Getting Burial Insurance When You’re Over 80
Discover how burial insurance after 80 might be an excellent option for your loved ones. Learn what you need to know here.
For most people, getting life insurance is a smart financial decision. After all, you want to make sure that your loved ones are taken care of if something were to happen to you. However, for those over 80, getting insurance can sometimes be a little tough.
While your personal financial situation may not dictate a traditional term or whole life insurance policy, one option that works for older folks is burial insurance. Even if you have your debt paid off or your loved ones are financially stable, burial insurance is an excellent way to prepare for the costs that will occur when you pass away.
So, with that in mind, we want to take a look at getting burial insurance when you’re over 80. Fortunately, this kind of policy is typically easy to secure, even if you’re not in excellent shape.
What is Burial Insurance?
As the name implies, this kind of plan is designed to help pay for burial expenses. Unfortunately, in the United States, funeral and burial costs can be substantial. Depending on where you live, your loved ones could expect to pay $8,000 to $15,000 when all is said and done.
Having this kind of insurance in place can alleviate the financial burden that comes with burials and funerals, and it can ensure that your family doesn’t have to shoulder this responsibility alone. Realistically, you don’t want to have to put your loved ones in a situation where they need to go into debt to cover your end-of-life expenses.
Burial vs. Funeral Insurance
When shopping around for the right policy, you may come across both burial and pre-need funeral insurance. Here is a quick breakdown to help you understand how these plans differ.
Burial insurance is a flat rate paid out to a beneficiary of your choice. Typically speaking, these policies cap off at around $25,000, but that depends on the insurance carrier. The best thing about this kind of plan is that your beneficiary can use the money however he or she chooses. So, if the payout is $10,000 and your burial or cremation costs less than that, your beneficiary can keep the remainder.
Pre-need funeral insurance, however, is designed to pay for specific funeral costs. These expenses can range wildly, depending on the plans you have for your memorial. Some examples of funeral costs can include church services, cremation, an urn, a coffin, or a wake. Typically, you will price out each component individually, and you’ll work with the funeral home directly.
Another critical difference between these policies is that funeral insurance is paid directly to the funeral home. If there are any excess funds, your family doesn’t get to keep them. The money can only be used for your end-of-life expenses, nothing else.
One benefit of getting funeral insurance, however, is that you can often lock in pricing and protect against inflation. For some people, this feature can provide significant cost savings to your loved ones.
Considerations When Buying Burial Insurance
Overall, this kind of policy is relatively straightforward, but there are several factors that you want to think about before buying it. Here are the potential considerations you should make when comparing plans.
Term vs. Whole Insurance
When buying traditional life insurance, you will need to decide whether to set a specific time (i.e., 20 years) or to pay for it throughout your whole life. When it comes to burial insurance for seniors over 80, however, terms are no longer applicable. The reason for this is that the entire point of this insurance is to pay for your end-of-life expenses, so it’s not a “just-in-case” plan.
Typically, because the payout for burial insurance is much lower than traditional policies, most insurers consider policyholders paid up if they reach 100. However, that depends on the company you buy from and when you get the insurance.
For example, if you buy burial insurance at 60, you likely won’t have to keep paying it for 30-plus years. Still, be sure to talk to your insurance agent so that there are no surprises.
In most cases, you can obtain burial insurance without having to submit a medical exam. Again, the reason for this is because the payouts are much less substantial. However, your age and overall health will affect your premiums, so keep that in mind.
For example, a 90-year-old with significant health problems will pay much higher than an 80-year-old in decent shape. Sex can also be a factor, as men tend to die younger than women.
Depending on the carrier you choose, you may be able to get a discount on premiums if you’re in good health. However, if you don’t have to answer any medical questions, then chances are that the insurer doesn’t offer a structured payment plan.
When comparing different burial insurance plans, you will likely come across a variety of premium payment options. Here is a brief overview of the most common ones available.
- Stepped Premiums – the insurance company will reassess your payments each year based on specific factors, like age, health, and sex.
- Leveled Premiums – you will have to answer some health questions initially, but your rates will be locked in for the life of the policy.
- Capped Premiums – in this case, once you’ve paid an amount equal to the death benefit (i.e., $10,000), you no longer have to pay. Your plan remains active until you die.
- Payout Guarantee Premiums – this option is less frequent, but the policy pays your beneficiary either the death benefit or the amount you’ve paid in premiums, whichever is higher. So, you could technically overpay on the plan, and the money will still go to your loved ones.
No Waiting Period
Typically, with standard life insurance plans, there is a two-year period where the insurance company can potentially deny your claim if they find evidence of fraud. For burial insurance, however, many companies offer immediate benefits as soon as you’re approved and have made the first premium payment.
Be sure to talk with your insurance agent to see if you qualify for guaranteed payouts. Those in poor health that aren’t sure they will make it more than 10 years should get this kind of guarantee. As long as you make the first payment, you could die at any time, and your beneficiary will get the full amount.
How Much Burial Insurance Do You Need?
As we mentioned, these policies can usually cap off at $25,000. You may be able to get a higher death benefit, but you will likely need to be in good health or submit to a medical exam to qualify.
While you may want to get as much money for your loved ones as possible, it’s crucial to make sure that you know the costs associated with your burial and funeral services. Here are some common expenses that you should price out now.
- Cemetery Plot
- Headstone or Gravestone
- Cremation Services
- Memorial Service
- Church Service
- Embalming for Open-Casket Funerals
Beyond the standard funeral and burial expenses, keep in mind that your loved ones may have to pay for other end-of-life needs. These additional costs can include meeting with a lawyer, arranging the sale of personal belongings, settling medical bills, or paying off any outstanding debt. Fortunately, traditional burial insurance can be used for any or all of these expenses, provided that your death benefit is enough to cover everything.
Now is the time to start thinking about what you want to include in your funeral. You also need to discuss these options with your family so that they are aware of your wishes. This way, there is no confusion regarding how your arrangements will be handled, and you can make sure that there is enough money to avoid creating debt.
Another thing to consider is the price of inflation. Be sure to add another eight to ten percent to the costs each year. If your death benefit doesn’t cover the total after 10 years, you will want to talk to your insurance carrier. Then you can see what options you have.
What If I Already Have Life Insurance?
You can often add burial insurance to your plan if that makes sense for you. The advantage of adding this is that your loved ones can use the extra funds for end-of-life expenses. That is without having to dip into the rest of the money.
Another option is to get a separate burial insurance plan. Not only can you designate a different beneficiary for the second policy, but you don’t have to worry about submitting to a medical exam. Talk with your insurance agent to see if this strategy is right for you.
Contact NextGen Life Insurance Today
At NextGen Life Insurance, we make it easy to compare burial insurance plans and rates. If you’re over 80, give us a call so that we can start the process right away. Don’t leave your loved ones in a financial bind. The right policy can make a world of difference.