Funeral Insurance in Canada 2024

Planning for end-of-life expenses is not something most people look forward to. However, funeral insurance can provide affordable coverage to pay for final arrangements. This comprehensive guide covers everything you need to know about purchasing funeral insurance in Canada.

What is Funeral Insurance?

Funeral insurance, also known as burial insurance or final expense insurance, is a specialized type of life insurance policy that is intended to cover funeral costs. Unlike traditional life insurance, which pays out a larger lump sum, funeral insurance provides a smaller payout, typically ranging from $5,000 to $50,000. This amount is meant to cover expenses directly related to your funeral, burial, or cremation.

Such expenses can include funeral home services, burial plots, caskets or urns, headstones, flowers, transportation, cremation costs, and other related expenses. The goal is to alleviate the financial burden on your loved ones after your passing by providing funds to take care of your final arrangements.

Why Consider Funeral Insurance?

Here are some of the key reasons to consider a funeral insurance policy:

• Bypass medical exams – Because the payout is smaller, you can often qualify for funeral insurance without undergoing medical examinations, even if you have pre-existing conditions. This makes it easier to get approved.
• Affordable premiums – Funeral insurance premiums are generally lower than traditional life insurance since the payout is smaller. This makes it a budget-friendly option.
• Guaranteed acceptance -Some funeral insurance policies guarantee approval regardless of health or age, as long as you are under a certain limit, such as 80 years old.
• Coverage while alive – As long as you keep paying the premiums, the policy remains in effect throughout your lifetime.
• Tax-free payout – The lump sum payout to your beneficiaries from a funeral insurance policy is not taxed as income.
• Lock-in funeral costs – Funeral expenses are only going to increase over time. Purchasing coverage now locks in funds to cover costs.

Types of Funeral Insurance in Canada

There are two main types of funeral insurance policies available in Canada based on eligibility requirements:

Simplified Issue Life Insurance

With simplified issue life insurance, you’ll need to answer some basic health questions when applying for coverage. However, you won’t be required to take a full medical exam. This type of funeral insurance is ideal if you have minor health issues that may make it challenging to qualify for traditional life insurance requiring medical exams. Payout amounts can reach up to $350,000, depending on the insurance company.

Guaranteed Issue Life Insurance

Guaranteed issue life insurance does not require any medical exams or health questions. You cannot be denied based on age or health conditions. The only requirement is that you must be under a certain age, usually between 80 to 85 years old depending on the insurer.

Because there is no underwriting, guaranteed issue funeral insurance is more expensive. Payout amounts are also lower, usually capping at $25,000. This type of high-risk coverage is suitable if you have been denied life insurance in the past or have severe health issues.

What Does Final Expense Insurance Cover?

Final expense life insurance covers:

• Funeral home costs
• Cremation or burial fees
• Caskets, urns, or funeral plots
• Gravestones or headstones
• Transportation of remains
• Flowers
• Obituary notices
• Clergy honorariums
• Other expenses related to ceremonies

Some policies may even help cover outstanding medical bills or tax

Alternatives to Burial Insurance in Canada

Purchasing a dedicated funeral insurance policy is not the only way to cover your final expenses. Here are some alternatives to consider:

Savings Accounts

You can open a separate savings account and regularly contribute funds earmarked specifically for funeral costs. Make sure to communicate the purpose of the account to your loved ones.

The benefit of this option is you have total control over the funds. The downside is discipline to consistently save and the account balance may be insufficient.

Traditional Life Insurance

Some whole life and universal life insurance policies have higher death benefit payouts that can cover funeral costs in addition to other financial needs your family may have.

The advantage is greater coverage for potentially lower costs, but you will need to medically qualify.

Pre-Pay Funeral Plans

Another option is to pre-pay some or all of your funeral expenses to lock in costs. This can be done directly through some funeral homes.

The main downside is the pre-paid funds cannot be retrieved if your plans change. You also need to ensure the funeral home can still perform the services when needed.

How Does Funeral Insurance in Canada Work?

