Funeral Insurance in Canada: What You Should Know

Planning your funeral is not the most pleasant thing to do. But funeral Insurance can spare your family from having to make decisions and worry about burial expenses.

Even a basic funeral can cost thousands of dollars. Funeral insurance is one of the most thoughtful gifts you can give to your family. Since it covers all end-of-life expenses, it will ensure your loved ones won’t be burdened with costs after you’re gone.

Continue reading to find out what funeral insurance is and if it is right for you.

What is Funeral Insurance?

Funeral insurance is a type of permanent life insurance product. A traditional permanent life insurance policy provides your family with income replacement if you pass away. By contrast, a funeral insurance policy is meant to cover specifically your end-of-life expenses. 

Funeral insurance has smaller payouts than most permanent life insurance policies. As a result, it is less expensive. 

Funeral insurance doesn’t have an end date and lasts as long as you do, provided you pay the premiums. It is often called burial insurance, final expenses insurance, or end-of-life insurance.

Funerals can cost upwards of several thousand dollars, so it’s important to plan ahead. Otherwise, your loved ones might be stuck paying end-of-life expenses, like burial services.

Many elderly don’t buy funeral insurance because they think they won’t qualify due to poor health. However, these policies are much easier to get than traditional life insurance since a paramedical exam is not involved. 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.

Simplified Issue Life Insurance

This can be a good option for those who can’t get traditional life 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.

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 provide information about your health.

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 life insurance and funeral insurance pay a death benefit — but they are used for entirely different purposes. 

Life insurance is typically intended to pay for costs your family is likely to be burdened with, but find difficult to cover without your income. This can include expenses like college tuition fees, a mortgage, or the cost of raising kids.

Funeral insurance typically covers final expenses, including medical bills, cremation fees, and urns or caskets.

Funeral insurance also has a lower face value compared to most life insurance since it’s intended to pay only for end-of-life 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 policy is generally more expensive than a comparable life insurance policy. However, the price difference is not huge, as the following chart shows.

Funeral Insurance Rates – Medical Underwriting

Age	Non-Smoker Male	Non-Smoker Female	Smoker Male	Smoker Female
40	$24	$19	$42	$36
45	$35	$26	$59	$42
50	$46	$37	$70	$55
55	$55	$46	$87	$62
60	$64	$50	$102	$69
65	$86	$65	$132	$92

Funeral Insurance Rates – Non-Medical Underwriting

Age	Non-Smoker Male	Non-Smoker Female	Smoker Male	Smoker Female
40	$26	$22	$42	$37
45	$34	$31	$56	$45
50	$47	$42	$65	$56
55	$57	$51	$89	$68
60	$78	$68	$117	$88
65	$105	$86	$155	$110

 

Does Life Insurance Cover Funeral Expenses?

The answer is YES. Your life insurer will pay a lump sum to your family upon your death. Your loved ones are free to use the funds to pay for any expenses, including your funeral and related costs.  

Many people use a traditional life insurance policy to cover final expenses. If you are in reasonably good health, you may want to buy a life insurance policy with a medical exam instead, because these policies are cheaper than funeral insurance.

When shopping for a life insurance product, adjust the face value so that it will be enough to cover end-of-life expenses on top of your family’s other financial needs. Our life insurance calculator takes your end-of-life expenses into account while calculating how much life insurance you might need.

How much funeral insurance coverage do you need?

Your final expenses insurance 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. 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

 

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.

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.

If you are young and healthy, consider buying a term or permanent life insurance policy. Your family can use part of the proceeds to cover funeral expenses.

If you are on a tight budget, burial insurance may be better for you. Since these policies have smaller payouts, their premiums are lower than those of permanent life insurance.

For the elderly and people in poor health, funeral insurance may be a better option. When you are older, final expense insurance can be less expensive than life insurance. And if you have a chronic health condition and want insurance for funeral expenses, burial insurance may be your only option.

How much does a funeral cost in Canada?

The average cost for burial in Canada is between $5,000 and $10,000. But remember, the cost 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 your end-of-life expenses with a traditional life insurance policy or a final expense policy. 

What is the cost of funeral insurance?

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, final expenses insurance costs increase as you grow older. Also, simplified issue life insurance is cheaper than guaranteed life.

How can I buy funeral insurance?

The best way to find the right final expenses coverage is to speak to an independent insurance broker. At Dundas Life, we help you find the best final expenses insurance policy at the best price. 

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