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Today, I Will Be Answering The Question: “How Does Burial Insurance Work?”
If you’re trying to find out if a burial insurance policy is something that is sensible either for yourself or for somebody you love. Then this presentation should answer the vast majority of your questions.
NOTE: Would you prefer me to present this information to you in video format? Watch the video below for the compete presentation on how burial insurance works. Enjoy!
Here’s An Overview Of Our Discussion On How Burial Insurance Works:
- What Is Burial Insurance?
- How Do You Qualify For Burial Insurance?
- How Do You Ensure Your Burial Insurance Stays Active And Does Not Cancel?
- What Happens With Burial Insurance Upon Passing?
- Who Gets The Money From A Burial Insurance Policy?
- Best Burial Insurance Options (Companies & Rates)
- Next Steps
What Is Burial Insurance?
Let’s talk about the definition of burial insurance. Let’s dispel any kind of confusion there may be right up front.
First of all, burial insurance is life insurance. There is no difference at all between the term burial insurance and life insurance.
The reason we use the term burial insurance is because many years ago insurance companies recognized that there were a lot of consumers that were buying life insurance plans specifically to cover for final expenses.
They didn’t want large six-figure plans. They just wanted smaller $5,000, $10,000, $15,000 plans, just enough to cover those final expenses as it relates to being buried through funeral costs, cremation costs, or any other kind of final expenses like a small debt.
Burial insurance is the term we use when we refer to these life insurance products because it gets a picture in mind of exactly what it is that we’re trying to accomplish.
The other thing is that burial insurance, in most circumstances, is a whole life insurance product. This means the rates never increase and your coverage never cancels because you get older or your health changes.
In fact, in certain circumstances, if your health is good enough, you may qualify for first-day full coverage. So after the first payment, you’re fully protected.
Now the reason I said some, but not all, burial insurance is whole life insurance is because there is another kind of plan out there called term life insurance.
Term life insurance is short for terminating life insurance.
When you buy one of these plans, you can literally outlive it. And often the policy premium goes up as you get older.
This is not a good deal because, in my opinion, if your goal here is to cover burial expenses, why would you get a plan you could outlive? Why would you take out a plan that makes you gamble on whether you’ll die before the expiration date?
A lot of these plans you get in the mail are designed to cancel at 80 years old. So if you lived eighty years old and a day, you lose your coverage.
All that money is wasted, and you don’t get a dime!
Whereas with whole life insurance, it doesn’t matter when you pass away, as long as you keep up with the premiums, the coverage can’t be canceled and the premium stays the same.
So the bottom line is a whole life insurance plan, in my experience, does a much better job of matching the solution to the problem. The problem is not knowing when you’re going to die, and the solution is an insurance policy that will be there no matter when it occurs as long as you’re paying.
How Do You Qualify For Burial Insurance?
So how do you actually take out a burial insurance program to begin with? You apply for burial insurance products through a life insurance company.
Life insurance companies offer life insurance, disability insurance, cancer insurance. Burial insurance is just another one of the products that they offer you as a consumer. You have to go through a company and let them underwrite you to determine whether or not you’re insurable.
You do have some choices here as to how to apply for the burial insurance programs. So let’s talk about that.
The most common method you may see is advertisements on TV, the junk mail you constantly get, or maybe even ads you see on the internet. The pro of these plans is you don’t have to go through an agent. You just send in the application and hopefully get approved.
The downside, I believe, greatly outweighs the pros. The truth is that usually the plans that are on TV, in the mail, or advertised on the internet are really high in price or they’ve got limitations on coverage, whether it’s in the beginning or in the end
Take for example, the very first client I helped with a policy. His dad had a plan through a company that advertises on TV, and unbeknownst to him, he had a two-year waiting period provision.
He died 12 months into the plan thinking he was fully covered, and when the kids went to collect on the policy, they only received the money back plus a little bit interest instead of the full $5,000. They had to go into debt just to bury their father.
I say this because at the time he took the plan out, he would’ve qualified for full coverage at a much better price. Instead of %5,000, he probably would’ve gotten $7,000 or $8,000 for the same price.
So hopefully you can see that if you buy a plan through the TV or the mail, you’re only given their set of options which tend to be higher priced and lower quality.
The second way you can get a policy is through what’s called a captive agent. Captive agents represent one company, and they’re usually specialists in the burial insurance products sold by that particular company.
