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What is "burial insurance?"
“Burial insurance”
usually refers to a whole life insurance policy with a death benefit of
from $5,000 to $25,000. As its nickname implies, people buy this type
of policy to provide money for funeral and burial costs for themselves
and/or family members. It is possible to buy a policy after answering a
few health-related questions on the application and with no medical
exam.
Premiums are payable weekly or monthly. The premium is usually
collected at the policyowner’s home or workplace, and the premium is
usually a small round number, such as $2 or $3 per week; the death
benefit is whatever that premium will buy given the insured’s current
age. For example, a $3 per week premium might buy a $6,000 death
benefit for a 36-year-old man or an $18,000 death benefit for a
9-year-old boy.
Burial policies may be designed to cover one person or everyone in a
family.
Under some state laws, funeral homes may be licensed to sell burial
insurance, but it is mainly sold through brokers and agents of
insurance companies licensed to sell life insurance.
An approach that is similar to burial life insurance (and sometimes
called burial or “pre-need” insurance) is pre-payment of your funeral
arrangements. Under this program, you may select the funeral home, type
of service, casket (or cremation), flowers, headstone, burial plot, the
cost of digging and filling the grave, and other items, and lock in the
prices for them by paying in advance. |
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