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What is Funeral Insurance?

Funeral insurance is a type of permanent life insurance, also often called burial insurance or final expense insurance.

Unlike traditional life insurance policies that often require medical exams and have high coverage amounts, funeral insurance specifically covers end-of-life expenses. These policies typically offer smaller payouts, ranging from $5000 to $25 000, which are intended to cover funeral costs, outstanding medical bills, and other final expenses.

Some things to keep in mind about funeral insurance include:

• It has smaller payouts than most permanent life insurance policies. As a result, it is generally less expensive.
• It doesn’t have an end date and lasts as long as you do, provided you pay the premiums.
• 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.

Funeral insurance policies are much easier to get compared to traditional life insurance since a medical exam is not involved. You can qualify for life insurance coverage even if you have a serious illness, although there may be a waiting period on the policy.

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Types of Funeral Insurance in Canada

There are two types of funeral insurance policies: simplified and guaranteed issue life insurance. Both help you cover your final expenses, though they vary in pricing and eligibility requirements.

Simplified Issue Life Insurance

Simplified issue life insurance is an option for those who can’t get traditional 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.

• Ideal for: Seniors in relatively good health who want more affordable coverage.
• No Medical Exam Required: You'll answer a few health questions, but no medical tests are needed.
• Potentially Lower Premiums: Since you're providing some health information, premiums may be lower than guaranteed issue policies.

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 answer any health questions.

• Ideal for: Seniors with pre-existing conditions who want guaranteed acceptance.
• No Health Questions: Acceptance is guaranteed, regardless of your health history.
• Simplified Application: The application process is quick and straightforward. Often has a 2 year waiting period.

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Funeral Insurance vs Life Insurance

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

Life insurance is typically intended to cover expenses that your family would find difficult to cover without your income. This can include expenses like:

• college tuition fees
• a mortgage
• the cost of raising kids

Funeral insurance is more specific, and typically covers:

• funeral or cremation costs /final expenses
• medical bills
• cremation fees

Funeral insurance also has a lower face value compared to most life insurance since it’s intended to pay only for funeral 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 exam, 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 plan is also generally more expensive than a comparable life insurance policy.

However, life insurance can also be used to cover your funeral expenses.

Cost of Funeral Insurance in Canada

The cost of any life insurance policy is dependent on several factors, mainly: 

• Age: As we age, the likelihood of health issues increases. This means insurance companies view older individuals as higher risk and charge higher premiums. For example, a 40-year-old may pay $52.72 per month for $25,000 in coverage, while a 60-year-old may pay $100 or more per month.
• Gender: Women tend to live longer than men, on average. Hence they pay slightly lower life insurance premiums.
• Smoking Status: Smoking significantly increases the risk of various health problems. As a result, smokers will typically pay higher premiums for funeral insurance compared to non-smokers.
• Type of policy: Higher coverage amounts, such as $25,000 or $50,000, will result in higher monthly costs. Similarly, whole life policies tend to have higher premiums than term life.

To get an estimate of how much funeral insurance would cost for you, check out the chart below. It outlines the approximate cost of funeral insurance for Canadians with respect to age, gender, and smoking status.

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As mentioned earlier, funeral expense insurance is also available without a medical exam, however the premiums are generally higher. Check out the chart below to see how much funeral insurance with no medical exam costs for Canadians.

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How much funeral insurance coverage do you need?

Your final expense insurance policy should be large enough to cover the kind of funeral expenses you want. Start by pre-planning your funeral or memorial service with a funeral home. 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

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As you can see, a burial costs between $5,000 and $10,000 in Canada today. While thinking about it may be uncomfortable, planning your funeral in advance and knowing the costs can take a lot of pressure off of your loved ones during a difficult time.

How to Choose the Right Funeral Insurance Policy

There are many things to consider if you’re trying to find the right funeral insurance policy to suit your needs.

1. Coverage Limits and Costs: Consider the costs associated with funeral services in your area.
2. Policy Types: Funeral expense insurance comes in various forms, including term life insurance, whole life insurance, and burial insurance. There may also be options for family coverage as well.
3. Exclusions and Limitations: Certain pre-existing conditions or circumstances may also affect coverage options, so carefully review the exclusions and limitations of each policy.
4. Underwriting Process: Underwriting is the process of evaluating risks in insurance and setting a price based on these risks. Some policies may require a medical exam, while others may offer more simplified underwriting.

All in all, it’s best to choose a funeral insurance policy that compliments your personal situation, your estate plan, and your end-of-life wishes.