The biggest downside to a captive agent is their prices are higher and their coverage isn’t nearly as good quality as you can find with what’s called an independent agent. Independent agents, like myself, represent a variety of different life insurance companies that have burial insurance products.
Essentially what an independent agent does is, after we figure out your health profile, we go out to these companies and see who’s going to give you the best price and the best value of coverage. You can usually get more coverage for a better price, and in many cases, even with health issues, you can get better quality of coverage, assuming that your health is good enough to qualify for it.
So there’s really no downside to working with an independent agent because he’s not married to one company. Their mindset is that they’re looking out for your best interests and trying to figure out what’s going to be the best combination of price and value for you.
Now, with a whole life burial insurance plan, there is no examination necessary. You just fill out an application and maybe do a phone interview. After that, the policy gets issued if you get approved. That’s it!
There are no exams. There is no detailed medical underwriting or any of that stuff.
There’s a brief medical check of your health history usually going back a couple of years. They look at your prescriptions as well and do the phone interview. The entire approval process usually takes a couple of days.
How To Ensure Your Policy Stays Active And Does Not Cancel?
Part of the process with buying a burial insurance plan is making sure you keep that burial insurance policy on the books. So here’s what I mean.
I have an old saying that I picked up from another agent whose been in the business forever:
The policy that stays is the policy that pays.
The policy that you want to get is the one that’s easily affordable and that does the job. There’s nothing more wasteful than taking out a plan, keeping it for six months, and then having to drop it because you really can’t afford it.
That’s a bad use of your money, and that’s not the kind of burial insurance you need.
I want to share with you a case study from a recent death claim that I had. A gentleman I sold a $5,000 policy to a few years ago in Tennessee just passed away.
In the process of sitting with him back then, I made it completely clear that all I care about as an agent is making sure this is easily affordable. I actually had to walk him down in premium just so he could feel totally comfortable that his policy was affordable and something he could keep.
Well, fast forward to just a couple days ago, and I got a phone call from his daughter-in-law saying that he had passed away and, if I had pushed too hard for this guy to take out double the coverage, he might have dropped it along the way, thinking it was just too expensive.
For me, that policy is going to go towards his wife. It’s going to help her out and make her life a little bit easier. In the end, it was a good deal.
Again, price is very important when buying burial insurance, especially since most people that take this out are on a fixed income.
Now, there are important elements for your future burial insurance policy you should consider. Again, I can’t harp on it enough. Is it affordable? It’s got to be easily affordable. Something that fits in your budget.
Does it cover what you want? I’m a big believer that the first goal of buying burial insurance is to meet the need of what it is you want to accomplish.
If you want to buy enough to cover a basic cremation, usually $3,000 to $5,000 in coverage is plenty. If you want a burial and the whole ball of wax covered with that, we’re looking at somewhere between $10,000 and $15,000 depending on what part of the country you’re in.
The bottom line is you want to make sure what you get is sensible. You want to make sure that it’s realistic and accomplishing the goals that you want along with it actually being affordable.
Another element is, do you want your policy to be a whole life or term life insurance? Hopefully I’m making the case that the smart thing to do is to buy a whole life insurance plan because it doesn’t terminate after reaching a certain age as long as you pay the premiums. Whereas term life insurance doesn’t really make sense for seniors because you can outlive it.
The other benefit to whole life is that the rates are locked in place. This is especially important if you’re on a fixed income. As a senior, you don’t want the price of your policy steadily increasing.
You want to fit that in your budget and forget about it. You want to know it’s affordable and never worry about a rate increase.
You don’t want a plan like the ones on TV, in the mail, or on the Internet that go up in price incrementally every five years. That will put severe pressure on your wallet. Again, there’s nothing worse than losing the coverage because it was too expensive or became too expensive.
Is the company reputable? I think this is pretty important.
You certainly want to work with a company that has a longstanding history of being in business and that’s ranked well by the A.M. Best Company. That’s basically like an auditing company that goes in and assesses the financial strength of each life insurance company. You just want to make sure that they’re doing what they say and follow through on their promises.
Do you trust the agent? And I think this is the biggest one.
The biggest component of working with anybody is making sure your agent is the guy that you feel is good at going to bat for you, helping you out, and servicing you. He or she should be a good resource and well of knowledge that can help you with your concerns and find the options out there to get you the best deal.
What Happens With Burial Insurance Upon Passing?
So once an insured dies, the next step is to file a claim with the insurance company. This simply requires either you or your agent to call up the company and began to file the claim.
So what’s going to follow now is a breakdown of what to expect depending on the kind of burial insurance plan you have.