Funeral insurance works similarly to other types of permanent life insurance:

• You select a policy with a coverage amount sufficient to cover expected funeral costs and expenses. This is known as the death benefit.
• Apply and answer any health or medical questions required to determine eligibility and pricing. There may be a short waiting period before full coverage takes effect.
• If approved, you pay ongoing monthly premiums to keep the policy active. Premiums are generally fixed and do not increase with age.
• Once you pass away, your beneficiaries file a claim by submitting a death certificate.
• The insurance company then pays out the guaranteed death benefit in a lump sum with no delays or extra paperwork.
• Your beneficiaries use this payout to cover your funeral costs and handle any other final expenses according to your wishes.

The death benefit from a burial insurance policy is not taxable income. Your beneficiaries will receive the full payout.

When Do You Need Funeral Insurance in Canada?

Here are some of the most common situations when purchasing funeral insurance coverage is prudent:

Ineligible for Traditional Life Insurance

If you have been denied coverage from regular life insurance policies requiring medical exams, funeral insurance can provide a safety net. This includes people with chronic illnesses and other health conditions.

Want Minimal Coverage

If you only need basic coverage to cover funeral costs and expenses without extra funds, the limited payouts from funeral insurance may be sufficient.

Approaching Advanced Age

Once you are over 70 years old, qualifying for regular life insurance becomes more difficult and expensive. Funeral insurance is a viable option if you still want coverage.

Have Minimal Savings

If you have limited financial means or savings, paying the lower premiums of a funeral insurance policy may be the only way to finance a proper burial or cremation.

Pros and Cons of Funeral Insurance in Canada

Funeral insurance offers several advantages but also has some drawbacks to consider:

Pros

• Guaranteed payout to cover funeral costs
• No medical exam is required in most cases
• Premiums do not increase with age
• Coverage while alive as long as premiums are paid
• Can qualify with pre-existing conditions
• Simple claims process for beneficiaries

Cons

• Payout maximums are low, usually only $25,000 or less
• Much more expensive compared to regular life insurance
• Often, a two-year waiting period before full coverage starts
• Strict limitations on how funds can be used
• Usually, a poor value for younger healthy individuals

As you can see, the main benefit of funeral insurance in Canada is covering final expenses if you otherwise may struggle to qualify for regular life insurance. However, the trade-off is higher premium costs for less policy coverage.

How Much Does Final Expense Insurance Cost in Canada?

Final expense insurance premiums vary based on these key factors:

• Age – Costs rise as you get older. Buying coverage earlier means locking in lower rates.
• Gender – Due to differing life expectancies, premiums tend to be a bit lower for women than men.
• Smoking Status – Policies cost significantly more for smokers due to the increased health risks.
• Health Status – While final expense insurance doesn’t require a medical exam, certain conditions may still increase your premiums.
• Coverage Amount – The higher the payout amount, the more coverage costs.

To give you a sense of typical costs, here are sample monthly premiums for a $25,000 funeral insurance policy from leading Canadian insurer Canada Protection Plan:

Premiums are significantly higher without medical underwriting. For example, guaranteed issue insurance for an 80-year-old female non-smoker rises to $416.34 monthly.

Remember to compare numerous providers’ quotes to find the best rates. Funeral insurance costs can vary widely.

Average Funeral Costs in Canada

According to current data, the average funeral costs in Canada are:

• Basic cremation: $2,500
• Full-service funeral: $6,000-$12,000

Funeral expenses in major cities like Toronto and Vancouver tend to be more expensive, averaging $10,000-$15,000 for a full-service funeral.

How Much Funeral Insurance Coverage Is Needed?

Determining the right funeral insurance coverage amount involves:

1. Researching funeral costs in your local area
2. Accounting for any additional end-of-life expenses
3. Using a detailed funeral expense calculator
4. Adding a 10-15% buffer for rising costs over time

Expect coverage between $15,000 to $20,000 to sufficiently cover most reasonable funeral expenses depending on where you live. Rural areas are generally less expensive than major cities.

