Funeral insurance
Also called: Burial insurance, Final expense insurance
A small whole-life insurance policy ($5,000–$25,000) marketed to cover funeral costs. Often expensive relative to the payout. A separate savings account usually outperforms it.
Funeral insurance is sold heavily to people over 50 through TV, direct mail, and senior-focused marketing. It is structured as whole life insurance with a small face value. Premiums are level for life. There is usually no medical exam, which is the main selling point.
The economics are usually bad for the buyer. Premiums for a $10,000 policy purchased at age 65 commonly total $15,000–$25,000 over the policyholder's expected lifetime. A separate savings account funded with the same monthly amount would be worth more by the time it is needed, and is fully accessible for any purpose.
The product makes the most sense for buyers with serious health conditions who cannot qualify for term life and who genuinely cannot or will not save the money in another account. For everyone else, a savings account labeled 'funeral fund' is the better choice.
Funeral insurance is different from pre-need contracts. Pre-need is a contract with a specific funeral home, locking in services and (sometimes) prices. Funeral insurance is a check from an insurance company that the family can use anywhere. Salespeople sometimes blur the two.
- Pre-need— Arrangements made before death — picking services, choosing a casket or urn, sometimes paying in advance. Done by the person who will die or by family on their behalf.
This definition is general consumer information, not legal, medical, or financial advice. Industry practices and regulations change occasionally; verify before relying on anything here for a specific decision.
Stuck or just need to hear a human voice?
Call (555) 555-55559am–9pm ET, every day.
Prefer email? support@honestfuneral.co