Burial insurance or a prepaid funeral plan: which is better?
A side by side look at cost, flexibility, and what happens if you move, change your mind, or the funeral home closes.
- If your main worry is that your family will not have the cash, insurance is usually the better fit, because it is portable and the money is theirs.
- A prepaid contract can lock today's prices for the services it lists, and insurance pays a set dollar amount that inflation wears down over time.
- We do not sell funeral contracts, so bring what a funeral home quoted you and we will price the insurance version.
Which one is better depends on what you want in place. Burial insurance pays your family cash. A prepaid funeral plan pays for the funeral itself at one funeral home.
Both are ways to make sure a funeral is paid for, and they are built very differently. The differences matter more than the sales pitch for either one.
What each one is
Burial insurance, also called final expense insurance, is a small whole life policy. Whole life means the coverage stays in place as long as you keep paying the premium, the monthly bill for it.
When you die, the company pays cash to your beneficiary, the person you named to receive the money. Your beneficiary can spend it on anything.
A prepaid funeral plan is a contract with a specific funeral home. You pay for goods and services in advance, and the funeral home agrees to provide them.
In Texas these arrangements are regulated. The money is either placed in trust, meaning it is set aside and held for that purpose, or used to buy an insurance policy assigned to the funeral home. Assigned means the funeral home receives that money when you die.
Where they differ
- Flexibility: insurance money can be spent anywhere and on anything, including other bills. A prepaid contract is tied to that funeral home and those goods.
- Moving: if you move to Houston or back to Mexico, an insurance policy follows you. A prepaid contract usually does not.
- Price protection: a prepaid contract can lock today's prices for the services it lists. Insurance pays a fixed dollar amount, which inflation wears down over time.
- Leftover money: money left over from an insurance payout goes to your family. On a prepaid contract it usually does not.
- If the funeral home closes or is sold: contracts can transfer, but this is where families run into trouble.
How to choose
If your main worry is that your family will not have the cash, insurance is usually the better fit. That is because it is portable, meaning it goes with you, and the money is theirs.
If you have already chosen a specific funeral home, want the exact service spelled out, and expect to stay in the same city, a prepaid contract does something insurance cannot. It locks the price of the service itself.
Plenty of families do both. They sign a prepaid contract for the service and buy a small policy for everything else, because a funeral is not the only bill that arrives.
Read the paperwork before signing either
- Is the plan a guaranteed price, or does it only apply a credit toward what the funeral costs later?
- What is cancellable, and what is refunded if you change your mind?
- Who owns the policy behind the plan, and who is the beneficiary?
- What happens if you die out of state?
We will compare it for you
We do not sell funeral contracts, so we have no stake in that side of the comparison. Bring what a funeral home quoted you and we will price the insurance version. Call our McAllen office at (956) 687 3334, or use the ZIP form on this page. Se habla español.
Common follow-up questions
Can I cancel a prepaid funeral plan?
Texas rules give you the right to cancel. What you get back depends on how the plan was funded and how long you have had it. Ask for the cancellation terms in writing before you sign.
Does burial insurance pay fast enough for a funeral?
Usually yes. Most final expense companies pay within a few business days once the claim and the death certificate are turned in. Many will send the benefit straight to a funeral home.
Is one cheaper?
It depends on your age and health. For a healthy 60 year old, insurance usually costs less over time. For someone in poor health, prepaid arrangements sometimes come out ahead.
How much should it pay?
The death benefit is what your family receives. Most final expense policies here run between $5,000 and $25,000.
What kind of coverage?
Not sure is a fine answer. Your agent will walk you through the difference.
Male or female?
Rates are set separately for each, so this one changes the number.
When were you born?
Age is the single biggest thing that moves a final expense premium.
Any nicotine in the last year?
Cigarettes, cigars, chew or vape. Answering honestly keeps the quote accurate.
Who are we quoting?
So your agent knows who they are calling.
Where should we call you?
One call with your prices. No robocalls, no list selling.
Want a copy by email?
Optional. It means you have the numbers in writing after the call.
By pressing “Get my quote” you agree a licensed McAllen Insurance Group agent may contact you by phone, text or email at the details you provide, including by automated dialing. Consent is not required to buy. This is a request for a quote, not an application, and not an offer of coverage.
Getting your request to an agent
We have your request
An agent will call you with the prices. If you would rather not wait, call us now.
Call (956) 687 3334Monday to Friday, 9 AM to 6 PM. Se habla español.
Read next
How much life insurance do I actually need?
Life · 3 min read
Gerino Alejos
Licensed insurance agent · License 3128710 · NPN 18243381
Owner of McAllen Insurance Group, an independent agency on North 10th Street in McAllen. Works with clients across Hidalgo, Cameron and Starr counties on Medicare, Marketplace health, life and auto coverage. Se habla español.