The two most common types of funeral insurance are standard funeral insurance and pre-need funeral insurance. These are also called funeral expense life insurance.
Standard funeral insurance
This is life insurance you buy to pay for your funeral or cremation when you pass away. Insurers usually offer coverage that lasts either for a certain amount of time or your entire life. Death benefits for standard funeral insurance are often low, ranging from $5,000 to $25,000. After you die, your death benefits go to the person you chose as your beneficiary. They can use those benefits in any way, including paying for your funeral, medical bills, legal costs or debt you owe.
Pre-need funeral insurance
Pre-need insurance lets you save money for your funeral. It helps pay for costs you expect to have, such as funeral home services, funeral merchandise, church and burial services. It can protect you from inflation by setting your funeral and burial costs at today’s prices. Like standard funeral insurance, this coverage usually lasts either for a certain amount of time or your entire life. Unlike standard funeral insurance, it pays the funeral provider you choose. Once you fully pay your coverage, it’ll last for the rest of your life.
Pros and cons of buying funeral-related insurance
Pros
- It's easier to qualify than most life insurance plans.
- There are few or no health questions.
- Often you don't need a medical exam.
- It can protect you from inflation.
Cons
- It offers lower benefits than most life insurance plans.
- There are no discounts for good health.
- The premiums are usually higher than life insurance.
- What you pay for premiums may cost more than your funeral.
Companies that offer funeral and pre-need insurance
- Funeral Directors Life Insurance Company: 800-692-9515
- Great Western Insurance Company: 866-689-1401 (Pre-Need) or 800-733-5454 (Funeral Costs)
- National Guardian Life Insurance Company: 800-988-0826, option 1
- United Heritage Life Insurance Company: 800-657-6351
NOTE: This list does not include companies that may offer minimum death benefits. Companies often sell these instead of funeral/burial or pre-need insurance.