Funeral Expense Insurance in Canada

Whether you’re a senior or a young adult planning ahead for unexpected events, figuring out how to finance your funeral costs is an important part of your financial planning. Funeral insurance is one way to help ease the financial burden of funeral costs from your loved ones once you pass away.

In this article:

• What is Funeral Insurance?
  • Types of Funeral Insurance
  • Pros and Cons of Funeral Insurance
  • Do I need final expense insurance or funeral insurance?
• What is the difference between life insurance and funeral insurance?
  • Can Life Insurance Cover Your Funeral Expenses?
• How much funeral insurance coverage do you need?
• How much does funeral insurance cost?
• What does funeral insurance cover?
• What are the best funeral expense insurance plans in Canada? 
• Alternatives to Funeral Insurance
• Frequently Asked Questions (FAQs) about Funeral Insurance
  

What is Funeral Insurance?

Funeral insurance, also called burial insurance or final expense insurance, can be purchased as a product to help loved ones and family members to finance your funeral costs. It’s a type of permanent life insurance product, so it doesn’t have an end date and lasts as long as you do, provided you pay the premiums. 

A traditional permanent life insurance policy provides your family with income replacement if you pass away, whereas a funeral insurance policy is intended to specifically cover your end-of-life expenses. As a result, burial insurance policies alone aren’t meant for people raising families and who need life insurance to cover bigger obligations, such as a mortgage, kids’ college tuition and income replacement during their prime working years.

Since funeral insurance has smaller payouts than most permanent life insurance policies, it’s less expensive than the former. This is because in Canada, the estimated cost of funeral expenses ranges from $5,000 to $15,000, which would be paid by your surviving family members if you have not opted for funeral insurance.

Burial insurance for seniors is often marketed to people with tight budgets and sometimes in poor health. They may not have savings or other life insurance that a family could use for funeral costs. Despite this, many older people won’t buy funeral insurance because they believe they won’t qualify due to poor health. However, because no medical exam is required, these products are far easier to obtain than standard life insurance. Even if you have a serious condition, you may be eligible for coverage, although there may be a waiting period. 

Types of Funeral Insurance

There are two main types of funeral insurance, as burial and funeral insurance policies generally do not require a medical exam or only ask a few health questions—or no questions at all. Rates are based primarily on age and gender. Burial insurance is typically one of these varieties of whole life insurance:

• 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. Although you won’t have to take a medical exam, you will have to provide some basic information about your health, typically in the form of a few health questions. For example, simplified issue applications often ask if you’re currently living in a nursing home or if you have HIV. These types of insurance will require some underwriting but in exchange will be a bit cheaper than guaranteed issue funeral insurance.
• 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 medical exam or provide information about your health. 
  • Guaranteed issue life insurance is ideal for someone with a severe medical condition that would cause their traditional or simplified issue policies to be rated too high or to be declined. Although your acceptance is guaranteed with this type of policy, the payout is typically lower than simplified issue life insurance, and premiums can still be higher than a regular policy.

Overall, the downside to these funeral insurance applications is that the policy will usually have a graded death benefit. If you pass away within two or three years after buying the policy, your beneficiaries will receive only a refund of the premiums you paid, plus some interest, or a small percentage of the policy’s coverage amount. However, accidental deaths are typically covered in full from the start of the policy, such as a death in a plane crash.

Funeral Insurance Pros and Cons

Pros of Funeral Insurance

Some advantages of purchasing funeral insurance are:

Cons of Single Life Insurance

Some disadvantages of getting funeral insurance are:

Do I need final expense insurance or funeral insurance?

As with all insurance types, choosing which one you need depends on your situation.

Whether or not you need funeral insurance will heavily depend on:

• Your health
• Your financial situation
• Whether or not you have or qualify for traditional life insurance

It’s a good idea to start planning your funeral in advance. When the time comes, it will save your loved ones both time and money. Purchasing a final expense insurance coverage is one option, but it is far from the only one.

Funeral insurance may be the best alternative for you if you are older or have a limited budget. Since these policies pay out smaller amounts, their premiums can sometimes be lower than buying traditional life insurance policies at an older age. Furthermore, if you are a senior in Canada with a chronic health condition looking for funeral insurance, this type of insurance may be your only option.

If you are in a strong financial position, you can put money aside for your funeral before it becomes necessary. If you are young and healthy, consider purchasing a term or permanent life insurance policy instead, since the payout can cover more than just your funeral costs, such as lingering debts or mortgages after you pass away.

