Final expense insurance explained: burial coverage basics

Final expense insurance, also called burial insurance, is a small whole life insurance policy meant to pay funeral, burial or cremation costs and other end-of-life bills, so the people you love are not left paying them. The money goes to the beneficiary you name, and they can use it for anything. Jackie describes it as an act of love: something you put in place not for yourself, but for those you leave behind. The national median cost of a funeral with viewing and burial was $8,300 in the National Funeral Directors Association's 2023 study, before any cemetery charges, while Social Security adds only a one-time $255 payment for a qualifying spouse or child. Most policies ask a few health questions instead of a medical exam, premiums usually stay level for life, and whether you qualify, and for how much, depends on the insurance company's underwriting.

What a funeral actually costs

The most widely quoted national figures come from the National Funeral Directors Association (NFDA). Its 2023 General Price List Study, released December 8, 2023, put the national median cost of an adult funeral with viewing and burial at $8,300, up from $7,848 two years earlier, and the median for a funeral with viewing and cremation at $6,280, up from $5,810. These are the most recent medians NFDA has published in a news release, so treat them as a 2023 starting point, not a 2026 price.

Read those medians carefully, because they leave a lot out. The burial figure covers the basic services fee, transfer of remains, embalming and preparation, a metal casket, use of facilities and staff for the viewing and ceremony, a hearse, a service car and a basic printed memorial package. It does not include the cemetery plot, opening and closing the grave, a vault or liner, a monument or marker, or cash advance items such as flowers and an obituary. For a burial, the cemetery side is billed separately and can be a large share of the total.

The cremation figure includes a viewing and ceremony, the cremation fee, an alternative container and an urn. A direct cremation with no viewing usually costs less, and a memorial service can be held later wherever the family chooses. Prices vary from one funeral home to the next in New Jersey just as everywhere else, so the only reliable way to know local costs is to ask each funeral home and cemetery for its itemized price list.

Source: NFDA: 2023 General Price List Study news release (December 8, 2023).

The bills families face besides the funeral

The funeral home bill is usually the largest single item, but it is rarely the only one. On her original website Jackie listed the costs a family can be handed in the days after a death, and the list is worth reading before you choose a benefit amount.

• Funeral home services, casket or cremation, embalming and preparation, hearse and service car, removal and transfer of remains.
• Cemetery plot, burial vault or grave liner, and a grave marker.
• Flowers, an obituary and catering for family and friends after the service.
• Travel and lodging for family coming from out of state.
• End-of-life medical bills and legal costs such as probate.
• Household bills that keep coming, such as utilities, plus credit card balances, a car loan or a remaining mortgage.

Your rights when you shop for a funeral

The Federal Trade Commission's Funeral Rule protects you anywhere in the country, including New Jersey. It lets you buy only the goods and services you want instead of a package. A funeral home must give you price information over the phone if you ask, must hand you a General Price List to keep, and must show casket prices before you see the caskets. It cannot refuse to handle a casket or urn you bought somewhere else or charge you a fee for doing so. A funeral home that offers cremation must tell you that alternative containers are available, and you are entitled to a written statement of what you chose, with prices, before you pay.

Knowing those rules helps you size a policy realistically. Gather two or three price lists, keep them with your policy papers, and the person who carries out your wishes will know what things cost before anyone is under pressure.

What Social Security and Medicare do and do not pay

Social Security pays a one-time lump-sum death payment of $255 to a surviving spouse who was living with the person who died, or in some cases to a spouse or child receiving benefits on that person's record. The amount is fixed by law, is not tied to funeral prices, and is far below what a funeral costs. Monthly survivor benefits may help a widow or widower with ongoing bills, but they do not arrive in time to pay a funeral home that wants payment when arrangements are made.

Medicare does not pay funeral costs, and neither does a Medicare Supplement or a Medicare Advantage plan. That gap is the reason final expense insurance exists.

How final expense policies are underwritten

Underwriting is how an insurance company decides whether to accept you and on what terms. For final expense coverage there are three common types, and the type matters more than almost any other feature of the policy.

Source: State of New Jersey: New Jersey Department of Banking and Insurance: consumer help, complaints and questions about an agent or company.

