The financial choices you make today can help your loved ones stay afloat when you pass away, so it’s important to understand your options.
Life insurance offers your loved ones financial security by paying your beneficiaries a sum of money, or death benefit, when you pass on. Specifically, burial insurance, also called final expense or funeral insurance, is a type of life insurance designed to cover the rising costs of funerals. Burial insurance offers a streamlined application process and quick approval but a smaller payout than standard life insurance policies, providing coverage up to $40,000.
If you don’t know what type of policy to choose, read on to learn more about the differences between burial insurance and traditional life insurance so you can make an informed decision for your family’s future.
Comparing burial insurance and traditional life insurance
Burial insurance and traditional life insurance provide coverage to help meet different needs.
What burial insurance covers
Burial insurance covers a wide range of end-of-life expenses, so your loved ones don’t have to manage the sudden costs of a burial and funeral.
- Remaining medical bills
- Cremation or other body preparation
- An urn or casket
- Funeral services, including an officiant
- Cemetery plot
- Reception expenses
- Flowers
- Obituary placement costs
- A funeral home and planning
What traditional life insurance covers
Traditional life insurance, on the other hand, is meant to cover ongoing expenses that your income would otherwise pay for, so your loved ones can avoid financial disaster should you pass away unexpectedly.
- Outstanding debts or bills
- Mortgage payments
- Day-to-day expenses
- Utility costs
- Childcare
- Rent
- College tuition
- Charitable contributions
- Estate taxes
- Inheritance
- Car payments
- A living partner’s retirement fund
Differences in burial insurance vs. traditional life insurance
Comparing the benefits of traditional life insurance and the benefits of burial insurance can help you make the best choice. The table below provides insight into key differences between life and burial insurance.
| Traditional Life Insurance | Burial Insurance |
| A broad category of insurance with policies that generally fall under one of two categories: permanent or term life. | A specific type of permanent insurance designed to cover end-of-life expenses. Policies are either simplified issue or guaranteed issue. |
| Term life policies remain active only for a fixed period of time. Permanent life policies remain active through the end of the recipient’s life as long as the recipient continues paying premiums. | Burial insurance typically remains active through the end of the recipient’s life as long as the recipient continues paying for premiums. |
| Term life policies do not accrue cash value. Permanent life policies typically do. | Accumulates a modest cash value over time. |
| Beneficiaries may sometimes wait to receive the death benefit, depending on their policy. The death benefit can be paid monthly or as a lump sum. | Beneficiaries receive a lump sum immediately after the policyholder passes away. |
| Premiums depend on age, health, coverage amount, and policy type. Term life premiums for healthy young people can be as low as $15 a month. Permanent life policies for older adults are more costly. | Burial insurance typically charges higher premiums than traditional life insurance. Guaranteed issue insurance is generally more expensive than simplified issue. |
| Term policies can provide up to $2 million in coverage. | Usually provides up to $40,000 in coverage. |
| May require a medical exam depending on the policy type and coverage amount requested. | Typically does not require a medical exam. Simplified issue requires a basic health questionnaire. |
When should you get traditional life insurance over burial insurance?
If you have family or other loved ones who rely on your income, traditional life insurance might be a better fit than burial insurance.
For example, a life insurance policy can help ensure your family can still afford childcare if you pass away. Your life insurance policy can also help safeguard your children’s futures by covering college tuition.
A life insurance policy can provide your family with a financial safety net. So, you can rest assured that they will always have a home, even if you’re still paying a mortgage.
Meanwhile, life insurance is the most affordable if you’re a young adult without health issues. If you don’t have any major health concerns, you could likely secure a life insurance policy with sufficient coverage for a reasonable price by completing a medical exam.
When should you get burial insurance instead of other types of life insurance?
Burial insurance addresses a much more specific need than traditional life insurance and typically comes with a lower coverage amount. If you’re an older adult seeking coverage, you might find that you’ve already surpassed the milestones that life insurance usually covers. Maybe the mortgage is paid off, and the kids have graduated. Or perhaps you don’t have children or other dependents, but you want to make sure your loved ones can mourn once you’re gone without worrying about paying for a funeral. In these situations, a burial insurance plan might meet your coverage needs at a price you can afford.
Factors like age, health, and lifestyle determine life insurance eligibility and premiums. Unlike most traditional life insurance policies, burial insurance typically does not require a medical exam.
Simplified issue burial insurance requires you to complete a simple health questionnaire. However, suppose you have complicated health issues that would disqualify you from other types of coverage. In that case, you can apply for guaranteed issue burial insurance, which does not require you to provide any health information.
Can you use life insurance to cover funeral expenses?
Your beneficiaries can use the money they receive from your life insurance policy in whatever way they deem fit. If you choose a traditional life insurance plan instead of burial insurance, your beneficiaries may still apply a portion of the payout to cover your funeral expenses.
Despite its name, beneficiaries can also decide how to use the death benefit they receive from burial insurance. While the amount of money that beneficiaries receive is usually modest compared to a standard life insurance payout, a burial insurance policy can still cover a number of expenses, like medical bills or unpaid debts, after you pass away.
If you’re still unsure whether burial insurance or traditional life insurance would provide the protection your family needs at the right price point, we’re here to help. Get a quote online or reach out to a licensed insurance agent< to review options for your unique situation.