Best Final Expense Life Insurance Companies Reviews in Canada

There are many great options when it comes to funeral insurance providers in Canada. It’s crucial to compare policy options from numerous insurers to find the best match for your needs and budget. Here is an overview of 5 top companies:

Canada Protection Plan

Canada Protection Plan is one of the most highly rated funeral insurance providers, with over 50 years of experience serving Canadians. They offer guaranteed issue policies up to $50,000 in coverage. This means approval is guaranteed regardless of your health or age as long as you are under 85 years old.

Guaranteed Issue Plan

• Up to $25,000 coverage
• Sample rate: $162.34/month for an 80-year-old female non-smoker

Simplified Issue Plan

• Up to $350,000 coverage
• Sample rate: $45.25/month for a 60-year-old female non-smoker

Canada Protection Plan has built a strong reputation for excellent customer service and fast claims payouts to beneficiaries. They are a great option to consider.

Read the full review: Canada Protection Plan CPP Life Insurance

Foresters Financial

Foresters Financial offers competitively priced guaranteed acceptance life insurance. Their policies are designed to keep premiums low. A unique feature they offer is called the Age Reset Benefit. If you purchase a policy with this benefit between ages 50 and 75, Foresters will reset your premiums back to age 50 after 10 years. This helps keep your costs lower for longer.

PlanRight

Their PlanRight guaranteed acceptance final expense insurance provides lifetime coverage from $2,000 up to $50,000 for applicants aged 50-85:

• Up to $50,000 coverage
• Sample rate: $26.78/month for a 65-year-old male non-smoker

Your Choice Policy

• Up to $25,000 coverage
• Sample rate: $18.78/month for a 60-year-old female non-smoker

Foresters is also a fraternal benefit society that offers member programs, rewards, and community initiatives across Canada.

Read the full review: Foresters Financial Life Insurance

Industrial Alliance

Industrial Alliance (iA) provides funeral insurance with a wide range of potential coverage amounts, from as low as $10,000 up to $500,000. Their simplified issue plan does not require a medical exam to apply. You simply answer some health-related questions. This makes it easy to get covered without invasive tests or appointments.

Final Expense Simplified

• Up to $25,000 coverage
• Sample rate: $51.93/month for a 70-year-old male non-smoker

Funeral Security Plan

• Up to $35,000 coverage
• Sample rate: $39.83/month for a 65-year-old female non-smoker

iA also offers the ability to convert to permanent life insurance plans down the road. This allows you to extend your coverage as needed.

Read the full review: Industrial Alliance Life Insurance

Empire Life

Empire Life is known for its competitive pricing on funeral insurance products. Their policies can also accrue cash value that you can borrow against if needed. They offer strong options for Canadians over 50 years old. Empire Life has also added unique living benefits to their plans like disability insurance, so you get coverage while you are alive too.

Simple Protect

• Up to $25,000 coverage
• Sample rate: $45.06/month for a 65-year-old male non-smoker

Assured Life

• Up to $50,000 coverage
• Sample rate: $53.76/month for a 70-year-old female non-smoker

Overall, they provide versatile options with robust features.

As you can see, Canada has many great funeral insurance providers. Make sure to get personalized quotes from multiple companies before deciding which policy works best for your financial situation.

Read the full review: Empire Life Insurance

Tips for Buying Funeral Insurance

Follow these tips when shopping for funeral insurance in Canada:

• Start researching policies early, in your 60s or 70s
• Compare quotes from a minimum of 3 insurance providers
• Take time to accurately assess expected funeral costs
• Consider simplified issues before guaranteed issue policies
• Review all policy details like waiting periods, cancellations, etc.
• Pick an established insurer known for good customer service
• Notify beneficiaries about your funeral insurance details

How To Choose the Best Final Expense Life Insurance

When comparing final expense policies, keep the following criteria in mind:

• Coverage Amount: Make sure it fully covers expected funeral costs.
• Premium Cost: Lock in affordable rates when young and healthy.
• Company Reputation: Seek established insurers who reliably pay claims.
• Policy Terms: Understand limitations, fees, contestability periods, etc.
• Ease of Application: Opt for a smooth, simple application process.

Working with an independent insurance advisor can help you consider all these factors and determine the ideal final expense insurance for your specific needs and budget.

