Difference between Life Insurance and Burial Insurance?

What’s the Difference between Life Insurance and Burial Insurance?

The importance of life insurance in our life is simply undeniable. None of us want to leave our loved ones sweating cover future expenses.

Most importantly, our prime objective is to secure our family with financial consolidation in case of our passing.

This prompts us to buy insurance policies (depending on our motives) to make sure that you or your family have no financial worries in the future.

The term “life insurance” is a very broad category, and it caters to different subcategories such as term life insurance, annuity insurance, burial insurance, whole life insurance, etc.

Every category offers specific distinctive features. It depends on your preferences as to what do you want for your future.

In this article, we will focus on burial as well as life insurance and the difference between life insurance and burial insurance.

So, let’s get started with the basics.

What is Life Insurance?

In simplest terms, it is a contract between two parties:

The insurer pays a specific predefined amount or benefits to the insurance policyholder in case of his/her death, illness, or any specific even mentioned in the contract.

However, the insurance policyholder has to pay a specific amount (premium) to the insurer to buy a policy.

The policyholder can either pay that specific amount upfront or make regular installments.

There are some specific terms related to any insurance policy that you must know before reading further about this topic.

The insurer

 The insurer is a registered company that provides or sells life insurance policies.

State insurance departments or other related authorities regulate these companies (insurers).

The policyholder

The policyholder can be an individual, trust, company, or any business that buys or owns an insurance policy.

However, it is important to understand that an insurance policy may insure the policyholder. Or it can also insure another person depending upon the contract.

The Insured

An individual or a person whose life is insured. It can be an individual himself/herself, or one can buy an insurance policy for others.

The Death Benefit

It is the amount an insurance policyholder will get from the insurer in case of his/her death.

That said, nominated individuals will receive that amount on behalf of the deceased.

The Beneficiaries

An individual or entity that an insurance policyholder nominates or designates to receive the death benefit.

It can be the spouse only, or the insurance policyholder may nominate the children or a charity institute as well.

The policyholder may also nominate the percentage of benefits for every nominee.

The Policy Length

It is a specific time period during which an insurer agrees to pay the death benefit.

The time period may vary from 5 to 30 years, or it can be permanent.

A policy will be in order as long as the policyholder pays the premiums.

The Premium

It is a specific amount that an insurance policyholder has to pay during the policy length.

It can be a lump sum, or the policyholder can pay regular installments over a specific period.

Life insurance is the main category, which is further divided into subcategories. Every subcategory has specific benefits and requirements.

Here are some common subcategories of life insurance:

  • Term life insurance policy
  • Permanent life insurance policy (which has further types)

What is Burial Insurance?

It is a type/subcategory of life insurance.

If it is to be more specific, it is a type of whole life insurance.

There are different names for burial insurance, such as “funeral insurance” and “final expense insurance.” Basically, it covers the funeral costs of the policyholder according to the contract.

The idea behind burial insurance is to keep your loved ones away from worrying about your funeral costs in case of your demise.

Burial insurance is basically a type of life insurance, but it covers or offers smaller benefits. Just like all other insurance policies, its cost and benefit are decided on the basis of your health condition and your age.

One may think that why is it important to have burial insurance. Well, death is a sudden calamity, and even if you want your burial to be simple, your family will still have to incur some expenses.

These expenses may include, casket or urn, flowers, catering, burial plot, headstone, memorial services, etc.

The need for burial insurance becomes more intense in case of sudden death. In such cases, you or your family may not be prepared financially. However, burial insurance can turn out to be a savior for your family.

According to the National Funeral Directors Association, an average funeral cost varies between $7,400 to $8,800. This is a hefty amount and can be a massive burden for your family.

So, it is evident that burial insurance is a subcategory or type of life insurance. But the question is, what is the difference between life insurance and burial insurance? Let’s get to the differences between the two:

Difference Between Life Insurance and Burial Insurance

You can differentiate between these two insurance policies on different grounds. Here is a comparative difference between life insurance and burial insurance.

Cost Covered by Burial Insurance and Life Insurance

Burial insurance covers all costs or expenses incurred in your funeral. Moreover, most of the burial insurance policies allow your beneficiaries to use the remaining amount.

If there are still excessive funds even after paying for funeral costs, your beneficiaries can use that amount to pay for expenses immediately before death. For instance, you can pay the doctor’s bills, etc.

