What is funeral insurance?

By Kaitlyn Kokoska
Content Editorial Manager
10 ‏‏‎ ‎‎‎‎‎min read

No one likes to think about what will happen after they’re gone, but the hard truth is funerals can be expensive in Canada. Instead of leaving your family to start a GoFundMe if you suddenly pass, funeral insurance can be a better way to plan ahead.

In this article, we look at what funeral insurance is, and how it can help you make sure you don’t leave your loved ones with any hefty bills.

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What is funeral insurance?

Funeral insurance is a special type of life insurance policy. It’s meant to cover costs associated with the end of one’s life, including funeral or burial costs — hence the name.

Key features of funeral insurance

The key features of funeral insurance are:

  • Death benefit — just like with life insurance, it pays out a single lump sum payment once you pass away
  • Payout — the policy is guaranteed to pay out because it covers you up until the time of death 
  • Premiums — the amount you pay is level and won’t change once you buy the policy
  • Coverage amount — lower death benefit amount than normal because it’s meant to pay for just funeral costs
  • Beneficiary — in Canada, the payout can sometimes be paid directly to the funeral home or service instead of going to your surviving family like a life insurance payout does

Is burial insurance the same thing as funeral insurance?

Yes, burial insurance is the same as funeral insurance. They’re different words that refer to the same kind of coverage — a special type of policy that is specifically designed to cover costs associated with the insured person’s funeral, burial, or other end-of-life ceremony.

What is final expense insurance?

Final expense insurance is a type of life insurance specifically designed to cover the costs associated with a person’s funeral, burial, and other end-of-life expenses. It’s like funeral insurance, but it’s a little more comprehensive than just covering burial costs.

Just as with funeral insurance, final expenses insurance pays out as a one-time lump sum when the person dies. It also usually offers lower coverage amounts than regular life insurance does.

Click here to read more about Final Expense Insurance

What does funeral insurance cover in Canada?

In general, funeral or burial insurance helps to cover payments for things like:

  • Funeral home services
  • Cremation
  • Burial plot
  • Caskets
  • Urns
  • Other related expenses

What’s the difference between funeral insurance and life insurance?

Funeral insurance, life insurance, and final expense insurance can all be used to address similar needs. But, in general, life insurance has a wider range of uses and a higher maximum coverage amount.

The chart below breaks down the differences between these 3 types of coverage.

Funeral Insurance vs Final Expense Insurance vs Life Insurance

Funeral/Burial Insurance Final Expense Insurance Life Insurance
Purpose Covers funeral and burial expenses Covers funeral, burial, and other end-of-life expenses Provides full financial protection for beneficiaries upon the death of the insured
Coverage Up to $15,000 Up to $25,000 Up to $5 million
Lump Sum Payment Yes – usually directly to the funeral home Yes – usually to beneficiaries Yes – to beneficiaries
Usage of Funds Solely for funeral and burial expenses Primarily for funeral, burial, and end-of-life expenses, but can be used however the beneficiary wishes Can be used for various purposes as determined by the beneficiaries
Application process Guaranteed issue coverage (no medical questions or exam required) Guaranteed or simplified issue coverage available Guaranteed, simplified, and standard underwriting options available
Waiting period No No No (guaranteed policies are an exception)

Click here to learn more about the different types of life insurance in Canada
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What are the benefits of funeral insurance?

Funeral insurance plans can provide peace of mind for you and your loved ones. Here are some key benefits of having funeral insurance:

  • Financial relief. Your family isn’t burdened with having to pay out of pocket during a difficult and emotional time.
  • Peace of mind. Knowing that costs are already covered lets you and your family enjoy time together without worrying now.
  • No medical exam needed. Most companies approve you even if you have pre-existing health issues or if you’re already getting on in age.
  • Fixed premiums. Monthly or annual premium costs are locked in once you buy the policy — they won’t change over time.
  • Ease of access to funds. The beneficiary receives the death benefit payment fairly quickly, allowing them to pay for the funeral promptly.

What are the disadvantages of funeral insurance?

While funeral insurance can provide financial security, there are also some disadvantages to consider when evaluating this type of coverage compared to life insurance:

  • Limited coverage amounts. They usually only give just enough coverage to pay for estimated funeral costs — unlike life insurance, which includes enough to cover far more expenses.
  • Higher average cost. Premiums can be higher than traditional life insurance policies for several reasons, including that the payout is guaranteed and no medical questions are asked.
  • No cash value accumulation. Some policies that last for your entire life, such as whole life or universal life, also give cash value growth through investments. Funeral insurance does not.
  • Limited flexibility. It’s only designed to cover one specific cost, unlike life insurance that can cover anything.
  • Inflation or cost-of-living increases. Funeral expenses increase over time as the cost of living goes up. The coverage amount you buy today may not actually be enough to pay for your funeral if inflation jumps up significantly in the future.

