Funeral and burial fees may be as much as $15,000. If you want to avoid your loved ones being burdened with funeral and burial costs when you’ve passed on, then you will need a plan. Here’s a quick cheat sheet on how to protect your family from end-of-life expenses.
Will funeral homes take life insurance?
Yes. Many funeral homes will work closely with families and normally perform their services and wait to receive payment from the family once they receive the death benefit.
There is a product called funeral insurance in which funds are set aside and paid directly to your funeral home of choice, but we recommend instead to purchase a form of life insurance that distributes benefits to your loved ones and they can use these funds for whatever they want, including funeral expenses.
What types of life insurance can provide coverage for funeral and burial costs?
Any type of life insurance you purchase can provide death benefits for a funeral as long as you die while it’s inforce—or active. Final expense life insurance (a small guaranteed whole life insurance policy sometimes confused with funeral insurance), permanent life insurance, or a term life insurance policy can provide funds to pay for end-of-life costs.
How much insurance should I buy to cover funeral costs?
The average funeral and burial costs about $10,000, not including the usual additional expenses such as flowers, the grave marker (or tombstone), and obituaries. Your policy should at a minimum cover these expenses with an allowance for inflation over time.
How can I tell if I really need life insurance for my funeral?
If you already have life insurance in place, have any changes occurred in your life since you purchased it? Did you buy a house? Open a business? Have children? If so, you may want to consider purchasing additional life insurance to provide more financial protection to your loved ones.
If you don’t have life insurance, how will your family pay for your final expenses such as your funeral or any debt you leave behind?
Simply put if your loved ones will be financially burdened at your passing, then you need life insurance.
» Calculate: Life insurance needs calculator
Term, Permanent, and Final Expense Life Insurance: How to Make the Right Coverage Choices
Since funeral and burial costs can be significant it is important to have the facts when choosing between purchasing a new term life policy, permanent life insurance policy, or final expense life insurance policy.
How much will my funeral really cost?
According to the Bureau of Labor Statistics, the cost of funerals and burials has risen by more than 220% in the past 30 years—rising twice as fast as any other consumer item and service.
That means it is very likely that the costs of funerals will rise significantly in the future as well. As we learned above, although the average funeral may cost around $10,000, there are many extra costs to factor in when estimating end-of-life costs, such as probate court fees and medical bills.
Should I purchase a new term life insurance policy?
Term life insurance is the most affordable type of life insurance. It’s common to own more than one policy as well. This strategy is called laddering.
Oftentimes, people will buy a small term policy when they are young ($100,000 to $250,000 in coverage) at a nominal cost, but then their lives change—they get married, buy a house, have children. These changes may bring the need for more life insurance coverage.
If you currently already own life insurance, does your term life policy’s death benefit provide funds sufficient to:
- Replace lost income if you are a key provider in your household?
- Repay consumer debt that is not dischargeable upon your death?
- Pay off the remainder of your mortgage (if you wish your spouse or partner to own your home outright)?
- Contribute towards your spouse or partner’s retirement fund?
- Leave funds earmarked to help adult children buy their first home or pay off student debt?
Of course, you may have other financial priorities in addition to the ones above. These are just a few questions to which, if the answer is “No”, we advise purchasing additional life insurance.
Although having some insurance is better than none, with today’s various insurance options there is no reason to be underinsured.
You can always use our free life insurance needs calculator to find out how much term life coverage makes since for your family.
See what you’d pay for life insurance
Term vs. Permanent vs. Final Expense Life Insurance: What’s the Difference?
- Does not require a medical exam
- You are guaranteed to be accepted
- Your premiums are determined based on your gender, age, and smoking status
- Only available for people ages 50-80
- Policies have a face value ranging from $2,000 to $15,000
- You can be approved in just one day
- It is permanent as long as your premiums are kept up
- Your premiums will not increase
- Accrues cash value as you pay premiums
- Most affordable type of life insurance
- Normally requires a medical exam
- Acceptance is not guaranteed
- Premiums are based on several factors including age, health, job, and hobbies
- May take more than a month to be approved
- Provides coverage for a set term and must be renewed or converted to a whole life policy to maintain uninterrupted coverage
- Your premiums will go up as you age if you renew or purchase another policy when your term expires
- Normally requires a medical exam
- Acceptance is not guaranteed
- Premiums are higher than that of term life insurance
- Approval takes longer than guaranteed-issue policies because you go through underwriting
- Lasts your entire life
- Accumulates a cash value
- Has the option to pay dividends
Final expense life insurance is typically only advisable if you have or have had significant health challenges, or you are of an age that makes the cost of permanent or term life insurance prohibitive. Its main purpose is to leave your family funds to cover end-of-life expenses, versus income replacement as term life insurance and permanent life insurance can do.
