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What is covered in a funeral insurance plan?

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Quick Answer

Funeral insurance plans are a type of whole life insurance that typically covers the costs of funerals, cremations and burials, notes Bankrate. Consumer groups do not consider funeral insurance plans a good investment and recommend other ways of planning for expenses related to death.

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What is covered in a funeral insurance plan?
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Full Answer

People can usually purchase funeral insurance plans by answering health questions, with no requirement for medical exams, states Bankrate. Funeral insurance may be a good choice for those who do not have other insurance options, such as people with limited incomes and people who are already very sick. Because funeral insurance plans involve simplified underwriting, they tend to be much more expensive than fully underwritten term life policies. Insurance companies may turn down applicants for funeral expense policies if they have been hospitalized for more than 20 days in the previous year, have cancer or admit to using drugs.

Insurance companies generally attach two-year suicide and contestability clauses at the beginning of the terms for funeral insurance plans, during which time they conduct investigations before paying claims, notes Bankrate. People who want to plan for expenses related to death but cannot get underwritten term life policies may save more by putting money into a bank account rather than making monthly funeral insurance payments.

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