Who should buy burial insurance? Well, the short answer is: everyone. According to the National Funeral Directors Association, funeral costs can easily exceed $6,000—and that’s just for the funeral, the figure doesn’t include associate expenses for the burial at the cemetery, a grave stone or other extras like flowers or placing a lengthy obituary in the local paper.
Don’t assume that your funeral expenses will be far less if you opt for cremation instead of burial; the cost will be less because there will be no casket or casket liner, but crematorium expenses and ash receptacles don’t come cheap either.
Sometimes it is simply easier to make separate arrangements for burial expenses. You can do this by taking out a burial insurance policy. Unlike a life insurance policy or an annuity, burial insurance is strictly used for all of the expenses surrounding your funeral arrangements. Ideally, you should purchase a policy that will cover every contingency so that the burden is not put on your family or friends.
Most burial insurance policies come with high premiums because there are generally no restrictions on age or health issues, which drive the overall cost of the policies up. If you do choose to purchase this type of insurance, be sure to read the policy carefully before you sign on the dotted line. Some policies may have restrictions, such as not covering 100% of the expenses if the policy holder dies within a certain period of time after taking out the insurance.
Another option is to purchase “preneed” insurance from the funeral home of your choice. You can cover the service you want with the funeral director and then buy a policy that will cover the exact amount of expenses; you simply make the funeral home the of the policy and no one will have to worry about your final expenses. Check with your state’s laws to be sure you are allowed to name the funeral home as your beneficiary; most states allow it.