How Does Burial Insurance Work?

The Concept

When the sad day arrives when you depart from this world, you would want a proper and befitting funeral and burial to be accorded. This is not so cheap and requires a fair amount of money. Insurance providers offer burial insurance to take care of these funeral expenses. Burial insurance is nothing but a type of funeral expense that is covered by an insurance policy that you take out with an insurance company, during your lifetime.

Most people do not plan for burial expenses, because they either think it is not a significant expense or they avoid thinking about this topic, as it is unpleasant.  Unfortunately, the deceased person never knows the problems family members face due to the high expenses incurred in funerals and burials. Burial insurance taken during a person’s lifetime would cover this expense and help to reduce burial expenses.

How does it work?

How Does Burial Insurance Work

Burial insurance is usually taken as a life insurance policy, which may be whole life or term insurance. In the case of a whole life policy, it is valid as long as you live. When you are no more, the insured amount or the death benefits is handed over to the beneficiary you have named in your policy. In term insurance though, the beneficiary gets the death benefits if you pass away during the term of the policy (which would be pre-agreed). After the term of the policy is over, if you are alive then the policy expires and you get nothing.

There are two aspects here, one is preneed funeral insurance, which covers the funeral expenses, including service costs, funeral home charges, and burial services. Here, the money is directly handed over to the service provider who would take care of funeral arrangements. The beneficiary does not get the money. Only the actual amount incurred for the funeral is paid out.Read this common FAQ on burial insurance 2019.

On the other hand, in burial insurance, coverage includes funeral services and burial, but here the money is handed over to the beneficiary you have named. The beneficiary can pay for the funeral services, burial/cremation, and related expenses. It is possible that the amount insured is more than the expenses needed for a funeral and burial. In such a case, the leftover money can be utilized by the beneficiary in any way he/she deems proper.

In burial insurance, the benefits given on death is not very high. It ranges from $5,000 to $15,000. This, of course, depends on the insurance provider and the kind of policy that you have opted for. Since the payout is less, the premium is also relatively less.


The premium for a burial insurance policy would cost from $10 a month to $100, depending on the insurance company and the amount you specify. Remember that the older you are when taking a policy, the higher the premium is. It would be advisable to take a policy when you are in the late 60s.

Burial insurance is useful as it covers funeral expenses after you pass away and the insured amount is handed over to the beneficiary to use as they deem fit.

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