Where to Buy Funeral Insurance in Canada

There are several options for you :

Buy Directly from Insurance Company Websites

Most major insurance companies like Canada Protection Plan and Foresters allow you to get quotes and buy policies directly online. This is usually the fastest and most affordable option.

The insurer’s website will walk you through the application process step-by-step. You can get covered entirely online without speaking to an agent.

Through Independent Online Insurance Brokers

Brokers like Life buzz, Insurance Direct Canada IDC allow you to compare quotes from multiple insurers in one place. You can shop for the best rates and apply online.

The benefit of using a broker is getting quotes from numerous companies quickly. However, brokers may charge small policy fees.

Over the Phone from Insurance Agents

You can call insurers directly and speak with an agent to ask questions and get set up with a policy. This allows you to get detailed advice for your specific situation.

When you call an insurer, ask to speak with an agent who specializes in funeral insurance for the best guidance. Discuss your budget and needs.

In Person with a Local Advisor

Meeting face-to-face with an advisor can provide a more personalized service. They can explain options clearly and assist you through the application process.

To find an advisor, ask insurers for a recommendation. Make sure to verify they offer funeral insurance in Canada.

Through Independent Insurance Advisors

Some independent advisors will compare quotes across companies on your behalf. This ensures you get the optimal rate.

Ask advisors if they charge fees for their service or if they earn commissions from insurers. Quotes should always be free.

Overall, purchasing directly from insurer websites is the easiest and most affordable option for most Canadians. However, speaking with an advisor can provide added guidance in choosing the right funeral insurance policy.

Who Needs Final Expense Insurance?

Here are some situations where final expense insurance is recommended:

For Seniors Over 65

As we age, the cost of final expense insurance premiums rises substantially. Seniors can benefit from getting coverage locked in while still relatively young and healthy. Having this policy in place earlier means they’ll pay lower premiums over the long run.

More: Term to Age 65 Life Insurance in Canada

For Those With Health Conditions

If you have chronic illnesses like heart disease, cancer, COPD, or other conditions, you may struggle to qualify for traditional life insurance. In these cases, final expense insurance provides guaranteed acceptance coverage regardless of health.

To Cover Costs for Spouses & Loved Ones

Without adequate savings or life insurance, the burden of covering funeral costs often falls on a deceased’s family. Final expense insurance helps ensure no loved one has to worry about footing these bills.

For Peace of Mind

Just knowing that your final arrangements are covered can provide comfort. You can rest easy that your passing won’t create financial hardship or chaos for those you leave behind.

How to Make a Claim

To make a funeral insurance claim, beneficiaries must:

• Contact the insurer by phone immediately
• Provide required documentation like a death certificate
• Complete any claim forms required by the company
• Receive the lump-sum payout in a timely manner, usually within a week

The insurer will guide beneficiaries through the entire claims process. However, notifying loved ones about policy details ahead of time makes it easier.

Life insurance and funeral insurance are two standard policies that provide financial protection for your loved ones after you pass away. While they share some similarities, there are critical differences between them regarding coverage amount, purpose, requirements, payout duration, and cost factors.

Coverage Amount

Life insurance typically offers higher coverage amounts, often starting at $50,000 or more, to help replace lost income and support any dependents. According to leading Canadian life insurance provider SunLife, their policies can offer up to $25 million in coverage.

In contrast, funeral insurance usually caps coverage around $25,000. It is specifically meant to cover end-of-life expenses like funeral and burial costs. For example, North Cover’s funeral insurance covers $25,000.

Purpose

The main purpose of life insurance is to replace income and provide ongoing financial support for dependents after the policyholder passes away. It helps survivors maintain their standard of living.

Funeral insurance has a more limited purpose – its death benefit solely covers final expenses, like funeral and burial costs. According to the Financial Consumer Agency of Canada, the average funeral in Canada costs $6,000, with higher costs in urban areas. Funeral insurance ensures loved ones aren’t burdened with these sudden expenses.

