When it’s your time to go, you may end up leaving your loved ones with thousands of dollars in expenses for a proper funeral. It’s not be a pleasant thing to think about, it is something you may want to plan for.
But if you’re not in a position to save for funeral costs, there are many insurance options designed to cover the costs of burials or cremation.
Here’s a look at some of the most popular options in the marketplace. Plus, tips on how to determine the right policy for you.
In This Article
Top Burial Companies
The National Bureau of Economic Research reports that average spending in the final year of life can top $11,000.
Parting.com, a website devoted to reviews of the funeral industry, says a modest funeral can cost upwards of $8,000 to 10,000.
Many of the least expensive plans, including those that offer guaranteed acceptance for older Americans, come in the form of whole life insurance.
With whole life, there is usually a guaranteed benefit when you die as long as premiums are paid. Whole life insurance also has a cash value, against which you may be able to borrow.
Note: Premiums quoted below are as of February 2021, and can vary depending on age, location, term, and gender.
AARP is not an insurance company, but a membership and advocacy organization for older Americans. Through membership to AARP, you can access a variety of benefits, including various life insurance policies.
Of these, the easiest and least expensive option to cover final expenses is the AARP Easy Acceptance policy.
Coverage: Up to $100,000
Acceptance policy: Guaranteed, with exclusions for those who are terminally ill.
Who can apply: AARP members between ages 50 and 75, as well as spouses between ages 45 and 75.
Premiums: Monthly rates can vary, but AARP advertises a $10,000 policy for men for $14 per month.
A Good Fit For: Those who are already AARP members, and those who like the idea of an accelerated payout in the event of a terminal illness.
- Coverage lasts for your entire life, but premium payments end at age 95.
- If, after two years, you are diagnosed with a terminal illness and given a life expectancy of 24 months or less, you can access half of the benefit amount.
- There is no benefit for death by suicide in the first two years.
- Beneficiaries will receive full benefits from the first day. Death from natural causes in the first year will result in a benefit of 110% of the premiums paid.
2. Mutual of Omaha
Mutual Of Omaha offers guaranteed whole life insurance in amounts ranging from $2,000 to $40,000. This is enough to cover most final expenses.
Anyone aged 45-85 is accepted, and benefits don’t reduce due to age. United of Omaha Life Insurance Company underwrites policies.
Coverage: $2,000 to 40,000
Acceptance policy: Guaranteed, with exclusions for those who are terminally ill. There are no medical examinations or health questions.
Who can apply: Anyone between ages 45 and 85. (Ages 50-75 in NY).
Premiums: Mutual of Omaha quotes an $58.15 monthly premium for $20,000 in coverage for a man currently age 50. A $10,000 policy is advertised as $30.68 per month.
A Good Fit For: Those who wish to avoid a medical exam and who are budget conscious.
- Full benefits are paid for accidental death from day one.
- If in the first two years, you die from any other cause, your beneficiaries will receive 110% of premiums paid.
3. Gerber Life Insurance
What, the baby food company? Yes. Through Gerber Life Insurance, you can get a whole life policy to cover final expenses. The company promises that the application can be completed in minutes.
Coverage: $5,000 to $25,000. (The maximum in South Dakota is $15,000.)
Acceptance policy: Guaranteed, with no medical examinations or detailed health questions.
Who can apply: Anyone between ages 50 and 80.
Premiums: Gerber quotes a monthly premium of $87.27 for a $20,000 policy for a 50-year-old man. A $10,000 policy is quoted as $44.09 monthly.
A Good Fit For: Those who can pay a bit more but enjoy the backing of a larger company.
- Full benefits are paid for accidental death from day one. If in the first two years, you die from any other cause, your beneficiaries will receive 110% of premiums paid.
- Coverage is available in $1,000 increments.
4. Foresters Financial
Foresters Financial offers a selection of whole life policies that could cover burial expenses and offer guaranteed acceptance. This includes the Express Issue Premier product.
Coverage: $5,000 to $35,000 for people up to age 50-85.
Acceptance policy: Guaranteed acceptance. No medical exam, but some health questions.
Who can apply: Anyone between ages 50 and 85.
Premiums: `A 50-year-old male will pay $60.85 per month for $20,000
A Good Fit For: Those who are healthy. Beneficiaries don’t get the full benefit if the policy holder dies of natural causes before year three.
- Exlcusions during the first two years for suicide or health misrepresentation.
American International Group is one of the world’s largest insurers and offers simple policies designed for burial benefits.
Coverage: $5,000 to $25,000
Acceptance policy: Guaranteed acceptance for anyone between 45 and 80. No health questions or medical exams.
Premiums: Vary by age and policy, but AIG says premiums start at $35.83 per month for a $10,000 policy covering a woman age 50.
Independent agency Choice Mutual says a 50-year-old man would pay $51.92 for a $10,000 policy.
A Good Fit For: Those looking for a guaranteed acceptance and the backing of a large firm.
- Pays full face amount for accidental death and full face amount in the third year and beyond. In the first two years, beneficiaries receive premiums plus 10%.
- Rates include a $24 annual policy fee.
- The company specifically says it will not pay benefits to those who take part in “speed or endurance contests.” This includes rock or mountain climbing, bungee jumping and much more.
