No one wants to think about their death, but preparing for your last day will give your loved ones a financial safety net. Many people opt for a burial, but funeral costs add up quickly.
The average funeral costs thousands of dollars to orchestrate, but burial insurance can provide significant assistance with funeral costs. If you’re wondering what is burial insurance, today we’re going to break it down and help you make the best financial planning decision.
How does burial insurance work?
Burial insurance covers your funeral expenses. While you won’t live to see this insurance pay off, the insurance will help your family tremendously, especially if your loved ones will face financial turmoil as a result of your absence. Prioritizing a financial safety net now will take the financial stress away from your family during an already dismal situation.
Do I need burial insurance if I have life insurance?
Burial insurance is a separate life insurance policy. Even if you have a life insurance policy in place, you will need burial insurance to cover funeral costs. However, if the life insurance payout is large enough, your existing policy should comfortably cover funeral costs.
Is burial insurance cheaper than life insurance?
Burial insurance is cheaper than life insurance, but that’s because it’s limited to funeral costs. Although life insurance can generate high payouts, burial insurance is a much smaller payout because it’s a niche extension of life insurance. Burial insurance does help with funeral costs, but the financial safety net will be much larger if you pair it with a traditional life insurance policy.
How do you bury someone with no money?
If you cannot afford funeral costs, there are still options available to you. You can take out a personal loan or ask friends to contribute to the funeral financially.
As a last resort, you can reach out to your county’s coroner’s office and sign a release. The state will then cover the expenses. However, if you want to obtain ownership over the ashes following cremation, you will have to pay a fee.
Death is tragic in and of itself. Financial stressors only make matters worse. It is better to prepare ahead of time rather than leave your family to deal with the consequences later.
The MoneyLion Safety Net feature enables you to easily view your MoneyLion funds in one place. This clarity will provide the peace of mind of knowing how much funds you have to cover family emergencies and tragedies should they arise in the future. Build your financial safety net while you can so that your loved ones won’t have to worry about covering funeral costs.
What is covered by burial insurance?
Burial insurance will cover cremation or funeral costs. Whether burial or a cremation happens will depend on the decision you’ve made about the end of your life. Most insurance companies will put anywhere from $5,000 to $25,000 towards your funeral expenses.
How much does burial insurance cost?
Burial insurance costs vary depending on the insurer, your age, the payout you’re looking to secure for your family, and a handful of other factors. However, burial insurance policies are often relatively affordable.
Most policies tend to cost less than $50 per month. You may pay slightly higher premiums though because policies are shaped around you, your life, and your desired payout plan.
Example of a burial insurance policy
Both your age and the death benefit will play significant roles in the overall cost of your burial insurance premiums. A 60-year-old with a $10,000 death benefit may pay $43 per month in premiums if she is considered to be in good health. That same 60-year-old may only pay $23 per month in premiums if she is seeking a $5,000 death benefit.
These premiums will increase with age. So, for a 65-year-old, a $10,000 death benefit for a 65-year-old can command $56 per month in premiums. The $5,000 death benefit for the same individual may cost $29 per month in premiums.
3 burial insurance factors to consider
Before you start searching for the best burial insurance policy, here are some factors to consider.
How much burial insurance do you need?
Many people wonder how much burial insurance they think they will need. The average funeral costs $9,000 if you include a vault. If you want an above-average funeral or believe your loved ones will go over the top, consider additional coverage for your burial insurance policy.
Can burial insurance payouts get used for non-funeral expenses?
While burial insurance payouts usually go towards funeral costs, it’s not a requirement. That means if the payout exceeds the funeral costs, your beneficiaries can pocket the extra money. If you want to cover your funeral costs and give your beneficiaries something extra, it’s worth paying slightly higher monthly premiums.
Can your burial insurance get cancelled?
Burial insurance can get canceled if you stop making payments. In this case, your beneficiaries will not receive a payout when you die. Only take on burial insurance if you can comfortably pay off the monthly premiums.
Advantages of burial insurance
One of the main advantages of burial insurance is that you get to provide your family with a financial safety net. You can have the peace of mind associated with knowing that your funeral expenses will be covered, and your beneficiaries will be able to use the remaining payouts for any expense.
Unlike other policies, burial insurance does not require a medical test. This perk is beneficial for people with medical conditions because you won’t be disqualified based on health concerns.
Disadvantages of burial insurance
One of the main disadvantages of burial insurance is that the payout is lower than other policies. If you want to give your beneficiaries a higher payout, burial insurance isn’t the best policy.
Furthermore, most policies have a two-year waiting period. If you die within two years, your beneficiaries won’t get the payout. If you die before the waiting period, your beneficiaries will only receive your premiums as the payout, not the lump sum payout promised in the policy.
Burial insurance vs life insurance
Choosing between burial insurance vs life insurance is easy for people without health conditions. Life insurance grants a far higher payout with considerably lower premiums based on the payout.
For example, a 50-year-old will pay roughly the same in premiums for a 20-year life insurance term with a $250,000 payout compared to a burial insurance policy with a $15,000 payout. However, the 20-year term can expire before you die.
Even so, it goes to show how much more you can get out of a life insurance policy compared to a burial policy. If you have a health condition, burial insurance may be your only choice anyway.
Building your financial safety net
Not everyone opts for burial insurance, but everyone who is considering a burial policy is interested in building a financial safety net for their family. Burial insurance has its own advantages and disadvantages, but it’s not your only option.
You can provide your loved ones with a financial safety net through a MoneyLion Safety Net account. Reducing financial stress allows you to focus on the more important things in life. Set up a direct deposit and get started with a MoneyLion Safety Net account and get access to $250 no interest Instacash today!
Frequently Asked Questions
How do I choose burial insurance?
Review your finances to see what premiums you can comfortably afford. A higher monthly premium results in a higher payout for your beneficiaries.
What is the difference between life and burial insurance?
Life insurance provides a higher payout to beneficiaries compared to burial insurance. Unlike life insurance, burial insurance policies don’t require medical exams.
How much is burial insurance a month?
The monthly burial insurance premiums vary based on age, location, and other factors. Review different policies to see how much it will cost you.