bURIAL INSURANCE COMPANIES OF 2020
What is burial insurance?
Burial insurance, funeral insurance or final expense insurance is a special type of life insurance that is designed specifically to take care of end of life expenses. You make certain payments to the insurance company throughout your life and when you pass away your beneficiaries receive a lump sum, the death benefit. Your beneficiaries could be your family, friends or loved ones. You can haveas many beneficiaries as you want. They can use this amount to take care of your funeral and burial expenses, hospital bills, credit card bills or any loans or debts you may have owed. Once your expenses have been covered, the amount left can be used by the beneficiaries however they like.
Unlike other insurance policies, burial insurance is meant cover your end of lifeexpenses and not replace income or cover huge expenses like college tuitions or buying a home.
Burial life insurance policies have three components:
This is the amount you pay the insurance every week, month, 3 months, 6 months or year. This is the amount for your insurance policy and failing to pay it may result in the policy being cancelled. Once paid the premium is an income for the insurance company and serves as a liability. The insurance company must provide the coverage dictated by the insurance policy when the claim is made against that policy. The cost of premiums depends on a number of factors:
- The coverage you opted for
- Your age
- Your state
- The amount of risk you pose
- Your health
WHY SHOULD I GET BURIAL INSURANCE?
Death is often an unexpected event. With average funeral costs in the United States ranging from $7,000 to $10,000, the thought of leaving behind your loved ones to deal with it alone is very scary and uncomfortable. They can only arrange such a huge amount is a short period of time by using up their hard earned savings or
taking a loan, neither of which is a good option.With burial life insurance you can have the peace of mind of not putting your family and loved ones through the stressful and burdensome process of arranging a huge amount of money in a short time. The death benefit usually ranges from $5,000 to $40,000, which is often enough to take care of all your final expenses.
WHAT MAKES FUNERAL INSURANCE UNIQUE?
One of the things that separates burial insurance from other life insurance policies is the lenient underwriting. What is insurance underwriting? Insurance companies use underwriting to price risk. They evaluate the risk associated with clients. What that means is they figure out how much coverage a potential client needs vs. the likelihood of them claiming the policy. Using this they set the price of monthly premiums.
Since burial insurance policies are designed to absorb high risks, usually no medical exams or questionnaires are required.
SMALL FACE VALUE OPTIONS
The face value is the death benefit, the amount the insurance company gives your beneficiaries on your death. With final expense insurance, you can opt for face value as little as $1,000. This is a great option as it allows you to buy only what you need.
EASY TO GET
You don’t have to physically go to the insurance company, agent or broker. You can apply easily from the comfort of your home. This can be done over a phone call or via email.
With a final expense insurance policy, regardless of where you pass away in the world, the insurance company will give your beneficiaries the death benefit.
GUARANTEED LIFE INSURANCE OPTION
There are certain health conditions that won’t allow you to be insured by any insurance company. For such situations, there is the guaranteed life insurance option. You don’t have to fill out any health questionnaires, take no medical exam, are guaranteed instant acceptance. But it comes with a 2 year waiting period. So if you pass away during the first two years, your beneficiaries only receive the premium plus a little interest. The premium costs for this insurance is higher.
Funeral insurance is a whole life insurance policy, meaning your premium cost stays the same and will last forever.
As mentioned before, burial insurance has a cash value component. This can serve as a savings account. Though you should never touch the cash value, life is uncertain and should you face a financial crisis, cash value can be of use.
Funeral insurance policy approvals can take around 12 minutes to 3 business days. The approval time depends on the insurance company.
LOTS OF FINAL EXPENSE INSURANCE COMPANIES TO CHOOSE FROM
There a tones of burial insurance companies out there to choose from. With the growing demand, insurance companies are coming up with new ways to attract customers and fill the gaps in the market. So you don’t need to be worried that your age or health may be a barrier. There will most definitely be an insurance company that will accept you.
What should I look out for
when buying funeral insurance?
Burial insurance premiums cost more as you age. If you are past a certain age, most burial companies will not insure you. There are also chances that you might develop a health condition in the future that may prevent you from getting accepted by an insurance company.
Don’t lie or hide anything
When filling out your insurance application do not lie or hide anything. This will only cause problems for you in the future as it may result in you paying higher premiums than originally planned or having the policy cancelled all together.
Most burial insurance companies do not have a medical exam. Most companies usually ask you to fill out a simple health questionnaire. If you have a certain health condition you have to take a medical exam. Such health conditions include:
- AIDS or HIV
- Terminal illness
- Organ transplant
- Wheel chair bound due to a disease or illness
As mentioned before, premium payments can be made weekly, monthly, every 3 months, 6 months or yearly. Though making these payments monthly may seem more budget friendly and easier, annual payments may save you money in the long run. A lot of final expense insurance companies charge more for frequent premium payments.
It is possible that sometimes you may forget to make a payment completely or make it at a later date. In both cases you are risking losing your insurance policy. So instead of making the payments manually and risk forgetting, set the payment up as an automatic bank draft or credit card charge.
Do your research. There is plenty of material online and insurance agents and brokers can assist you in the process as well. Investing time in comparing policies will help you find the perfect burial insurance policy for you. But don’t waste time in trying to get one specific policy cheaper. Insurance costs are regulated and will be the same throughout, regardless of if you buy it from an insurance company or from agents or brokers. You may get a discount some time, but that isn’t always the case.
