"Funeral insurance" generally refers to a whole life insurance policy with a death benefit of $5,000 to $25,000. As the nickname implies, people purchase this type of policy to provide money for funeral and burial expenses for themselves and/or their family members. A policy can be purchased after answering a few health questions on the application and without a medical exam.
Premiums are payable weekly or monthly. The premium is usually collected at the home or workplace of the policy owner, and the premium is usually a small round number, such as $2 or $3 per week; the death benefit is what that premium will buy given the current age of the insured. For example, a $3 per week premium could buy a $6,000 death benefit for a 36-year-old male or an $18,000 death benefit for a 9-year-old boy.
Burial policies can be designed to cover one person or all members of a family.
Under some state laws, funeral homes may be allowed to sell funeral insurance, but it is primarily sold through brokers and agents of insurance companies licensed to sell life insurance.
A similar approach to burial life insurance (and sometimes called burial or "pre-need" insurance) is pre-paying for your funeral arrangements. Under this program, you can select the funeral home, type of service, casket (or cremation), flowers, headstone, burial plot, cost of digging and filling the grave and other items, and lock in prices for them by paying in advance.
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