Burial Insurance vs. Life Insurance

Burial insurance, also known as final expense insurance, offers no-hassle coverage with a low death benefit for burial expenses. Life insurance offers a variety of policies, with options for high death benefits and opportunity to build wealth. Depending on your health and coverage needs, one type of insurance will likely benefit you over the other.

Lindsey Crossmier, writer for RetireGuide
  • Written by
    Lindsey Crossmier

    Lindsey Crossmier

    Financial Writer

    Lindsey Crossmier is an accomplished writer with experience working for The Florida Review and Bookstar PR. As a financial writer, she covers Medicare, life insurance and dental insurance topics for RetireGuide. Research-based data drives her work.

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    Lamia Chowdhury
    Lamia Chowdhury, editor for RetireGuide.com

    Lamia Chowdhury

    Financial Editor

    Lamia Chowdhury is a financial content editor for RetireGuide and has over three years of marketing experience in the finance industry. She has written copy for both digital and print pieces ranging from blogs, radio scripts and search ads to billboards, brochures, mailers and more.

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  • Published: September 8, 2022
  • Updated: September 13, 2022
  • 8 min read time
  • This page features 11 Cited Research Articles
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APA Crossmier, L. (2022, September 13). Burial Insurance vs. Life Insurance. RetireGuide.com. Retrieved September 29, 2022, from https://www.retireguide.com/life-insurance/permanent/final-expense/burial-vs-life/

MLA Crossmier, Lindsey. "Burial Insurance vs. Life Insurance." RetireGuide.com, 13 Sep 2022, https://www.retireguide.com/life-insurance/permanent/final-expense/burial-vs-life/.

Chicago Crossmier, Lindsey. "Burial Insurance vs. Life Insurance." RetireGuide.com. Last modified September 13, 2022. https://www.retireguide.com/life-insurance/permanent/final-expense/burial-vs-life/.

Comparing Burial Insurance to Life Insurance

When trying to decide between burial insurance and life insurance, you should consider how much coverage you need and your overall health condition. On average, burial insurance’s death benefit doesn’t exceed $50,000. With life insurance policies, your death benefit coverage could be millions.

According to Lincoln Heritage, the average funeral costs between $7,000 and $12,000. Even with a smaller death benefit, burial insurance would still cover a funeral.

As for your health, most burial insurances don’t require a medical exam. This means, you can get coverage quickly. Life insurance typically requires a medical exam. If you’re found to be in poor health, then you may be at risk for costly premiums or even denied coverage.

Burial and Life Insurance Comparison
Burial InsuranceLife Insurance
A specific type of life insurance intended to cover a person’s burial costsOffers a variety of policies
Can only be paid out as a lump sum Death benefit can be paid out as installments and annuities, lump-sum payments or a retained asset account
Death benefit payout is very quick, typically within 24 to 48 hours Death benefit can take weeks or months to be paid out
Policies don’t typically exceed $50,000 Policies may cover millions of dollars
Usually doesn’t require a medical exam Typically requires a medical exam, which may lead to coverage denial if you’re in poor health
Policy remains active until the policyholder passes Insurance coverage could expire before you pass away, providing no benefit
Two main types are simplified issue and guaranteed issue burial insurance Two main types are term life and permanent life insurance
Source: Lincoln Heritage Funeral Advantage

Similarities

Burial and life insurance both offer a death benefit with lifelong options. With each type of policy, the death benefit can be used towards funeral costs or any other necessary expenses. Examples of funeral costs include the viewing service, burial costs, cremation, medical bills, outstanding debt or any legal costs.

Burial and life insurance death benefits can both be paid out in a lump sum. A lump-sum payment is when the beneficiary receives the entire death benefit in one payment.

All burial insurance policies and some life insurance policies have a cash value component. In most cases, you can access your cash value while you’re still alive.

Similarities Between Burial and Life Insurance
  • Death benefit can be used for funeral costs
  • Lifelong coverage options
  • Can be paid out in lump sum
  • Offers cash value component

Differences

Burial insurance offers a singular type of insurance with one purpose — to cover end-of-life expenses. This isn’t to say you can only use the death benefit from burial insurance on end-of-life expenses. You can choose what you want to spend the death benefit on. However, since the death benefit for burial insurance is typically small, most policies only offer enough to fund funeral costs.

