What Is Funeral Insurance? – NerdWallet

In case you’re frightened that your family members would wrestle to cowl your end-of-life bills, funeral insurance coverage could also be an possibility. Funeral insurance coverage is a small life insurance coverage coverage that’s supposed to pay to your funeral, cremation or burial, plus different excellent bills comparable to medical payments.

Funeral insurance coverage insurance policies are sometimes capped at low quantities, usually between $5,000 and $25,000. The explanation the payout — or loss of life profit — is small is as a result of it’s meant to deal with a selected set of bills.

Technically, your life insurance coverage beneficiaries can spend the cash nonetheless they select. However it’s widespread to make use of the loss of life profit to pay for funeral-related bills, together with:

Most insurers don’t require a medical examination for funeral insurance coverage. As an alternative, approval relies in your solutions to a well being questionnaire. Some burial insurance coverage insurance policies are assured subject insurance policies that may cowl any applicant, even when they’ve main well being issues. Nonetheless, these insurance policies normally include a two-year ready interval. Which means if you happen to die throughout the first two years that the coverage is in power, your beneficiary will solely obtain a refund of your premiums plus curiosity as a substitute of the complete loss of life profit.

As with every life insurance coverage coverage, your premiums will fluctuate primarily based on components like your age, gender, well being and tobacco use. For a 50-year-old, a $10,000 burial insurance coverage coverage with Lincoln Heritage could price as little as $25 or $30 a month. However somebody who’s 80 may pay month-to-month premiums as excessive as $150 to $190 for $10,000 of protection.

Each funeral insurance coverage and preneed insurance coverage are designed to cowl remaining bills. The important thing distinction is that funeral insurance coverage is a kind of life insurance coverage coverage, whereas preneed insurance coverage is a pay as you go funeral plan.

You should purchase funeral insurance coverage by way of a life insurance coverage firm, when you would buy a preneed plan immediately from a funeral dwelling. Not like a funeral expense coverage, a preneed plan doesn’t pay out to your family members if you die. As an alternative, the cash goes to the funeral dwelling — so that you’re primarily prepaying to your funeral prices.