On the other hand, the beneficiaries can use the proceeds of life insurance for different purposes. They can use that amount for your burial, pay a debt or mortgage, college fee, medical expenses.

Moreover, the proceeds from life insurance can be divided into the heirs of the policyholder. Or, the amount may be sent to charitable institutions. It all depends on the conditions in the life insurance policy.

In a nutshell, burial insurance only covers the funeral costs unless the insurer agrees otherwise. However, proceeds from the life insurance policy can be used for different purposes.

Payout in Burial Insurance and Life Insurance

As the sole purpose of the burial insurance is to cover your funeral expenses, its face value is lower. In general conditions, burial insurance policies may pay you between $5000 to $50,000.

On the other hand, on average, the life insurance policies pay around $160,000. Yes, a life insurance policy is of different types, but a payout below $100,000 is pretty unusual. So, the face value of both policies has a significant variation.

Waiting Period in Burial Insurance and Life Insurance

The waiting period for burial insurance can last for years in order for the policy to build value before the payout. That period usually prolongs to three years or even more.

On the other hand, the waiting period for a life insurance policy (if decided) is one to two years. However, if a person purchases a life insurance policy through his/her employer, the waiting period is 90 days.

Age Restrictions for Burial Insurance and Life Insurance

There is an age restriction for both insurance policies as well. For instance, the minimum age limit to buy a life insurance policy is 18 years.

Anyone below 18 years is not eligible to buy life insurance. However, people generally buy life insurance policy after getting married or after having kids. Moreover, some people prefer buying life insurance policies through their employers.

On the other hand, a person who wishes to buy a burial insurance policy must be 50 years old. Well, the age limit may vary slightly, but generally, it is a minimum of 50 years or more.

Sample Rates of Burial insurance and Life Insurance

Well, it is quite difficult to compare the cost of both types because of the difference in their nature.

There are certain factors that an insurance company considers while making burial and life insurance policies. For instance, if you are not a smoker and have good health, then you can have access to better policies and lower side of the premiums.

On the contrary, a person who smokes will have to pay higher premiums and may have access to lesser policies. But, if a person quits smoking at least five years before purchasing life insurance or burial insurance, then he/she can get better policies with lower premiums.

Similarly, your premium rates will increase with an increase in your cholesterol levels or high blood pressure. But, this is not an issue in burial insurance. Here is a chart of both insurance policies:

Gender and  Age Annual Burial Insurance Rate

No Medical Exam Required

Annual Term Insurance Rates


Female, 70 $774 to $2,230 $981 to $4,756
Male, 70 $1,065 to $2,959 $1,065 to $6,644
Female, 60 $612 to $912 $370 to $2,324
Male, 60 $792 to $1,152 $506 to $2,911


Note: This chart is a compilation of different sample rates from some of the top insurance companies.

A Quick Summary of Difference between life insurance and burial insurance

Burial Insurance vs. Life Insurance
Burial Insurance Life Insurance
Burial insurance particularly covers the costs or expenses incurred directly on the funeral or just directly prior to the funeral. In life insurance policies, there is no restriction on the usage of funds.
The beneficiaries get the total amount in a lump sum as soon as the person dies. It is possible that the beneficiaries may get the funds in installments or lump sum. Also, legal matters or processes may delay the payments.
Even a funeral home can be a beneficiary to pay expenses directly. A beneficiary must be an organization, a trust, or at least one individual.
The maximum coverage the beneficiary can get is $50,000. Coverage for life insurance starts from a minimum of $100,000.
You can easily find the burial insurance policy, and you don’t need to go through a medical exam. You will have to go through a medical exam to buy life insurance unless you apply through an employer.
The waiting period can be up to three years or even more. The waiting period is generally a year or even less than that.
The policy will remain in effect until the policy holder’s death. The policy term may expire even before the death of the policyholder.


Pros and Cons of Life Insurance


  1. Peace of Mind for Everyone

A life insurance acts as an umbrella of protection not only for you but also for your loved ones. In case of sudden death, it covers most of the financial needs of one’s family.

  1. In Everyone’s Reach

Most of the life insurance is relatively cheap and in everyone’s access. The amount of premium depends on your age and health; if you are in good shape, you have to pay as little as 15$ per month for your policy.

