Burial insurance is easy issue life insurance coverage to age 100. Much like whole or universal life, it's referred to as graded life, final expense of easy issue permanent coverage. Most have a yes or no application with no medical review or exam (unless you are requesting over normal coverage limits). Coverage continues as long as premiums are paid unless you cancel the policy. All policies accumulate cash value, and premiums remain the same. Burial life insurance is usually used to pay for immediate medical expenses related to funeral, credit cards, etc. Features of burial insurance include:
- Small face value policies
- Easy to qualify for (yes / no application)
- Can accumulates cash value (most don't)
- Premiums remain level
- Provides protection to age 100
Can you get burial insurance if you are already:
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Terminally ill?
- Diagnosed with AIDS?
- In a nursing home?
- Have major heart issues?
- In the hospital, on morphine waiting to die?
- Diagnosed with cancer?
- Have other major, life threatening health issues?
The answer is "possibly." But it has to be a no questions asked policy, not just a policy with no physical exam. Those are referred to as guaranteed issue or graded life policies because they pay little or no benefit the first year, slightly more the second year, maybe half the face amount the 3rd year, etc. If you loved one is really on their last leg, they will most likely expire before you can get a benefit that justifies your time. But people to get better and miracles do happen. Below is a chart / example to illustrate on a $10,000 policy how much you could get:
| Policy year | % of face or death benefit paid to the beneficiary | $ amount paid |
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1st year | premium refunded, no death benefit paid. | $0 |
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2nd year | 25% of death benefit paid. | $2,500 |
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3rd year | 50% of death benefit paid. | $5,000 |
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4th year | 75% of death benefit paid. | $7,500 |
|
5th year | 100% of death benefit paid. | $10,000 |
Reasons to avoid buying burial insurance:
I want my death to be a real tragedy
But you don't want your loved ones left with any of your debts from a funeral, credit cards, etc.
I can't conceive of dying, it's hard for me to think about
It's not something you'll dwell on, just spend an hour or so making the arrangements and then keep your policy in force, from then on.
It's unpleasant to talk about
But you will show your loved ones that you care now by providing for them later.
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