Best Funeral Insurance Companies in Canada

If you do decide that funeral expense insurance is right for you, there are several companies in Canada that provide coverage. We've compared our top 4 choices below:

Canada Protection Plan (CPP)

CPP offers both simplified and guaranteed issue policies. They have a quick approval process, often within 48 hours, and offer additional accidental death benefits.

Guaranteed Acceptance Life plan includes:

• Coverage up to $50,000
• Guaranteed level premium (premium will remain the same throughout)
• Guaranteed cash value from the 5th year onward

Simplified Elite Permanent Insurance plan includes:

• Coverage up to $350,000
• Option to pay off the policy in 20 years
• Guaranteed cash value from the 5th year onward

Industrial Alliance

iA provides a terminal illness advance payment option. They offers a range of payment terms (10, 15, 20 years, or to age 100), while also including a premium waiver in case of disability.

Access Life plan includes:

• No medical exam
• Coverage from $10,000 - $500,000

Assumption

Assumption Life allows for coverage increases on policy anniversaries. They also offer riders like a children's insurance rider or a hospitalization benefit rider.

No Medical Whole Life Insurance plan includes:

• Qualify even if you were rejected coverage in the last two years
• Disability insurance option included
• Coverage $1,000 - $50,000K for people aged 40 to 85

Empire Life

Empire Life features a built-in living benefit and provides guaranteed cash surrender values after the third year,

Solution 100 plan includes:

• payable to 100 years of age
• Guaranteed premium rates
• Guaranteed cash surrender values available after 10 years

For more information, read our in depth reviews on Canada Protection Plan, Industrial Alliance, Assumption, and Empire Life.

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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, it can be less expensive than a life insurance policy. And if you have a chronic health condition and want insurance for funeral costs (final expenses), burial insurance may be your only option.

Pros and Cons of Funeral Insurance

Funeral insurance may not be right for you if:

1. ‍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.‍
2. You are young and healthy. Instead, consider buying a term or permanent life insurance policy. Your family can use part of the proceeds to cover funeral expenses if necessary.

Funeral insurance may be the best option for those who:

1. Are on a tight budget. If you are trying to save money, burial insurance may be better for you. Since these policies have smaller payouts, their premiums are lower than those of a permanent life insurance policy.‍
2. Are elderly or are in poor health. When you are older, funeral insurance can be less expensive than a traditional life insurance policy. And if you have a chronic health condition and want insurance for funeral costs, burial insurance may be your only option.

Conclusion

Choosing the right funeral insurance policy is an important decision that can provide peace of mind for you and financial protection for your loved ones.

By understanding the types of policies available, comparing options from top insurers, and carefully considering your needs and budget, you can find a funeral insurance plan that ensures your final expenses are covered without burdening your family.

If you're looking for the best funeral insurance options, talk to a Dundas Life licensed advisor today.

Frequently Asked Questions (FAQs)

How much does the Average Funeral Cost in Canada?

Funeral or cremation costs in Canada can range widely depending on where it takes place and what services you want. The price range is very broad, with the lower end being around $1,000 and the higher end being closer to $20,000.

The climate also plays a factor in costs for funeral and burial wishes. Cold or frozen ground is much more difficult to break through and may need different machinery, which could cost more.

Other factors that influence the cost of your funeral or burial service include:

• Caskets
• Embalming
• Funeral and reception service (may include the fee of reserving a place of worship for the service based on your beliefs)
• Burial or cremation
• Urns or headstones

Is funeral insurance worth it for seniors?

Funeral insurance can be worth it, especially if you don't have savings set aside for funeral expenses or want to ensure your family isn't burdened with these costs.

Does the Canadian government help with funeral costs?

Yes, the government can help with covering funeral or cremation costs. As long as the deceased contributed to the Canada Pension Plan (CPP) for at least three years, their executor can apply for a CPP death benefit, which is a one-time payment of $2,500 to help with funeral costs.

However, the executor must apply for the benefit within 60 days of the deceased’s date of death.

Learn more about who reports the CPP Death Benefit on their taxes →

What is not covered by a funeral plan?

Here are some examples of services that may not be covered if you use another provider:

• Flowers and catering
• Death certificate fees
• Sales tax for additional goods
• Placing obituaries in newspapers
• News covered of the funeral
• Police or security escorts
• Legal permits

Funeral insurance is just one way to do this, but if you haven’t already, a solid estate plan always starts with a legal will, which you can do easily with Willful.