What Is Burial Insurance and Should I Buy It?

Death and money are two things most people really don’t want to talk about. But funerals cost money, and one way to pay for a funeral is with burial insurance. The sales pitch is that burial insurance will help protect the pockets of your loved ones by covering your final expenses.

In this article, we’ll explain how burial insurance works and how much the policies cost. We’ll also hear from money expert Clark Howard, who says buying burial insurance is paying for a funeral or cremation the wrong way.

Here’s What You Need to Know About Burial Insurance

Burial insurance is intended to foot the bill for your final arrangements. But the policies are usually not a good value, according to Clark Howard:

“What you pay for a $10,000 policy effectively is at such an unbelievably high cost versus the value of the policy,” Clark says. “It’s a policy people buy because of a visceral fear that a loved one will die and they won’t have the money to bury or cremate them. But my attitude is that it’s looking at the whole equation backward.”

Read on and we’ll explain what Clark means, plus everything you need to know about burial insurance.

Table of Contents

• What Is Burial Insurance?
• How Does Burial Insurance Work?
• How Much Does Burial Insurance Cost?
• What’s Clark’s Preferred Alternative to Burial Insurance?

What Is Burial Insurance?

Burial insurance is a type of whole life policy used to pay for funeral and burial costs. It also goes by the name “final expense insurance.”

Clark points out that the name “burial insurance” is a bit misleading because many people today are choosing final arrangements that are not burials. That can vary greatly by family and region.

The Southeast is one of the last strongholds of traditional burials. But elsewhere in the country, the trend is moving toward other methods such as cremation and burial suits.

And it’s important to know that the proceeds from a burial insurance policy are not earmarked strictly for final expenses. Your beneficiaries are free to use the money for any purpose they see fit.

How Does Burial Insurance Work?

Like other types of insurance, burial insurance works on a premiums-based business model: The insurer collects a set amount from the customer monthly or annually. There’s typically no medical exam required to qualify, and in most cases, you can get a policy after answering a few health-related questions. Some policies require no health questions at all.

According to the Insurance Information Institute (III), policies are commonly sold either through funeral homes or by life insurance brokers and agents. The death benefit tends to be between $5,000 and $25,000 on a typical policy.

You can buy a policy for yourself and/or other family members, the III reports.

How Much Does Burial Insurance Cost?

In June 2020, we pulled sample quotes from State Farm and Mutual of Omaha — two leading sellers of burial insurance offering online quotes — plugging in information for a variety of possible customers in different parts of the country.

We quoted three hypothetical customers for a $10,000 policy under the following assumptions:

1. 55-year-old male, no tobacco use, living in Georgia – Excellent health
2. 60-year-old female, no tobacco use, living in California – Good health
3. 65-year-old female, no tobacco use, living in New Jersey – Average health

Burial Insurance Sample Premiums

Customer	State Farm Monthly Premium	Mutual of Omaha Monthly Premium
55-year-old male Excellent health	$43.73	$45.00*
60-year-old female Good health	$44.31	$42.00*
65-year-old female Average health	$67.40	$51.00*

* Mutual of Omaha’s policy is guaranteed acceptance and asks no questions about your health. However, the trade-off is that Mutual of Omaha may reduce the death benefit for up to two years after the policy is written. More details here.