Burial Insurance Benefits
What is Burial Insurance?
Burial insurance usually refers to a permanent life insurance policy in a small amount that lasts for your entire lifetime, and is meant to cover the cost of burial and funeral expenses.
It's generally purchased with a death benefit in the range of $3,000 to $20,000. Burial insurance is also referred to as "end of life insurance", "final expense life insurance", and "funeral insurance".
According to the National Funeral Directors Association (NFDA), the average cost of a funeral in 2021 was $7,848. The amount can represent an impact in the family savings if they are not prepared. Source: NFDA (National Funeral Directors Association)
Benefits of Burial Insurance
What are the Benefits of Burial Life Insurance Plans?
Generally speaking, the death benefits for burial insurance are low, ranging anywhere between $2,000 up to $20,000 (although some insurers may offer higher limits).
For example, Mutual of Omaha offers guaranteed issue burial policies with coverage limits up to $25,000.
After you die, burial life insurance pays the death benefit of your policy directly to your beneficiary who can use the money in any manner, including to pay for the costs related to your final expenses – burial and funeral.
Burial Insurance Cost and Benefits
The cost of a burial insurance policy will vary by insurance carrier.
Some plans start as low as $8.84 per month. However, the monthly cost will depend on your age, gender and the amount of insurance you need.
The amount of coverage available will vary by insurer; however, you may be able to buy a policy from more than one insurance company. Get a free quote for burial insurance.
Social Security Burial Insurance Benefits
If your loved one has paid into Social Security for a minimum of 40 quarters (or roughly 13.5 years), there are two types of Social Security final expense benefits available (including Social Security Burial Insurance).
When applying for survivor’s benefits, you will need to have the following: birth, death, and marriage certificates, Social Security numbers, and a copy of the deceased’s recent federal income tax return.
The two types of potential Social Security burial insurance benefits are:
- Death Benefits: Approximately $255 is given for burial expenses. This is paid to eligible spouses or dependent children. The survivor of the loved one can complete the necessary form at the local Social Security office, or the funeral director can choose to complete the application and apply the payment directly to the funeral bill.
- Survivor’s Benefits: Many types of benefits are available depending on the age and relationship of any survivors.
You may be eligible for benefits if you match any of the following circumstances:
- If your spouse is age 60 or older.
- If you have a disabled surviving spouse age 50 or older.
- If your spouse is under 60 and cares for dependent children under 16.
- If the children of the deceased are under the age of 18 or are disabled.
Veterans Burial Insurance Benefits
Burial Benefits for Veterans
Effective July 7, 2014: VA is changing its monetary burial benefits regulations to simplify the program and pay eligible survivors more quickly and efficiently.
These regulations will authorize VA to pay, without a written application, most eligible surviving spouses basic monetary burial benefits at the maximum amount authorized in law through automated systems rather than reimbursing them for actual costs incurred.
Under the current regulations, VA pays for burial and funeral expenses on a reimbursement basis, which requires survivors to submit receipts for relatively small one-time payments that VA generally pays at the maximum amount permitted by law.
The new burial regulations will permit VA to pay, at a flat rate, burial and plot or interment allowances thereby enabling VA to automate payment of burial benefits to most eligible surviving spouses and more efficiently process other burial benefit claims.
The burial allowance for a non-service-connected death is $300, and $2,000 for a death connected to military service.
Types of Veterans Burial Benefits
Service-Related Death
VA will pay up to $2,000 toward burial expenses for deaths on or after September 11, 2001, or up to $1,500 for deaths prior to September 11, 2001. If the Veteran is buried in a VA national cemetery, some or all of the cost of transporting the deceased may be reimbursed.
Non-Service-Related Death
VA will pay up to $796 toward burial and funeral expenses for deaths on or after October 1, 2019 (if hospitalized by VA at time of death), or $300 toward burial and funeral expenses (if not hospitalized by VA at time of death), and a $796 plot-interment allowance (if not buried in a national cemetery).
For deaths on or after December 1, 2001, but before October 1, 2011, VA will pay up to $300 toward burial and funeral expenses and a $300 plot-interment allowance.
For deaths on or after April 1, 1988 but before October 1, 2011, VA will pay $300 toward burial and funeral expenses (for Veterans hospitalized by VA at the time of death).
An annual increase in burial and plot allowances for deaths occurring after October 1, 2011 began in fiscal year 2013 based on the Consumer Price Index for the preceding 12-month period.
Source: VA Benefits
Taxability of Burial Insurance Benefits
The money received from an individual as beneficiary of a burial life insurance policy would usually not be subject to federal income taxes.
Although burial plans and funeral costs, in general, are not tax-deductible, there is an exception.
If the estate pays the costs for the funeral and the person who passed away had money for covering the final expenses, the estate can deduct the expenses from its tax return.
Source: TheNest
Burial Insurance Quotes
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