When it comes time to plan a funeral, the costs begin to add up quickly. That's why many seniors choose funeral insurance, which helps cover funeral expenses. It provides peace of mind for both you and your loved ones.
But, what are your options for funeral insurance? How can you tell which policy is best for you?
If you are a senior or the loved one of a senior, this post is for you! We'll explore your options and help decide on a funeral insurance policy that's right for you.
You'll learn:
What is Funeral Insurance?
Funeral insurance is a type of permanent life insurance product, also often called burial insurance, final expense insurance, or end-of-life insurance. A traditional permanent life insurance policy provides your family with income replacement if you pass away. By contrast, a funeral insurance policy is intended to cover specifically your funeral expenses in the form of a lump sum payment.
Some things to keep in mind about funeral insurance include:
- It has smaller payouts than most permanent life insurance policies. As a result, it is generally less expensive.
- It doesn’t have an end date and lasts as long as you do, provided you pay the premiums.
- Funerals can cost upwards of several thousand dollars, so it’s important to plan ahead! Otherwise, your loved ones might be stuck paying funeral expenses, like burial services.
Many elderly people don’t buy funeral insurance because they think they won’t qualify due to poor health. However, these policies are much easier to get compared to traditional life insurance since a medical exam is not involved. You can qualify for life insurance coverage even if you have a serious illness, although there may be a waiting period on the policy.
Keys Takeaways
- Funeral insurance is a type of permanent life insurance that is intended to cover your end-of-life expenses.
- Funeral insurance has smaller payouts than most permanent life insurance policies, but is also less expensive.
- You can qualify for coverage even if you have a serious illness, although there may be a waiting period on the policy.
Types of Funeral Insurance
There are two types of funeral insurance policies. Both help you cover your final expenses, though they vary in pricing and eligibility requirements.
1. Simplified Issue Life Insurance
Simplified issue life insurance can be a good option for those who can’t get traditional insurance coverage but are only at moderate health risk. You won’t have to take a medical exam to prove eligibility. However, you will have to provide some basic information about your health.
2. Guaranteed Issue Life Insurance
As the name suggests, guaranteed issue life insurance is a policy where acceptance is guaranteed. You can’t be turned down as long as you are below a certain age. You don’t have to take a paramedical exam or answer any health questions.
Guaranteed issue life insurance is ideal for someone with a severe medical condition. However, the payout is typically lower than simplified issue life insurance, and premiums are higher.
Funeral Insurance vs. Life Insurance
Both funeral insurance and life insurance involve a death benefit — but they are used for entirely different purposes.
Life insurance is typically intended to cover expenses that your family would find difficult to cover without your income. This can include expenses like:
- college tuition fees
- a mortgage
- the cost of raising kids
Funeral insurance is more specific, and typically covers:
- funeral costs/final expenses
- medical bills
- cremation fees
Funeral insurance also has a lower face value compared to most life insurance since it’s intended to pay only for funeral expenses. These policies typically have a death benefit amount ranging between $5,000 and $50,000. By contrast, many term life insurance policies include a death benefit of over $100,000.
In addition, most life insurance policies require a medical test, while funeral insurance doesn’t. In fact, you won’t even have to provide any health-related information if you apply for guaranteed life issue insurance.
A funeral insurance plan is also generally more expensive than a comparable life insurance policy.
Cost of Funeral Insurance
The cost of any life insurance policy is dependent on many factors. For example, a healthy woman in her forties might pay a premium as low as $19 per month for funeral insurance in Canada. Meanwhile, man in his sixties who is a heavy smoker could pay as much as $102 per month.
To get an estimate of how much funeral insurance would cost for you, check out the chart below! It outlines the approximate cost of funeral insurance for Canadians with respect to age, gender, and smoking status.
As mentioned earlier, funeral insurance is also available without a medical exam, however the premiums are generally higher. Check out the chart below to see how much funeral insurance with no medical exam costs for Canadians.
Can Life Insurance Cover Funeral Expenses?
Short answer is YES. Your life insurer will pay a lump sum to your family or beneficiary upon your death. Your loved ones are free to use the funds to cover funeral expenses, including your funeral costs and other related costs such as paying for a columbarium.
Many people use a life insurance policy to cover final expenses. Assuming you are in reasonably good health, you can buy a life insurance policy with a medical exam instead, because these plans are cheaper than funeral insurance.
