mind that a burial insurance policy for seniors provides several distinct advantages compared to other life insurance policies. These funeral policies typically come with a more lenient underwriting process, and many insurance providers accept those with health issues.
There are even options for seniors with moderate to severe health issues to still be able to obtain burial insurance. Those who fall under this class may fall under a burial insurance plan that offers a graded or modified death benefit. But keep in mind, in most cases starting year three, the full death benefit becomes payable.
Guaranteed life insurance policies also frequently include a waiting period before the death benefit activates. If you pass before the death benefit kicks in, your beneficiaries may not receive the death benefit payout but rather a full return of all premium payments paid plus interest of generally 10%.
Tips for Finding the Best Burial Insurance Plan
Some of the key considerations for finding the right policy include:
- Your age
- Medical history
- Monthly premiums
- Final expenses
Your age is the first detail to consider as you compare options. The younger you are, the more options you will have available to you. As with any insurance, age plays a significant role in the overall rates you will pay. So, with that being said don’t hold off if you are considering a senior burial insurance plan.
Along with age, medical history, and the cost of insurance, you need to think about the total cost of your final expenses. As mentioned, funeral plans for seniors can easily cost $10,000 or more. You may also want to cover any outstanding medical bills or debts.
It is easy to overlook some of the costs associated with burials. Depending on your preferences, you may need to cover:
- Funeral service
- Graveside service
- Memorial service
- Casket and headstone
- Cremation and urn
Consider your funeral plans and the total expenses when determining the amount of coverage that you require.
A Quick Note to Children of Elderly Parents
If you’re an adult child of an elderly parent and are concerned with the potential costs of a funeral, you may be eligible to purchase life insurance coverage on your parents. It is not out of the normal for adult children to buy life insurance coverage on their parents, especially if the parents are living on a fixed income and cannot afford life insurance protection.
There are a few factors that come into play when owning a life insurance policy on a parent or anyone else for that matter. For starters, there must be insurable interest between the insured and the individual who is wanting to own life insurance. In this case, the insurable interest would-be mom and dad.
The second qualifying factor falls under both insurable interest along with financial justification. The insurance company is going to want clarification as to what the financial loss would be to the policy owner should the insured pass away. In this case, it would be the cost of the funeral, burial and any other remaining final expenses that would be passed onto you.
Top Burial Insurance Companies
If you’re shopping for the best senior burial insurance plan, be sure to consider any one of the four companies listed below. As Top Quote Life Insurance works with multiple life insurance companies, the following four tend to be our top choice for senior burial insurance coverage.
These companies have a long company history, high ratings, multiple plan options, and affordable rates.
For additional resources and reviews, be sure to check out our full review of the Top 10 Best Burial Insurance Companies.
Final Thoughts on Senior Burial Insurance Policies
A senior burial insurance policy provides valuable life insurance protection against the costs of a funeral and final expenses. It is ideal for just about any senior citizen who is concerned with paying for those costs and them being passed onto loved ones.
No matter which type of burial insurance policy you qualify for, you can expect to pay fixed premiums along with permanent death benefit protection. Your premiums will also remain the same price while your death benefit will not decrease with age.
If you’re interested in exploring burial life insurance options, please allow us to help you. We currently work with over two dozen top-rated final expense life insurance companies. This allows us to shop for the best plans and the best rates for our customers based on their own unique life insurance needs.
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