What Is Burial Insurance and Should I Buy It?

Death and money are two things most people really don’t want to talk about. But funerals cost money, and one way to pay for a funeral is with burial insurance. The sales pitch is that burial insurance will help protect the pockets of your loved ones by covering your final expenses.

In this article, we'll explain how burial insurance works and how much the policies cost. We'll also hear from money expert Clark Howard, who says buying burial insurance is paying for a funeral or cremation the wrong way.

Here’s What You Need to Know About Burial Insurance

Burial insurance is intended to foot the bill for your final arrangements. But the policies are usually not a good value, according to Clark Howard:

"What you pay for a $10,000 policy effectively is at such an unbelievably high cost versus the value of the policy," Clark says. "It's a policy people buy because of a visceral fear that a loved one will die and they won't have the money to bury or cremate them. But my attitude is that it's looking at the whole equation backward."

Read on and we’ll explain what Clark means, plus everything you need to know about burial insurance.

What Is Burial Insurance?
How Does Burial Insurance Work?
How Much Does Burial Insurance Cost?
What's Clark's Preferred Alternative to Burial Insurance?

What Is Burial Insurance?

Burial insurance is a type of whole life policy used to pay for funeral and burial costs. It also goes by the name “final expense insurance.”

Clark points out that the name “burial insurance” is a bit misleading because many people today are choosing final arrangements that are not burials. That can vary greatly by family and region.

The Southeast is one of the last strongholds of traditional burials. But elsewhere in the country, the trend is moving toward other methods such as cremation and burial suits.

And it's important to know that the proceeds from a burial insurance policy are not earmarked strictly for final expenses. Your beneficiaries are free to use the money for any purpose they see fit.

How Does Burial Insurance Work?

Like other types of insurance, burial insurance works on a premiums-based business model: The insurer collects a set amount from the customer monthly or annually. There’s typically no medical exam required to qualify, and in most cases, you can get a policy after answering a few health-related questions. Some policies require no health questions at all.

According to the Insurance Information Institute (III), policies are commonly sold either through funeral homes or by life insurance brokers and agents. The death benefit tends to be between $5,000 and $25,000 on a typical policy.

You can buy a policy for yourself and/or other family members, the III reports.

How Much Does Burial Insurance Cost?

In June 2020, we pulled sample quotes from State Farm and Mutual of Omaha — two leading sellers of burial insurance offering online quotes — plugging in information for a variety of possible customers in different parts of the country.

We quoted three hypothetical customers for a $10,000 policy under the following assumptions:

55-year-old male, no tobacco use, living in Georgia – Excellent health
60-year-old female, no tobacco use, living in California – Good health
65-year-old female, no tobacco use, living in New Jersey – Average health

Burial Insurance Sample Premiums

Customer	State Farm Monthly Premium	Mutual of Omaha Monthly Premium
55-year-old male Excellent health	$43.73	$45.00*
60-year-old female Good health	$44.31	$42.00*
65-year-old female Average health	$67.40	$51.00*

* Mutual of Omaha’s policy is guaranteed acceptance and asks no questions about your health. However, the trade-off is that Mutual of Omaha may reduce the death benefit for up to two years after the policy is written. More details here.

What’s Clark’s Preferred Alternative to Burial Insurance?

Money expert Clark Howard is no fan of burial insurance. As we mentioned earlier, he says the idea of an insurance policy to pay for an expensive funeral or cremation is looking at the problem backward.

Instead, Clark recommends joining a nonprofit memorial society: It usually costs a nominal fee: $25 or $35 for life. Membership gives you access to reduced pricing on final arrangements. The Funeral Consumers Alliance at Funerals.org can help connect you with a local chapter.

"If you have a non-profit memorial society near you, you know you're going to be able to do a cremation for hundreds of dollars and typically a burial for a couple thousand, so to insure for that makes no sense," Clark says.

But even if you don't have time to plan arrangements through a nonprofit memorial society, you or a loved one can use a site like Funeralocity.com to comparison shop.

You can get the pricing right on the site, access to exclusive Funeralocity pricing discounts, read Google reviews of providers and more.

“The idea is instead of feeling like you’re a sitting duck and you have to pay whatever the funeral home tells you, what you do is make the end-of-life arrangements much more affordable, and then you haven’t created this burden you’re trying to insure,” Clark notes.

Final Thought

Burial insurance may seem like a good product if you don’t want to saddle your loved ones with bills after you die. But the value of the policy isn’t really great, according to Clark.

Plus, people have a tendency to insure against very narrow circumstances in life while ignoring big, glaring things like term life insurance or disability insurance.

“Buying burial insurance to me is almost like people who buy those accidental death and dismemberment policies,” the money expert says. “You’re narrowing the purpose of the insurance way too far.”

If you have additional questions about burial insurance, reach out to our Consumer Action Center for free advice.