With a life insurance policy, the death benefit amount is substantially larger, allowing your beneficiary to use the death benefit for more than just end-of-life expenses.

Common Uses of Life Insurance Coverage
  • Pay off mortgage
  • Send kids to college
  • Leave an inheritance
  • Fund wedding costs for their kids
  • Cover debt

Life insurance offers two main types of insurance — term and permanent. Permanent life insurance policies offer a cash value component to build your wealth with lifelong coverage. Term policies offer limited coverage, typically up to 30 years, with affordable premiums.

Most life insurance policies also require a medical exam, whereas burial insurance does not. There are also different age requirements for life and burial insurance. With a term life insurance policy from Mutual of Omaha, the issue age range is between 18 to 80 years old. But other types of life insurance policies require different age limits.

According to Progressive Casualty Insurance Company, typical qualifying ages for burial insurance is between 50 to 85 years old. The age restrictions could vary, depending on which insurance company you choose.

Cost

The average cost of burial insurance is $50 to $100 per month, according to Choice Mutual. Your age is the biggest factor in the price of burial insurance. The younger you are, the cheaper your premiums will be.

There is a wide range in life insurance policy costs. Premiums for permanent policies can cost hundreds, if not thousands of dollars a month. Term policies are more affordable. If you’re healthy and young, your premium for a term policy is typically under $50 a month.

Burial Insurance vs. Life Insurance Costs
Type of Policy and Policyholder Age Burial Insurance for a 65-Year-Old With a $15,000 Death Benefit10-Year Term Life Insurance for a 65-Year-Old With $100,000 Death Benefit
Cost Estimate $47 to $74$38.35

As you can see in the table above, there is a large difference in the coverage amount for a similar premium cost. On average, burial insurance premiums are more costly than traditional life insurance, with a lower death benefit.

When Is Burial Insurance the Right Solution Instead of Life Insurance?

If you need immediate coverage without a medical exam to cover your funeral costs and small bills — you should consider burial insurance.

Life insurance typically requires a medical exam and has a waiting period. If you think you’d be denied due to a health condition or are likely to pass away in the next two years — traditional life insurance would not be a good option.

If you’re choosing burial insurance, make sure your death benefit will cover all your expenses. Currently, cremation is more affordable than a traditional funeral. On average, cremation costs between $4,000 to $7,000, according to Lincoln Heritage Funeral Advantage. In comparison, the average funeral can cost up to $12,000.

Did you know?
While cremation is the more affordable option in 2022, it’s likely to change. The U.S. cremation rate is projected to reach 78.4%, and the burial rate is expected to drop to 16% by 2040. With cremation becoming more popular, it will likely become more expensive over time.
Source: NFDA

Remember that you should only consider burial insurance if you have a small amount of debt or mortgage to cover. If you want your death benefit to provide ample coverage for years to come, life insurance might be a better fit.

What Is the Waiting Period on Life or Burial Insurance?

Your waiting period for life or burial insurance varies depending on what type you have.

According to American International Group (AIG), an average waiting period for life insurance is two years. If you pass away within the first two years that your policy is active, there could be difficulties in getting your entire death benefit.

With some life insurance policies, you may only have to wait a few weeks for the underwriting process to be completed. After you’ve been approved, you could have immediate coverage.

With burial insurance, there are two main types — simplified issue and guaranteed issue. Depending on which you choose, you could have anywhere from immediate coverage to a three-year waiting period.

Waiting Periods for Burial Insurance
Simplified Issue Burial Insurance
There is no waiting period with simplified issue burial insurance. You have immediate coverage after you’ve been accepted.
Guaranteed Issue Burial Insurance
The waiting period for guaranteed issue could be 24 to 36 months. If you were to pass away during the waiting period, your beneficiary would only receive a portion of the death benefit.
Source: Progressive Casualty Insurance Company

Alternatives to Burial Insurance

If burial insurance doesn’t fit your needs, there are other options. A payable-on-death (POD) account, veterans’ benefits, or a term life insurance policy could cover burial costs instead.