Is funeral insurance worth it?

Yes, we believe that funeral insurance or some other form of life insurance is definitely worth it in Canada. Funeral insurance plans offer priceless peace of mind because they’re guaranteed to pay out to your loved ones no matter what.

It’s an easy way to make sure they aren’t left scrambling or holding fundraisers to give you a dignified farewell.

What’s the average funeral cost in Canada?

The average cost of a funeral in Canada can be anywhere from $5,000 to $10,000. Cremation costs are a little bit cheaper, running anywhere from $2,000 to $5,000.

Burial costs vary a lot, depending on when and where the funeral is held. But it’s still a lot of money for the average Canadian family to have to come up with if a relative suddenly dies!

This is one of the reasons why funeral insurance or any type of life insurance policy is so useful in helping to save your family from unexpected financial burdens.

Click here to read more detail about funeral costs in Canada

Is funeral insurance better than life insurance?

No, in our opinion, funeral insurance is not a better option than traditional life insurance. A traditional policy can give you:

  • More flexibility
  • A higher amount of coverage
  • Better prices
  • More add-on options (riders) to expand coverage

But, it also depends. For someone who is older or has health issues, getting traditional coverage can be difficult. In these cases, funeral insurance may be a better option for them.

In any case, you should speak with a licensed advisor who can help you figure out which type of life insurance would be best for you and your family.

Which types of insurance can pay for funeral expenses in Canada?

Aside from funeral insurance, the following life insurance policies can also help pay for someone’s burial costs in Canada:

  1. Term life insurance
  2. Whole life insurance
  3. Final expense insurance

1 Term life insurance

Term life insurance is a type of insurance policy that lasts for a set period of time called a “term” — for example, 10 or 20 years. It’s a short-term policy that’s ideal for covering short-term needs, but you can also factor in things like debt, inheritance, and funeral costs.

Term life insurance policies aren’t the best for end-of-life planning, because you may not pass away before your term ends. With this coverage, the death benefit is not guaranteed. Permanent insurance may be a better option.

Click here to read our full Guide to Term Life Insurance in Canada

2 Whole life insurance

Whole life insurance is a type of permanent life insurance policy — it covers you for your entire life. The death benefit payout is guaranteed because no matter when you die, your beneficiaries will receive the money.

This can be a great option for covering end-of-life expenses including burial costs, estate taxes, inheritance, and more.

Click here to read our full Guide to Whole Life Insurance

3 Final expense insurance

Final expense insurance is another option for ensuring funeral costs are covered when you die. As we discussed above, it’s a type of life insurance with modest coverage that’s designed to cover end-of-life expenses like:

  • Funerals
  • Medical bills
  • Outstanding debt (credit card balances, etc.)
  • And more

The entire purpose of this type of coverage is to pay out quickly to help families support the cost of planning a funeral.

Unsure about how much life insurance coverage you need to address funeral expenses, debts, and desired benefits for your loved ones? Try our life insurance calculator.

Check out PolicyAdvisor's life insurance calculator.

What is a pre-need plan?

A pre-need plan is a payment arrangement some funeral homes allow you to make for funeral or burial services. Think of it as a pre-paid plan for a funeral — it’s a little morbid, but a lot of Canadians find it convenient to alleviate some of the administrative burden on their family ahead of time.

You buy a pre-need plan directly from the funeral home of your choosing. You select your final arrangements and pay for the services either all at once or over a payment plan.

It is not technically a kind of insurance, although you may see some companies call it “pre-need insurance” or “pre-need life insurance.” You can use a pre-need plan with funeral insurance, final expenses insurance, or life insurance.

Get the best life insurance quotes to cover funeral costs

Find the best quotes for life insurance to cover funeral costs right here on Our team of insurance experts can make sure your family won’t have to worry about expenses during an already difficult time.

Contact us today to explore affordable life insurance plans and see how it can alleviate the burden of funeral and end-of-life expenses. Let us help you plan for the future!

Need help?
Call us at 1-888-601-9980 or book time with our licensed experts.
By Kaitlyn Kokoska
Content Editorial Manager
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