Whole life, cash value and level premiums

Most final expense policies are whole life insurance. Whole life is designed to last for your whole life as long as premiums are paid, the premium is set when you buy the policy, and the policy builds a modest cash value over time. Term insurance, by contrast, ends after a set number of years, often at an age when buying new coverage is harder and more expensive.

For a final expense buyer, that lifetime design is the whole point. The cash value can sometimes be borrowed against, but an unpaid loan reduces what your beneficiary receives, so most families leave it alone. Insurers set their own issue ages, minimum and maximum face amounts and health questions, so check the policy and its outline of coverage for the exact terms.

Final expense, a prepaid funeral and savings compared

Source: Federal Trade Commission: The FTC Funeral Rule.

A worked example: sizing a benefit

Hypothetical South Jersey household, not a real client, and an illustration only, not a quote. A 70-year-old widow wants a traditional funeral with viewing and burial next to her late husband, in a plot the couple already owns. She wants her two children to pay nothing out of pocket. Here is how to turn that wish into a benefit amount, starting from the cited national figure and then replacing it with local prices.

Step one, the funeral itself: the NFDA national median for a funeral with viewing and burial is $8,300. Step two, the items that median leaves out: because she owns the plot, what remains is opening and closing the grave, any vault or liner the cemetery requires, and a marker, so she asks the cemetery for its price list instead of guessing. Step three, cash advance items such as flowers and an obituary, plus a cushion for family travel. Step four, final bills: a last utility bill, a final medical bill, a credit card balance. Step five, subtract what is already set aside. The $255 Social Security payment goes only to a qualifying spouse or child, so as the surviving spouse herself she should not count on it.

Illustration, not a quote: a hypothetical example using figures from NFDA: 2023 General Price List Study news release (December 8, 2023).

How pricing works

Premiums depend mainly on your age when you apply, the death benefit amount, tobacco use, your answers to the health questions and the underwriting type. Applying younger and in better health generally means a lower premium for the same benefit. This guide does not list prices, because they depend on those answers and differ from one company to the next; Jackie compares current options with you.

A useful test is whether the premium still fits your budget if your income drops, for example after a spouse dies and one Social Security check stops. A policy that lapses for missed premiums can leave your family with nothing, which is worse than a smaller policy that stays in force.

What Jackie checks for you

• Your goal in plain terms: burial or cremation, a service or not, a plot already owned or not, and who you want to protect from the bill.
• Whether you can qualify for a level, full-benefit policy before looking at graded or no-health-questions options.
• Any existing life insurance, work coverage that may end at retirement and any prepaid funeral arrangement, so coverage is not doubled up or left with gaps.
• Whether the premium fits your budget on one income, not just on two.
• That the beneficiary and a contingent beneficiary are named correctly, and that the person carrying out your wishes knows the policy exists.
• If you are replacing an older policy, what you would give up: a new policy can restart a waiting period or a contestability period.

Questions to ask before you buy

• Is this a level, graded or no-health-questions policy, and how long is any reduced-benefit period?
• What exactly does the policy pay if death from illness happens during that period?
• Is the premium level for life, and can the company ever change it?
• Does the policy build cash value, and how would a loan affect the death benefit?
• Are there riders, such as an accelerated benefit for terminal illness, and what do they cost?
• What paperwork will my beneficiary need to file a claim, and how long does payment usually take once it is complete?
• How long is the contestability period, and what happens if I misstate something on the application?

Practical steps that help your family

• Write down your wishes: burial or cremation, service preferences and where your documents are kept.
• Collect itemized price lists from two or three funeral homes and the cemetery, and keep them with your policy.
• Name a beneficiary you trust to carry out those wishes, plus a contingent beneficiary.
• Tell your beneficiary the policy exists and where to find it.
• Review beneficiaries after any marriage, divorce or death in the family.

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The bottom line

Final expense insurance is a simple promise: a set amount of money, paid to the person you choose, when your family needs it most. Start from real prices, ask for itemized price lists, then apply for a level, full-benefit policy if you can qualify. Coverage is subject to underwriting. To see what is available for your age and health, call or text Jackie at (856) 727-4221 for a no-cost consultation by phone, Zoom, or in person.