Burial Insurance for Terminally ill Patients

Unlike traditional life insurance, burial insurance is accessible to those with severe health conditions, providing coverage for funeral expenses, final medical bills, and other related costs. For terminally ill patients, this insurance serves as a vital tool in ensuring a dignified departure without burdening their families with substantial financial responsibilities during an emotional period.

The distinct advantage of burial insurance lies in its accessibility, often available without stringent medical examinations or background checks. This characteristic makes it an invaluable resource for individuals diagnosed with terminal illnesses, offering a sense of security and relief amid challenging circumstances. Understanding the nuances of these policies—such as coverage limitations, waiting periods, and the specific benefits they offer—is pivotal for terminally ill patients and their families to make informed decisions during this sensitive and crucial period of life planning.

Can a Terminally ill Person Get Burial or Life Insurance?

Yes, you can get burial or life insurance even if you have a terminal illness like cancer or other serious medical conditions. However, the options for life insurance in this ‘high-risk’ category are quite limited.

Here are the most common types of life insurance for people who are considered high risk because of a terminal illness or other serious health reasons:

• Guaranteed issue/guaranteed acceptance whole life insurance
• Funeral expense life insurance
• Final expense life insurance

We’ll look at each of these options in detail to help you decide which might be the right fit for your situation.

What is the “guaranteed issue” life insurance?

Guaranteed issue (GI) life insurance, also known as guaranteed acceptance insurance, is likely one of the top choices for high-risk life insurance for individuals dealing with serious health problems or medical conditions.

GI life insurance looks at only your age, location, and gender without any health inquiries. What’s more, GI policies usually don’t have age limits or waiting periods.

However, there’s a downside. GI life insurance offers a limited death benefit, usually capping at $25,000. Additionally, it tends to be costly because insurance companies charge higher rates due to the increased risk of insuring someone without any medical information.

Returning to some positive aspects, GI life insurance falls under permanent whole life policies, featuring cash accounts that accumulate value from a portion of your premiums.

Similar to other permanent life insurance plans, GI life doesn’t have a fixed end date; it provides coverage as long as you keep paying the premiums.

With its advantages of no medical exams, no waiting periods, and no age limits, GI life insurance could be the optimal choice for high-risk individuals or the elderly, especially when obtaining standard life insurance is challenging or, in some instances, impossible.

What is Funeral Expense life insurance?

Two types of funeral expense life insurance exist: Burial insurance, the first type, provides a modest death benefit usually ranging from $5,000 to $25,000 to cover funeral, burial, or cremation costs.

The second type is preneed funeral insurance. Unlike burial insurance, it pays the death benefit directly to the funeral service provider. Although your family doesn’t receive the policy proceeds, you benefit by locking in pricing as of the policy’s issue date.

What is Final Expense Insurance?

A final expense insurance policy resembles funeral expense insurance, but its coverage isn’t restricted solely to funeral expenses. It also covers other end-of-life costs like medical bills or legal expenses.

How Much Insurance Do I Need If I’m A Terminally Ill Patient?

The amount of burial insurance you require depends on your individual financial situation. However, it should ideally cover your funeral, burial, and final expenses.

To determine the necessary coverage, start by assessing your end-of-life expenses. Typically, funeral costs constitute a significant portion. Additionally, consider outstanding medical bills, living expenses, credit card debts, and other financial obligations.

Here’s an example of a funeral cost breakdown from the National Funeral Directors Association.

Terminally Ill Patients And Burial Insurance Riders

Insurance policy riders offer added benefits to your policy, tailoring it to better suit your needs. These riders can either be built into your policy or added for an extra cost. Many riders are reasonably priced and often require minimal or no underwriting.

Here’s a list of common burial insurance riders:

Non-Burial Insurance Options For Terminally Ill Patients

Insurance revolves around managing risk, and insurance companies view terminal illness life insurance as a risky business choice.

If you’re unable to qualify for insurance due to a terminal illness, you have three alternative options.

1. Prepaid Funeral Plan

Consider a prepaid funeral plan where you can arrange and pay for your funeral and burial in advance. Signing up for this plan eliminates the need for a burial insurance policy to cover your final expenses.

However, it’s important to note that funeral and final expenses can be quite expensive, typically ranging between $8,000 and $15,000. This option might not be suitable for individuals with terminal illnesses as the prepaid plans require full payment for the funeral, which could pose financial challenges.

2. Savings Accounts

Rather than purchasing burial insurance, you have the option to open a savings or joint savings account to set aside funds for your final expenses.

Upon your passing, your family can promptly access the funds from this account to cover expenses related to your funeral, burial, and other costs associated with your passing.

However, savings accounts might not be suitable for individuals with terminal illnesses, especially for those with fixed or limited incomes. Accumulating $8,000 to $15,000 in savings accounts could be challenging for many people in such circumstances.

3. Payable on Death Account (Totten Trust)

If you’re unable to secure life insurance, another option is to open a Payable on Death (POD) account, enabling you to designate a beneficiary for your bank account.

The funds in this account can be utilized for your funeral expenses, as your chosen beneficiary can access the funds immediately after your passing.

However, starting a POD account may pose challenges, especially for individuals between the ages of 50 and 85 who often have fixed or limited incomes. For many of the individuals I assist regularly, initiating a POD account could be difficult, if not impossible.

Benefits Of Burial & Funeral Insurance

Here are some of the benefits of purchasing a burial or funeral policy:

• No need for a medical exam or doctor’s visit – easy approval process.
• Simple qualification and coverage issuance.
• No initial payment required – start your policy whenever convenient.
• Stable premiums – your premium remains unchanged.
• Guaranteed death benefit – the benefit won’t decrease.
• Permanent coverage – as long as premiums are paid, the policy cannot be canceled by the insurer.
• Tax-free benefit – the death benefit is paid directly to your beneficiary without tax deductions.
• Accumulation of cash value – burial insurance, a whole life policy, builds cash value over time.

Other Common Uses For Final Expense Life Insurance For Terminally Ill Patients

All of these examples are appropriate uses for Final Expense Life Insurance:

• Burial insurance plan for terminally ill patients
• Cremation insurance plan for terminally ill patients Funeral home insurance plan for terminally ill patients
• Final Expense insurance plan for terminally ill patients
• Prepaid funeral plan insurance for terminally ill patients
• Mortgage payment protection plan for terminally ill patients
• Mortgage payoff life insurance plan for terminally ill patients
• Deceased spouse’s income replacement plan for terminally ill patients
• Legacy insurance gift plan to family or loved ones for terminally ill patients
• Medical or doctor bill life insurance plan for terminally ill patients

When Is The Best Time To Buy Burial Insurance?

The ideal time to obtain life insurance is before any sickness or illness occurs, as your health significantly influences your eligibility for immediate coverage from certain insurance companies.

If you’re contemplating purchasing burial insurance, act promptly! Secure it now while you can access the most competitive pricing.

To obtain the most affordable life insurance rates, it’s advisable to purchase it at a younger age rather than later. Premiums tend to increase with age.

Additionally, consider purchasing insurance while in good health rather than when facing significant health issues. Better health often results in lower premiums.

Bottom Line on Life Insurance for the Terminally Ill

Even if you are terminally ill, it is possible to obtain life insurance that suits you and your family’s needs. However, your choices may be restricted to guaranteed issue, funeral expense, and final expense life insurance policies. Typically, these policies have higher premiums and offer a maximum death benefit of around $25,000. Nonetheless, they serve to cover end-of-life costs and expenses.