When shopping for a life insurance policy, adjust the face value so that it will be enough to cover end-of-life expenses in addition to your family’s other financial needs. To get instant personalized quotes for life insurance, try our free calculator!
How much funeral insurance coverage do you need?
Your final expenses policy should be large enough to cover the kind of funeral you want. To get as accurate an estimate as possible, start by pre-planning your funeral or memorial service with a funeral home. Some of the main funeral expenses that can influence the cost include:
- Professional services fee
- Caskets
- Embalming
- Funeral service
- Burial or cremation
- Urns or headstones
As you can see, a burial costs between $5,000 and $10,000 in Canada today. While thinking about it may be uncomfortable, planning your funeral in advance and knowing the costs can take a lot of pressure off of your loved ones during a difficult time.
If you are unsure how much life insurance you need to cover your funeral expenses, check out our Free Life Insurance Calculator here!
Best Funeral Insurance Companies in Canada
If you do decide that funeral insurance is right for you, there are several companies in Canada that provide coverage. We've compared our top 4 choices below:
Canada Protection Plan (CPP)
Guaranteed Acceptance Life plan includes:
- Coverage up to $50,000
- Guaranteed level premium (premium will remain the same throughout)
- Guaranteed cash value from the 5th year onward
Simplified Elite Permanent Insurance plan includes:
- Coverage up to $350,000
- Option to pay off the policy in 20 years
- Guaranteed cash value from the 5th year onward
Industrial Alliance
Access Life plan includes:
- No medical exam
- Coverage from $10,000 - $500,000
Assumption
No Medical Whole Life Insurance plan includes:
- Qualify even if you were rejected coverage in the last two years
- Disability insurance option included
- Coverage $1,000 - $50,000K for people aged 40 to 85
Empire Life
Solution 100 plan includes:
- payable to 100 years of age
- Guaranteed premium rates
- Guaranteed cash surrender values available after 10 years
For more information, read our in depth reviews on Canada Protection Plan, Industrial Alliance, Assumption, and Empire Life. Or, use our free quotes tool to compare rates from different life insurance companies in Canada.
Find the best rates
Do I need final expense insurance?
There’s no one-size-fits-all answer to this question. Whether you need funeral insurance depends on your health and financial condition.
Planning for your funeral in advance is a good idea. It will save your loved ones stress and money when the time comes. Buying a final expense insurance policy is one way to do that — but it is not the only way.
Pros and Cons
Funeral insurance may not be right for you if:
- You are in a good financial position. You can set aside money for your funeral, before the need arises. Talk to your family to let them know how you want these funds to be used.
- You are young and healthy. Instead, consider buying a term or permanent life insurance policy. Your family can use part of the proceeds to cover funeral expenses if necessary.
Funeral insurance may be the best option for those who:
- Are on a tight budget. If you are trying to save money, burial insurance may be better for you. Since these policies have smaller payouts, their premiums are lower than those of permanent life insurance.
- Are elderly or are in poor health. When you are older, funeral insurance can be less expensive than life insurance. And if you have a chronic health condition and want insurance for funeral costs, burial insurance may be your only option.
Frequently Asked Questions (FAQs):
The average cost for burial in Canada is between $5,000 and $10,000. But remember, the funeral costs can vary greatly depending on what you want.
Nobody likes to talk about death, but planning final arrangements in advance can take a lot of pressure off your loved ones. You can cover funeral costs and your end-of-life expenses with a life insurance policy or a final expense policy.
How much you will pay for funeral insurance depends on several factors. Your age, the policy type, and the coverage amount can all impact your premium rates. Like other life insurance products, a final expense policy costs increase as you grow older. Also, simplified issue life insurance is cheaper than guaranteed life.
When looking for the right final expense coverage, speak to an independent insurance advisor. Dundas Life can help you find the best final expense insurance policy at the best price.
Gregory Rozdeba is the CEO of Dundas Life, Canada's leading digital insurance brokerage. He has over 8 years of experience in the life insurance industry. Gregory previously served as Director of Sales at a Toronto-based insurtech firm. He took the company from having no product to raising over $7.6M+ in venture capital to transform the prospect to policy process in Canada. Gregory holds a Bachelor's Degree in Finance & Accounting from Ontario Tech University and a Master of Information Management from FH Joanneum.
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