The two most common types of funeral insurance, which are considered funeral expense life insurance, are standard funeral insurance and pre-need funeral insurance. These types of plans help cover costs associated with your funeral and any final expenses. However, there are differences to note.
Standard funeral insurance
This is a life insurance policy you buy to cover the cost of your funeral or cremation cost when you pass away. Insurance companies generally offer this type of coverage in the form of term life or whole life. The death benefits for a standard funeral policy are typically low and range from $5000 to $25,000. After you die, funeral insurance pays the death benefits directly to the person you named as your beneficiary. Your beneficiary can use the proceeds in any manner, including funeral expenses, medical bills, legal costs or any outstanding debt you owed.
Pre-need funeral insurance
Typically, you buy pre-need insurance to set aside funds for your funeral before the need arises. It covers the cost of predetermined expenses, such as funeral home services, funeral merchandise, church and burial services. The policy can protect against inflation by locking in funeral and burial cost at today’s prices. As with funeral insurance, this type of coverage is generally in the form of term life or a more permanent life insurance policy. However, unlike funeral insurance, the proceeds are paid directly to the funeral provider that you choose. Once you pay the policy in full, it’ll remain in force for the rest of your life.
Pros and cons of buying funeral-related insurance
- It's easier to qualify than most life insurance plans.
- There are few, if any health questions.
- Often there's no medical exam required.
- It can protect against inflation.
- Offers lower benefits than most life insurance plans.
- There are no discounts for good health.
- The premiums are generally higher than life insurance.
- The amount you pay in premiums may be more than funeral cost.
Companies that offer approved funeral and pre-need insurance policies
- Funeral Directors Life Insurance Company: 800-692-9515
- Great Western Insurance Company: 866-689-1401 (Pre-Need) or 800-733-5454 (Funeral Expense)
- National Guardian Life Insurance Company: 800-988-0826, opt 1
- United Heritage Life Insurance Company: 800-657-6351
NOTE: This list does not include those companies that may have approved minimum death benefit policies, which are often sold as an alternative to a funeral/burial- or pre-need-specific policy.