If you have a guaranteed acceptance life insurance plan, there is no coverage for natural death for the first two years. But after the first two years, you have full coverage.
If you have a guaranteed issue burial insurance program and you die within the first two years, the death claim is filed, and the amount paid into the policy is paid to the beneficiary plus 10 percent interest in most cases. So it’s not a full face amount payout.
Why is that the case? It’s because, if you apply for a guaranteed acceptance life insurance plan, by default, there’s going to be a waiting period on natural death coverage in most circumstances. After that waiting period, again usually two years, then the full death claim is paid out without delay.
So you may be thinking there’s no way you want a guaranteed issue plan. We’ll get to that in a little while, and I’ll explain to you how to hopefully circumvent that.
Now there’s also what’s called graded burial insurance. It’s like guaranteed acceptance except there are health questions, and they give you partial coverage the first year of about 30 percent. The second year it goes up to 70 percent of the face value.
For example, if you buy a $10,000 plan, you’re immediately covered for $3,000. That’s 30 percent. In the second year you’re covered for $7,000, which is 70 percent.
Beyond year two it’s full coverage for the face value of the policy. So this is a little bit better than guaranteed acceptance because, no matter when you die, your beneficiaries will receive some amount of payout.
Then with level coverage, once the first payment is made and everything gets through the contestability provisions in the contract, the full death benefit is paid to the beneficiary. Now, that brings us to contestability issues.
Let me tell you what contestability is and why it’s done. Even though it’s not necessarily a good thing, hopefully you’ll understand that all these companies do it.
Contestability is a law mandated by the Department of Insurance that says every single life insurance company has the right, if an insured person dies within the first two years of a policy, to delay paying a death claim until they have appropriately reviewed all health history within the last 10 years from the insured.
Now here’s why they do that. I’ll give you the perfect example.
I had a client that took a policy out from me and attested his perfect health. He got approved and then died 14 days after making the first payment.
It turns out that he had cancer, and he knew about it. If we allow people to knowingly defraud the system, it ends up affecting everybody.
Insurance is a pool of managed risk; so everybody pitches in. Some people die early, and other people die late. But it is what makes it possible for the insurance company to pay when somebody passes away.
If people begin to defraud the system, then the whole system falls apart. This is why the Department of Insurance in most states allows for investigation of deaths within the first two years of the policy to basically make sure that there wasn’t any outstanding information they should have caught on the front end before paying that death claim out.
The process can take months. I’ve seen three months, even six months before the death claim payout.
And understand, as frustrating as this may be, it is something that is not unique. Virtually all life insurance companies will contest the claim if someone dies from natural causes within the first two years.
The only way around it really is just to make sure that you apply for a policy in full transparency. Be honest and make sure there is no gray room. And if there is, let your agent know.
Because many times, especially as an independent agent, they can look around and see if there’s a better deal than just the one being offered. I’ve had plenty of people who were contested, and their beneficiary still got the full death benefit. It just takes some extra time.
Who Gets The Money From A Burial Insurance Policy?
Is it the funeral home? Is it the trust? Is it something like that?
Well, simply put, the beneficiary or beneficiaries are the only people who receive the money from your burial insurance policy, and yes, they can do whatever they want with it.
All the insurance company does is pay a claim to the beneficiary. They usually have no decision-making power to force the beneficiary to invest or spend that money in a certain way.
So here’s the deal. Obviously if you’re looking at a burial insurance program, you’re probably thinking about having a plan to pay for the burial.
So it goes without saying, please make sure the beneficiary you choose is somebody you can trust. You want the person who will actually follow through on your requests regarding how to be buried, where to be buried or cremated.
You don’t want somebody who will get a death claim payout and then not do anything with it. Just keep the money and then let the rest of the family try to come up with the money for the burial.
Also, don’t forget to add a backup beneficiary in case your first beneficiary dies. Perfect example is a husband and wife.
If the wife dies first and then the husband dies, make sure you put somebody as a contingent beneficiary or backup beneficiary. A child, a grandchild, somebody you can trust to manage your funeral.
There have been circumstances where people have only designated one person as a beneficiary. There are no backups, so by default, the law says that that claim is paid to the estate. It’s then transferred to a probate court, and it can take up to a year before the court decides who gets what.
Then there are fees associated with it. So it gets tied up, and it’s just a real frustration point.
Do yourself a favor. Make sure your beneficiaries are accurate, up to date, and who you want them to be.