  1. The Economical Way to Secure Your Financial Plans

Suppose you wish to make your financial plans secure but are not able to save enough money for them. Then life insurance is the best solution for your problem. Once a policy reaches its maturation stage, you can easily claim your amount.

  1. Tax Benefits

Most of the insurance policies are income-tax-free. In case of death before the maturation of a policy, the money can reach straight to the beneficiaries without deduction.


  1. Effects Your Financial Plans

It costs money. No matter how small an economic plan has opted, it affects the financial status of the individual. It can also get expensive for you if it is opted by some elderly or unhealthy individual.

  1. Troublesome Insurance Acquisition Process

Once the policy matures, the amount is paid to the beneficiary. In case of sudden death, the beneficiaries may have to face hurdles for cashing their policy.

  1. Expensive

The whole life insurance is much more expensive. A study revealed that nearly 45% of the people canceled or withdrew their policy plans within the first ten years.

  1. Realization of Responsibilities

Most of the insurance policies are chosen for those who depend on you. Think it this way; one has to consider that his family will get a fixed amount of money after one’s ‘death.’ This fear of responsibilities lies at the core of insurance policies.

Pros and Cons of Burial Insurance


  1. Easy Qualification

Anyone from any generation can apply for burial insurance. There is no specification of age, health, social and financial status. The beneficiaries of the insurance are also easy to choose.

  1. No Need for Medical Examination

There is no need for any health certificate or medical examination for its qualification. Only a few health-related questions are enough to apply for it. It is the most vital aspect of this policy that makes it unique, unlike other insurance policies.

  1. Flexibility

The plans are flexible to fit the needs of the insurer. The selection of beneficiary, package, and amount is to be decided by the individual himself, and there aren’t any criteria for the determination of this aspect.

  1. Easy Claim

The claim is not as tough as that of life insurance. Mostly, it takes three to seven days to deliver the money. However, a death certificate is mandatory for making a claim.


  1. Fewer Benefits

Since the selection criteria are very flexible, consequently, the benefits are also only a few. Some policies may not even cover the accidental death of the insurer.

  1. No Discounts

The requirement of no health certificates also means that you would not get any perks for being in good health.

  1. Expensive for Many

The rates of burial insurance are a bit higher than most life insurance plans. The amount of money paid in the form of premiums could be higher than the actual burial costs.

  1. Limited Coverage

Unlike the life insurance plans that cover almost all the financial plans of the individual, this covers only the burial expenses of the insurer.

Conclusion- What Should You Choose?

Both policies offer different benefits and have different criteria as well.

It is hard to select one because the preferences may vary from person to person. For instance, if you are having medical conditions, then you will most likely choose a burial insurance policy.

Also, it will be difficult for you to buy a life insurance policy in such circumstances.

Similarly, if you are more worried about the funeral costs, then opting for burial insurance will be a better option. Most people with smaller families choose burial insurance.

Also, if your spouse and children are financially stable, then burial insurance may be a good option.

Life insurance will suit those people who have mouths to feed. That is, they have family members depending on them.

In this case, life insurance will give better financial freedom to your family.

However, before choosing any of these options, keep other factors in front of you as well. For instance, keep an eye on teaser rates because if they go up, they may fall heavy on your budget.

Read the insurance policy documents with due diligence and ask every question that pops up in your mind.

Last but not least, you can go for both options if you have enough resources. This will definitely give maximum financial security to your family. This difference between life insurance and burial insurance may help you solve many riddles.

Frequently Asked Questions

  • What is the basic difference between life insurance and burial insurance?

Burial insurance is a subcategory of life insurance. It generally covers the burial expenses of the policyholder. On the other hand, there is no such restriction on life insurance.

  • Is it wise to buy burial insurance?

Yes, burial insurance is different from others. A car insurance policy may expire, and you will not get anything if your car doesn’t suffer any damage during that period. But, burial insurance is a “confirm money” that will cover your funeral expenses.

  • Is there any age limit for buying life insurance and burial insurance?

Yes, the minimum age limit for buying a life insurance policy is 18 years. The minimum age limit to buy burial insurance is generally 50 years.

  • Can I buy a life and burial insurance policy simultaneously?

Yes, a person can buy both policies at the same time.

  • On average, what is the cost of a funeral/burial in the USA?

As per the National Funeral Directors Association, on average, the funeral cost varies between $7,400 to $8,800.

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