Other Options to Cover Funeral Costs
Payable-on-death (POD) Account
A POD is an account where you can build funds for funeral or cremation services. Your beneficiary can only access the funds once you’ve passed away. Your beneficiary will need to show your death certificate before accessing the funds.
Veterans’ benefits
If you are a veteran, you can be buried in a national cemetery with no charge for the gravesite or marker. Your loved ones will need to cover the preparation services, like embalming. However, the U.S. Department of Veterans Affairs can help cover preparation costs with their additional burial benefits.
Term life insurance
If burial insurance doesn’t provide enough coverage, you could consider term life insurance. Term is the most affordable type of life insurance, and there could be options to skip a medical exam.
Source: AARP

Burial and Life Insurance FAQs

What is burial insurance?
Burial insurance is intended to cover end-of-life expenses after the policyholder dies. This may include funeral costs, cremation services or remaining debt. Burial insurances do not require a medical exam, and the death benefit is typically capped at $50,000.
What is life insurance?
Life insurance offers financial security the policyholder’s loved ones after the policyholder dies. Life insurance comes in various policies, with options for high death benefits and opportunity to build wealth. Term and permanent are the two main types of life insurance.
Is burial insurance worth buying?
Whether burial insurance is worth it or not depends on your age and how you intend to use your death benefit. The older you are, the more expensive your premiums are going to be. If you’re over 70 and only want to use your benefit for funeral costs, then burial insurance would be worth it. If you’re in your 40s and want to use your benefit towards long-term expenses such as your mortgage, college tuition for kids or debt — burial insurance may not be worth it.
Last Modified: September 13, 2022

11 Cited Research Articles

  1. Martin, A. (2022, August 13). How Much Does Burial Insurance (Also Known As) Final Expense Insurance Cost? Retrieved from https://choicemutual.com/burial-insurance-costs-age
  2. Martin, A. (2022, August 9). How To Qualify for Final Expense Life Insurance With No Waiting Period. Retrieved from https://choicemutual.com/burial-insurance-with-no-waiting-period/
  3. American International Group. (2022, January 21). Life Insurance with No Waiting Period and No Medical Exam. Retrieved from https://www.lifeandretirement.aig.com/articles/knowledge-insights/life-insurance-articles/life-insurance-with-no-waiting-period-and-no-medical-exam
  4. Potts, L. (2021, October 22.) Smart Ways to Cover the Costs of a Funeral. Retrieved from https://www.aarp.org/home-family/friends-family/info-2020/paying-for-cost-of-funeral.html
  5. National Funeral Directors Association. (2020, July 6). 2020 Cremation & Burial Projects Cremation Rate of 87% by 2040. Retrieved from https://nfda.org/news/in-the-news/nfda-news/id/5223/2020-cremation-burial-projects-cremation-rate-of-87-by-2040
  6. Progressive Casualty Insurance Company. (n.d.). What Is Burial Insurance? Retrieved from https://www.progressive.com/answers/burial-insurance/
  7. Lincoln Heritage Funeral Advantage. (n.d.). How Much Does a Funeral Cost? Retrieved from https://www.lhlic.com/consumer-resources/average-funeral-cost/
  8. Lincoln Heritage Funeral Advantage. (n.d.). How Much Does Cremation Cost? Retrieved from https://www.lhlic.com/consumer-resources/cremation-costs/
  9. Lincoln Heritage Funeral Advantage. (n.d.). What’s the Difference Between Burial Insurance, Life Insurance, and Funeral Insurance? Retrieved from https://www.lhlic.com/consumer-resources/burial-insurance-vs-life-insurance/
  10. ProFam. (n.d.). Average Cost of Life Insurance for Men and Women 65 And Over. Retrieved from https://www.profam.com/life-insurance-over-65/
  11. Mutual of Omaha. (n.d.). Term Life Insurance. Retrieved from https://www.mutualofomaha.com/life-insurance/term-life-insurance