What is the difference between life insurance and funeral insurance?

The biggest difference between a regular, traditional life insurance policy and a funeral insurance policy is the coverage limit, and the process for applying for the policy. Traditional policies will start at $50,000 which will help you cover more expenses such as medical bills along with funeral expenses, whereas funeral insurance policies, like a guaranteed insurance policy, have a maximum coverage of $50,000 which may only be enough for funeral and burial expenses.

Can Life Insurance Cover Your Funeral Expenses?

Life insurance can be used to cover your funeral expenses: your life insurer will pay your lump sum benefit (equal to your policy’s coverage) to your family upon your death. Your loved ones are free to use the funds to cover funeral expenses, including your funeral costs and other related costs.  

Many people use a life insurance policy to cover final expenses. Assuming you are in reasonably good health, you can buy a traditional life insurance policy with a medical exam instead of just a funeral insurance policy, as the traditional policies can be cheaper than funeral insurance because of the discount you can receive when you are in good health.

How much funeral insurance coverage do you need?

Your final expense policy should be large enough to cover the kind of funeral you want. To get as accurate an estimate as possible, you can start by pre-planning your funeral or memorial service. Some of the main factors that can influence the cost of final arrangements include:

• Professional services fee
• Caskets
• Embalming
• Funeral service
• Burial or cremation
• Urns or headstones

How much does funeral insurance cost?

The cost of premiums for a traditional policy to cover funeral expenses will typically depend on:

• Age
• Policy type
• Coverage amount 
• Smoker status
• Whether there is medical underwriting

In general, the costs for simplified or guaranteed issue insurance will be more expensive than traditional policies, and a simplified issue life insurance is cheaper than guaranteed life. 

Also, like other life insurance products, a funeral insurance policy’s cost will increase as you grow older. As a result, Funeral insurance for seniors in Canada costs more than for younger buyers.  

What does funeral insurance cover?

A funeral insurance policy will cover any final expenses related to your funeral. The estimated cost of funeral expenses in Canada ranges from $5,000 to $15,000, and there are several different factors that can influence the cost of these final arrangements. These could include:

• Funeral service
• Burial
• Cremation
• Urns
• Headstones
• Caskets
• Embalming
• Professional services fee

What are the best funeral expense insurance plans in Canada? 

Many reputable insurers provide some form of funeral or burial insurance either as a standalone product or as a part of another life insurance product. 

Some trusted insurers that offer funeral insurance or simplified life insurance policies include:

• BMO Life Insurance
• Canada Life
• Desjardins
• Foresters Financial 
• ivari
• RBC Insurance

Alternatives to Burial Insurance

Funeral insurance is one of many types of available life insurance options. It’s good to be familiar with the other choices to make sure that you’re buying the right one.

• Term life insurance is the best option to cover a specific financial obligation that has an end, like paying off a mortgage or a child’s college tuition. You’ll pick the amount of coverage you want and the length of the term. Term length choices are often 5, 10, 15, 20, 25 or 30 years.
• Whole life insurance is a life insurance policy that builds cash value and provides lifelong coverage. The full death benefit is guaranteed to your beneficiaries no matter when you die. The cash value grows at a predictable rate and the premiums stay the same. With a regular whole life insurance policy, you can get much more coverage than you would with just a burial insurance policy.
• Universal life insurance is an option for lifelong coverage that can be less expensive than whole life. Note that not all universal life insurance policies will build much cash value, but universal life can be less expensive than whole life insurance. The benefit from this policy can be used by your family for burial and other expenses.

Frequently Asked Questions (FAQs) about Funeral Insurance

Plan ahead and get the financial protection you need

Whether you’re a senior looking for funeral insurance now, or a young adult planning ahead for unexpected events, figuring out how to finance your funeral costs is an important part of your financial planning. Working with a life insurance advisor can help you find the right life insurance plan and package for your needs and situation. 

At Protect Your Wealth, we work with and compare policies and quotes from the best life insurance companies in Canada to ensure the best solution for you and your needs. We provide expert life insurance solutions, including no medical life insurance, critical illness insurance, term life insurance, and permanent life insurance to build the best package to give you the protection you need. 

To schedule a consultation about your income protection goals, or if you have any questions about insurance in Ontario or Canada, please contact Protect Your Wealth or call us at 1-877-654-6119 to talk to an advisor today! We’re proudly based out of Hamilton, and service clients anywhere in Ontario, British Columbia and Alberta including areas such as Guelph, London, Edmonton, and Abbotsford.