6. Colonial Penn
The Colonial Penn Company is well known for its advertisements featuring Ed McMahon and other celebrities from yesteryear. It offers three products that may be appropriate for those looking to cover burial expenses.
They included a Guaranteed Acceptance Product, a Permanent Whole Life Insurance product, and Renewable Term Life Insurance.
The Guaranteed Acceptance Product is the one that is most similar to the competitors listed here.
Coverage: Varies based on gender, age, and other factors.
Acceptance policy: Guaranteed acceptance for anyone between 50 and 85. No health questions or medical exams.
Premiums: Rates vary and are subject to change, but the company quoted one unit of coverage for $9.95 per month for a man 50 years old. Six units of coverage, (about $10,500) cost $59.70 per month.
A Good Fit For: Those looking for a variety of choices and flexibility.
- Full benefit is paid after two years. If the policyholder dies from natural causes before then, the beneficiary will receive premiums plus 7% interest compounded annually.
7. Prosperity Life
The Prosperity Life company started in 1916 as Shenandoah Life. It provides a variety of coverage options depending on your health.
Coverage: $1,500 to $35,000
Acceptance policy: Guaranteed acceptance. Designed for those between ages 50 and 85. No medical exams, but there are health questions. Plus, the company performs database research.
Premiums: A 50-year-old male will pay approximately $65.43 per month for $20,000 coverage
A Good Fit For: Those looking for quick acceptance who don’t mind answering some health questions.
- Reduced benefit during the first two years for non-accidental death
The San Francisco-based company, Transamerica, offers three policies designed to cover burial and funeral expenses.
The final expense life insurance policies include an Immediate Solution plan that does not make policyholders wait for eligibility.
Coverage: $1,000 to $50,000
Acceptance policy: Guaranteed for the Immediate Solution plan for people aged 45 to 85.
Premiums: A 50-year-old man would pay $30.70 per month for a $10,000 policy, according to Choice Mutual, an independent insurance agency.
A Good Fit For: Those looking for quick acceptance who want to avoid a waiting period to receive full guaranteed coverage.
- Offers a rider with an accelerated death benefit for those who want to use the expenses for end-of-life care.
9. Royal Neighbors of America
You may not be familiar with Royal Neighbors of America, which is a non-profit fraternal benefit society with more than $1 billion in assets under management. It got its start providing insurance to women.
Royal Neighbors offers a Simplified Issue Whole Life product designed to help cover burial expenses.
Coverage: $5,000 to $25,000
Acceptance policy: Not guaranteed. You must answer a series of health questions.
Premiums: A 50-year-old man would pay $39.61 monthly for a $10,000 policy, according to Choice Mutual.
A Good Fit For: Those with some pre-existing conditions.
- You must become a member of Royal Neighbors, at the cost of $20 annually.
- Offer an additional rider with an accelerated death benefit.
Burial Insurance Alternatives
Burial insurance can be helpful to those people who are concerned about the expenses that family members may have to pay upon their death.
But there are other options to explore, especially given that whole life insurance policies aren’t always a good investment.
The Funeral Consumers Alliance, a consumer watchdog group, notes that burial insurance is often not a good deal for people who purchase it.
“In most cases, you will spend as much or in premiums than the policy will actually pay out at the time of your death,” the FCS notes on its website. “Why make your money worth less by converting it into insurance?”
One option is to save for the cost of burial over time.
For example, if a funeral costs $10,000, you may be able to save for that expense by setting aside money each month until you reach a certain age.
To clarify, let’s say you begin saving at age 60 and set aside $100 per month, you’ll have more than enough saved by the time you turn 70.
In some cases, the money you put aside may be less than a monthly premium.
To ensure the money is directed where it needs to go, you can set up an interest-bearing “payable on death” account that pays out when you die.
It’s even possible to make the funeral home the beneficiary, though you sacrifice flexibility.
Many funeral homes will allow you to pay in advance for burial arrangements.
In theory, this enables you to lock in today’s prices while giving you peace of mind that your funeral arrangements will be handled.
The FCA warns against pre-paid plans, however, noting that funeral homes may go out of business, and you may not get a refund if your plans change.
Moreover, any money you have paid out to a funeral home then can’t be used for any other needs.
You could always take out a loan in anticipation of your burial costs. However, generally speaking, there are better things to borrow money for.
According to the FCA, many lenders are reluctant to lend money for a funeral. Those that do often charge very high interest rates of 15% or even more.
“We believe that no one should go into debt to bury or cremate a loved one, and strongly advise against taking out a loan,” the FCA says on its website.
The FCA goes on to call borrowing for a funeral a “last resort.”
If you are concerned about covering the cost of your funeral expenses, purchasing burial insurance or certain other whole life insurance policies might make sense for you.
These policies can offer guaranteed benefits (as long as you pay your premiums) and can give you peace of mind as you get older.
Ultimately, many of these companies offer very similar products. Premiums can vary depending on a variety of factors depending on age, gender, location, health and more.
While some companies offer the ease of guaranteed acceptance, it may come at a cost. Some companies may ask health questions or require a medical exam.
There is no downside to shopping around and getting quotes from as many companies as you can.