“Burial insurance” is more commonly recognized as a final expense whole life insurance policy with death benefits ranging from as low as $5,000 to $25,000. As it’s name implies, people normally purchase this to provide money for funeral and burial costs for themselves and/or family members. After answering few health-related questions on the application, you can get burial life insurance with no medical exam.
Most companies, have monthly, quarterly and annual payment plans for burial policies. With technology, burial insurance companies no longer have to send agents to your home to collect premiums. The combination of flexible payment plans and auto pay plans make it easy for virtually anyone to obtain immediate final expense burial coverage.
Applying for Burial and Final Expense Life Insurance
For the most part, qualifying for final expense or burial coverage is a rather simple process. Many companies will write burial policies with no medical exam. To qualify, an agent or underwriter will ask a few qualifying questions regarding your health and your family’s health. Regardless of the type of death benefit, all burial insurance policies pay for deaths caused by accident in the first two years. Based on your answers to the underwriting questions, your policy could be issued with one the following death benefits types:
Level Death Benefit
The Level Death Benefit is one that equals the full amount applied for without any changes.
Graded Death Benefit
While differences exist between companies, the graded death benefit burial insurance policy pays a graded percentage of the death benefit in the first 2 years. Depended on the company, this could mean that in year 1, the maximum death benefit at the end of year one is only 50% of the total death benefit.. In year 2 the number would increase until years 3 and later. In years 3 and later, the benefit equals the total policy amount
Modified Death Benefit
For most companies, a modified death benefit means that if you were to die within 2 years due to natural causes, your beneficiary would receive all the money paid into the policy plus a percentage set by the insurance company. In most cases, insurance companies give anywhere from 10 to 20 percent return for graded benefit burial insurance.
Underwriting Items to Consider
In the past, obtaining a final expense policy was relatively easy. Simply answer questions and you get about the same answer. Aside from the normal rating, insurance companies now ask and consider tobacco use, weight in rating considerations for final expense policies.
Aside from the physical stuff, your data now follows you as well. Life insurance companies now utilize big data life insurance companies by requesting Attending Physician (APS) Statements, Medical Information Bureau Reports (MIB), and even Prescription Checks to determine benefit levels when issuing a final expense policy. These underwriting methods protect both the consumer and company against rate affects caused by adverse selection, as well as fraud, waste, and abuse.
Are pre-need and pre-paid the same thing?
Well kinda, sorta. An approach that is similar to burial life insurance (and sometimes called burial or “pre-need” insurance) is pre-payment of your funeral arrangements. Under this program, you may select the funeral home, type of service, casket (or cremation), flowers, headstone, burial plot, the cost of digging and filling the grave, and other items, and lock in the prices for them by paying in advance. This method of paying for burial pro’s and con’s to the use of an insurance product.
Can Funeral Homes sell burial insurance
Short answer, is Yes! Under some state laws, funeral homes can sell insurance but must be licensed to sell insurance. While you can go to a funeral home to buy burial insurance, the consumer normally better off financially talking to someone in advance of severe or terminal illness.
Normally, burial insurance is sold through brokers and agents of insurance companies licensed to sell life insurance in their perspective states. The broader perspective of the insurance agent allows them to present alternatives to the policies presented at funeral homes.