You can also name a funeral home if you really want to. You can name a loved one like a grandchild. It doesn’t have to be a direct descendant of you.
You can leave the money to a church. That’s totally fine too.
The key point here is to understand you are in charge of who gets what money when it comes to your life insurance policy. So make sure you give some thought as to who you want the beneficiaries to be.
Best Burial Insurance Options (Companies & Rates)
We’re going to check some rates out and companies so you can see a couple of different ages and a couple of different setups as far as what’s available for men and women for burial insurance.
We’re going to pull up a $10,000 plan for a couple of different ages. We’ll probably do 60, 70, and 80 for nonsmokers.
This is just for educational purposes only. This is not a quote for you.
I have to ask you all the health questions. I’m sure you understand that. This is just for the purpose of showing what’s possible when you buy a burial insurance plan.
Okay, so what you’re looking at here is a $10,000 plan for level coverage for a 65-year-old nonsmoking male in Tennessee. You’re looking at somewhere between an average premium high $40s to the mid $50s.
There are a lot of different companies here, and which one that would be selected just depends on how you answer the health questions. Again, this is just to give you a general idea of what the possibilities are.
Okay, so now we’re looking at a 65-year-old female nonsmoker for $10,000 in whole life coverage, and of course, women are always less expensive than men in an apples-to-apples comparison for life insurance. No exception here.
We’re looking at mid $30s to mid $40s for $10,000 in first-day full coverage.
Now we’re looking at a 75-year-old male, $10,000 first-day full coverage, nonsmoker. As you can see, with the age increase, the price increases.
The lower $80s to a right around the $100 mark.
For $10,000 of level coverage for a 75-year-old female, nonsmoker, you’re looking at between low $60s to mid $70s.
And here’s an 85-year-old nonsmoking male for $10,000 in level coverage. You’d be looking at $160s to mid $230s.
Lastly we’re looking at an 85-year-old nonsmoking female for $10,000 in coverage. It’s from the low $120s to the $180s range.
So what I’ll say about this lastly is we just looked at a 65, 75 and 85-year-old rates for nonsmokers, males and females. Again, it’s going to be less expensive if you’re younger than 65. It’s going to be more expensive if you’re 65 or older and smoke.
Ultimately these are just ballpark figures to give you an idea of what to expect depending on how old you are. We can definitely go younger than this.
I’ve gotten people in their twenties approved for these kinds of products. Usually we do so because they have health issues, and there’s no other way to get approved.
So I want to assure you that what we’re looking at here is just an estimate to give you some thought as to what the numbers are going to run for how much you get.
You can certainly get less than $10,000 if you just want to be cremated. Then $5,000 would be plenty. If you want to get $15,000, $20,000, or $25,000, you can do that.
Let’s go over again how to qualify for burial insurance. The application process is very simple.
Find an agent you like, which hopefully is me right here. I can work with people across the nation. I help people with all of their burial insurance needs, and I can do it from the comfort of your home, over the internet, or through the mail.
Once your agent figures out what you’re looking for and you like the quote that you see, the next step is to do an application over the phone, through email, or snail mail. Sometimes this is what we do, and it usually takes just a few days or a week or two.
Then your coverage is approved, and several weeks later you get your policy.
Burial Insurance Rates, Age 40 to 90*
Rates For $5000 In Burial Insurance
Rates For $10000 In Burial Insurance
Rates For $15000 In Burial Insurance
Rates For $20000 In Burial Insurance
Rates For $25000 In Burial Insurance
*Burial insurance premiums are subject to underwriting, based on rates as of 8/20/2018, from state-regulated life insurance companies offering final expense burial whole life insurance protection. Understand that in order to potentially qualify, you must submit an application to see if you’re eligible. Rates are subject to change. Give Buy Life Insurance For Burial a call at 888-626-0439 now to see what program you may qualify for.
That’s it! You now have the peace of mind you’re looking for.
If you are interested in looking at burial insurance and seeing what you can qualify for, then there are two things you can do. Request a free here, or you can go to the bottom of the website where you’ll see a little pop-up box that will allow you to chat with me personally.
Either method is fine, and I’m happy to communicate with you via message. Otherwise the best, easiest, and fastest to reach me is to call 888-626-0439. This allows you to speak with me live.
It takes about 5 or 10 minutes of asking some health questions to figure out what your options are for burial insurance coverage. I’ll tell you what they are, and what you do with it is entirely up to you.
There’s no stress or pressure here. I just want to help if you need the help. Take care!