With all the insurance companies to choose from, it can be very difficult to decide which company to go for. When deciding an insurance company, keep the following in mind:
Insurance companies have ratings that you can easily find online and compare which ones are the best. These ratings give you an idea of the company’s past and future financial position and performance. Fitch Ratings, A.M. Best, Weiss Ratings, Standard & Poor’s and Demotech, Inc. and give these ratings. A company with a reliable and stable financial record will be more likely to pay the death benefit when your beneficiaries claim it.
If the policies from different companies you narrow down are similar, go for the insurance company that has the cheapest premium.
Brokers or Agents
Though you can buy insurance policies directly from insurance companies, some companies sell their policies through brokers and agents. Both agents and brokers have similar functions and duties. They help you find the right insurance policy for in your budget. They are supposed to explain everything about the policy, including any discrepancies. Both agents and brokers receive a commission from the insurance company for every policy they sell.
Agents are representatives of various insurance companies. They sign a contract, a binding agreement with insurance companies. This binding agreement lets them sell certain insurance policies. Agents can be captive or independent. Captive agents represent only one insurance company. Independent agents on the other hand represent multiple insurance companies.
Brokers operate on a client based business model. They represent multiple insurance companies. They do not have any contract with any insurance companies. If you agree to buy an insurance policy through them, the insurance company issues them an insurance binder.
Well now that you know what agents and brokers do, here are a number of things to keep in mind when deciding on which agent or broker to go for.
Finding the right agent or broker is a very long and tedious process. So if you find a good and trustworthy agent or broker, stick with them.
- Ask around people for referrals like friends, family, colleagues, neighbors etc.
- Do a background check on any agent or broker you decide to work with. Make sure they have an active license and have the authority to sell you the insurance policy you want. You can go online to your state’s insurance department website and check the status of their licenses.
- Look for agents or brokers who have been in business for quite some time. Experience is important.
- Ask them for all the insurance companies they represent. The more the insurance companies, the more chances of finding a better insurance policy.
- Go for agents or brokers who ask you lots of background questions. This way they will get a better idea of what you may need. Avoid agents or brokers who start recommending insurance policies without getting to know your background or situation first.
- Choose agents or brokers who give you time and space to make a decision instead of pressurizing you.
- Make sure the agent or broker can explain the terms and conditions and how the policy works in simple words instead of complicated insurance jargon.
- Understand how the agent or broker is paid, as mentioned before, they receive a commission for every insurance policy they sell. Ensure that they are not pressurizing you into buying an insurance plan only because it will earn them higher commission.
Avoid offers you get through mail or see on TV
In most cases these are guaranteed life insurance policies and they will charge you more. It is better that you some research before buying these policies.
Insure the right amount
If a death benefit of say $25,000 will be sufficient to cover your end of life expenses do not buy an insurance plan with a death benefit greater than that. It will only cause you to pay higher premiums.
When calculating how much coverage you need take into account the funeral and burial costs and inflation. You can also ask an expert for help.
You can buy as many policies as you like
Most burial insurance companies have a maximum death benefit of $50,000. If you want more, you can apply for more polices from different insurance companies. It is perfectly legal.
What is the difference
between burial, final expense and funeral insurance?
This is a very common question and the answer is they all mean the same thing, kind of like attorney and lawyer. If you are ever told otherwise by any website, insurance agent or broker run as far away as you can.
Who can qualify for a burial
People between the ages of 0 to 85 can easily qualify for a funeral insurance. Finding insurance for seniors above 85 isn’t that hard either, though there are fewer options. Other factors that determine your eligibility for a funeral insurance policy include:
The state you live in
There are some insurance policies that are not approved in some states.
There are some insurance policies that may not take you if you have certain health conditions but there are no health questions polices as well.
What is guaranteed life
Guaranteed life insurance requires no medical questions, no medical exams and offers instant acceptance. Sounds great, right? But there’s a catch:
- More cost per month. Since these companies are taking a greater risk, they charge higher premiums.
- 2 year waiting period. All guaranteed life insurance policies have this condition. If you pass away during the first 2 year, your beneficiaries receive only the premiums with a little interest.
These conditions make this insurance type a last resort. This can be the right insurance for you if you have certain medical conditions, or if no other insurance company is willing to insure you.
What are the different
options in burial insurance?
With final expense insurance, you have three different policy types, some companies only have two. These policies have different premium costs and eligibility depends on health. Here are the three policies:
Level Benefit Plan
Level benefit plan is also known as preferred benefit plan by some companies. For this plan you say no to all the health questions from the insurance company. If you get approved, you get protection from the first day. This plan has the lowest premiums the insurance company can offer.
Graded Benefit plan
With graded plans you get partial coverage during the first two years. So if you pass away during the first year of the policy, your beneficiaries get 30% of the death benefit. If you pass away during the second year, your beneficiaries get 70% of the death benefit. They will only get the full death benefit, if you pass away two years after the policy. The exact death benefit percentages for the first and second year may vary depending on the insurance company. Some companies offer between 25% and 40% during the first year and between 50% and 75% during the second year.
Modified plans are considered a 100% worthless by many, but they may be right for you. These are the highest risk plan an insurance company offers. You may qualify for this if you have a certain health conditions, like heart attack, cancer, etc. If you pass away within the first two years of the policy, your beneficiaries will only receive the premium payments and a little interest.
How do I get a burial
You can buy a policy directly from the insurance company or through agents or brokers. Once you decide on what insurance policy you want to go with, you will be required to fill out an application. You can find the application online, with the insurance company or with agents or brokers. If you don’t want to go outside, you can even fill out applications from the comfort of your home through email or on the phone. These applications can be a page long or even 10 pages depending on the insurance policy and company. Some insurance policies may require you to take a medical exam. Once the insurance company approves your application, you are good to go.