Burial Insurance | Burial Insurance For Seniors: Part 1

Have you ever thought about what your funeral might be like? What sort of service would there be? Have you thought about the type of coffin that you would prefer?

While these questions may seem a bit morbid they are certainly not unreasonable. There are actually many reasons to preplan and even prepay your final arrangements before you absolutely need to. There is even a product called preened insurance, also known as burial and funeral insurance (which is basically low cost term life insurance) that is intended for the aforementioned purpose.

Burial insurance deviates from other kinds of insurance because it is a matter of “when” instead of a matter of “what if”. With this insurance, you can plan out all your final details and then pay for it in advance.

Kevin Gough of Conning & Co., an insurance research firm, says, “People aren’t buying this for the financial benefit, but rather to lock in and prearrange their funeral their way”. He later mentions, “Whether it’s a velvet-lined casket or a particular type of service, it guarantees they’ll have the funeral they want.”

When looking at burial insurance from its most fundamental level, it seems as though it is a no-brainer purchase. However, a string of funeral insurance scams across the nation (affecting thousands of policy holders) gives a loud warning that you must do your homework when buying burial insurance, maybe even more homework than when trying to decide on other types of insurance. There has been much controversy over elderly people allegedly being tricked into paying more in premiums than they will actually receive in claims (sounds like “Social Security”). In fact, states including Florida have tried to pass legislation that would ban this practice.

Funeral prearrangement is not a new concept. According to the National Funeral Directors Association (NFDA), more and more people over the last 30 years have decided to look into preplanning. Recent industry wide events have put the focus on prefunding of these ceremonies.

In the past, funerals were normally paid for via trusts (a set amount of money that is set aside to cover final expenses). Trusts are no hard to make, but you have to think about the tax liabilities if you are considering moving out of state. Alternatively, some people set up something called “final life expense” insurance. These are designed to have small coverage limits, around $10,000, and are specifically for covering burial costs.

In the next article in this series we will start off talking about rising funeral costs.