The terms “burial insurance,” “funeral insurance,” “and final expense insurance” define any whole life insurance policy with a small death benefit, commonly ranging from $5,000–$20,000. Unlike larger whole life insurance policies that are intended to provide improved financial security for your beneficiaries, burial insurance only aims to provide enough death benefits to cover the costs of interment. Insurers don’t necessarily refer to their products as “burial insurance,” but they do offer flexible death benefit options for their whole life insurance products, making it possible to tailor a policy to suit your specific requirements.
What Is Whole Life Insurance?
Whole life insurance is an insurance product that runs for your entire lifetime, ensuring payout of death benefits when you pass away. Such payouts are useful if you have dependents and wish to provide them with a cash sum upon your death to secure their financial position, settle outstanding debts such as medical bills or pay off a mortgage. Small whole life insurance policies are useful for providing instant cash for obligations such as funeral expenses.
Whole life insurance combines insurance with an investment component. Over time, your policy accrues cash value due to overpayments of premiums above what’s necessary to cover your insurance costs. This cash is tax-deferred and is available to you if you terminate the policy early. It’s also possible to take out a loan against the cash value. Some whole life insurance products from mutual insurance companies are eligible to pay you dividends when the company does well financially.
Company & A.M. Best Financial Strength Rating
Not all companies offer whole life insurance in small amounts, so when you’re looking for burial insurance, you need to study a company’s products carefully. Additionally, consider the financial strength of the company. Ratings from companies such as A.M. Best are good indicators of a company’s investability, with a “good” rating indicating the company has a strong potential to generate profit. The A.M. Best scale ranges from the superior rating of A++ to the poor rating of D and also includes several “non-rated” designations.
The following companies have ratings of A- or better from A.M. Best and offer small whole life insurance policies suitable for covering your burial expenses.
AARP/New York Life
- Guaranteed acceptance whole life insurance for ages 50–80
- Death benefits available from $2,500–$25,000
- Rating of A++
AIG
- Guaranteed acceptance whole life insurance for ages 50–85
- Death benefits available up to $50,000
- Rating of A
Colonial Penn
- Whole life insurance for ages 40–75
- Guaranteed acceptance whole life insurance for ages 50–85
- Variable death benefits
- Rating of A-
Foresters
- Various whole life insurance products primarily for ages 50–85
- Death benefits available from $2,000–$35,000
- Rating of A
MetLife
- Guaranteed acceptance whole life insurance for ages 50–75
- Death benefits available from $2,000–$20,000
- Rating of A
State Farm Life
- Whole life insurance for ages 50–80
- Death benefits available
- Rating of A++
Settlers Life Insurance Co.
- Whole life insurance for ages up to 85
- Death benefits available from $1,000–$50,000
- Rating of A-
Finding the Ideal Burial Insurance Policy
You probably don’t like to think about death and ways to save money on funeral costs, but having provisions in place to ensure the financial security of your family is essential. There are several life insurance types to consider, but they fall into two main categories: whole life insurance and term life insurance. While term life insurance runs for a fixed period of time, usually ranging from 1–30 years, and doesn’t ensure a payout if the term expires and you’re still living, whole life insurance runs for your whole life and ensures a payout, making it a good option for covering burial expenses. With so many companies offering whole life insurance, it’s worth spending some time researching the various options to find a company and a product that matches your needs.
Ratings
If you’re taking out a policy that lasts a lifetime, you need to be confident that the company is still going to be in business when it’s time for your family to make a life insurance claim. Larger companies with good ratings at Standard & Poor’s or A.M. Best show signs of good financial strength, making them a more appealing option. The strong rating encourages investors and suggests the company is capable of expanding and continuing to generate wealth in the future.
Death Benefits
You must consider the products the company is offering carefully, as in many cases it’s possible to tailor your policy in terms of the flexibility, frequency of premium payments and death benefit amounts. Not all insurers offer small whole life policies that are suitable for covering only your interment costs, so shop around for a policy that matches your requirements and budget. Online insurance comparison tools and policy calculators are useful for quickly generating a shortlist of suitable companies.