Of course (and we can’t say this enough) if you are not insured or you’re underinsured, it is a smart idea to put applying for coverage at the top of your To-Do List (our free quotes tool lets you compare quotes and apply for coverage in less than five minutes.)
How does final expense life insurance work?
As long as you’re eligible, buying final expense life insurance is easy. All you do is complete a short application form. Since you don’t have to have a medical exam, your application is processed very quickly and can be done 100% online.
As soon as you complete your online application, verify your identity, and sign the policy, your coverage is inforce.
You are fully insured for accidental death immediately. However, you won’t be fully covered (meaning your beneficiary will receive the full death benefit) until after two years. If you die by any means other than an accident before you have reached the second year of your coverage, your loved ones will receive a refund of premiums paid plus some interest.
Contact Quotacy directly if you are interested in final expense life insurance.
How does term life insurance work?
If you aren’t insured, or you need a little refresher, here’s a quick review.
Term life insurance provides coverage over a specific term. Usually 10, 15, 20, 25, 30, 35, or 40 years.
The face value amount (or how much the policy will pay out to your beneficiaries when you die) determines the minimum price that you will pay in premiums.
Your premiums will stay level as you age, but once your term is over, if you decide to purchase a new policy (or renew an existing one) then your premiums will be based on your current age.
As long as you pay your premiums, you will have coverage.
How does permanent life insurance work?
Permanent life insurance lasts your entire life. Whole life is the most basic and common type of permanent life insurance. It will pay out when you die not if you die as is the case with term life insurance.
If you want life insurance that will be available for funeral costs and other final expenses when you die, you should consider permanent insurance. Term life insurance is temporary coverage mainly designed to protect your loved ones during their most financially vulnerable years, then if you outlive your term, your family relies on retirement savings and emergency funds to cover your future funeral costs.
Costs of Term Life Insurance vs. Whole Life Insurance vs. Final Expense Life Insurance
Your term life and whole life insurance rates depend on your risk class, or an insurance company’s estimate of your mortality. As uncomfortable as it is to think about, this is a key component in determining how much you’ll pay.
|Average Life Insurance Cost of a $100,000 Term Life Insurance Policy for a Healthy Male|
|Age at Purchase||Term Length||Monthly Premium|
Final expense life insurance premiums cost more than term life insurance and whole life insurance premiums because it is a guaranteed issue whole life policy. Since insurance companies do not have the benefit of evaluating a current medical exam or your medical records to determine the state of your health, they charge more to compensate for their financial risk.
|Final Expense Life Insurance Monthly Premiums – Male, Non-Smoker|
Whole life insurance is more expensive than term life insurance because of its benefits. It lasts your entire life, accumulates a cash value, and can pay dividends.
Most families only need term life insurance, but whole life insurance can be beneficial is many situations. Contact us if you would like to talk with an advisor on what type of insurance would be best for you.
|Average Whole Life Insurance Costs for a Healthy Male|
|Age at Purchase||Face Amount||Monthly Premium|
Life insurance isn’t one-size-fits-all. Your place in life and your needs will determine if you should get term, whole, or final expense life insurance.
» Learn more: Life Insurance Buyer’s Guide
About the writer
Natasha Cornelius, CLU
Senior Editor and Licensed Life Insurance Expert
Natasha Cornelius, CLU, is a writer, editor, and life insurance researcher for Quotacy.com where her goal is to make life insurance more transparent and easier to understand. She has been in the life insurance industry since 2010 and has been writing about life insurance since 2014. Natasha earned her Chartered Life Underwriter designation in 2022. She is also co-host of Quotacy’s YouTube series. Connect with her on LinkedIn.