Requirements

Most life insurance policies require a medical exam as part of the application process. The exam assesses the applicant’s health and medical history. According to PolicyAdvisor, nearly 60% of life insurance applicants must take a medical exam.

In contrast, funeral insurance does not involve a medical assessment. Coverage is guaranteed as long as the applicant meets age and residency requirements. For example, North Cover’s funeral insurance promises guaranteed acceptance for Canadian residents between 20 and 80 years old.

Payout Duration

Life insurance policies pay out death benefits over time to beneficiaries. This provides ongoing income replacement.

Funeral insurance gives survivors a lump sum payout that must be explicitly used for end-of-life expenses. For example, the Co-operator’s funeral insurance immediately pays the total death benefit upon the policyholder’s passing.

Cost Factors

For life insurance, premium costs are calculated based on personal factors like the applicant’s age, health, family history, and lifestyle. Younger, healthier applicants tend to pay lower premiums.

The applicant’s age primarily determines funeral insurance costs. Premiums increase as the applicant gets older. However, health status does not impact funeral insurance pricing.

What is the difference between life insurance and funeral insurance?

Life insurance and funeral insurance are two standard policies that provide financial protection for your loved ones after you pass away. While they share some similarities, there are critical differences between them regarding coverage amount, purpose, requirements, payout duration, and cost factors.

Coverage Amount

Life insurance typically offers higher coverage amounts, often starting at $50,000 or more, to help replace lost income and support any dependents. According to leading Canadian life insurance provider SunLife, their policies can offer up to $25 million in coverage.

In contrast, funeral insurance usually caps coverage around $25,000. It is specifically meant to cover end-of-life expenses like funeral and burial costs. For example, North Cover’s funeral insurance covers $25,000.

Purpose

The main purpose of life insurance is to replace income and provide ongoing financial support for dependents after the policyholder passes away. It helps survivors maintain their standard of living.

Funeral insurance has a more limited purpose – its death benefit solely covers final expenses, like funeral and burial costs. According to the Financial Consumer Agency of Canada, the average funeral in Canada costs $6,000, with higher costs in urban areas. Funeral insurance ensures loved ones aren’t burdened with these sudden expenses.

Requirements

Most life insurance policies require a medical exam as part of the application process. The exam assesses the applicant’s health and medical history. According to PolicyAdvisor, nearly 60% of life insurance applicants must take a medical exam.

In contrast, funeral insurance does not involve a medical assessment. Coverage is guaranteed as long as the applicant meets age and residency requirements. For example, North Cover’s funeral insurance promises guaranteed acceptance for Canadian residents between 20 and 80 years old.

Payout Duration

Life insurance policies pay out death benefits over time to beneficiaries. This provides ongoing income replacement.

Funeral insurance gives survivors a lump sum payout that must be explicitly used for end-of-life expenses. For example, the Co-operator’s funeral insurance immediately pays the total death benefit upon the policyholder’s passing.

Cost Factors

For life insurance, premium costs are calculated based on personal factors like the applicant’s age, health, family history, and lifestyle. Younger, healthier applicants tend to pay lower premiums.

The applicant’s age primarily determines funeral insurance costs. Premiums increase as the applicant gets older. However, health status does not impact funeral insurance pricing.

Here is a summary of the key differences:

In summary, while both offer financial protection for families, life and funeral insurance differ significantly in their coverage scope, eligibility factors, and duration of benefits. Understanding these distinctions can help you decide which type of policy aligns best with your needs and budget. Consult a licensed advisor for the right insurance solutions for your unique situation.

Conclusion

Funeral insurance in Canada can provide affordable coverage if you are unable to qualify for regular life insurance. Take time to shop multiple policies, understand costs, and pick an adequate death benefit. This ensures your final wishes are honoured, and your loved ones are at peace.

Getting the right funeral insurance policy takes research and planning. The team at Lifebuzz.ca can guide you through the process from start to finish. Our licensed advisors will answer your questions, provide personalized quotes, compare top insurers, and help you find budget-friendly coverage for funeral insurance in Canada.

Frequently Asked Questions (FAQs)

Why should I buy funeral insurance instead of setting aside savings?

Funeral insurance guarantees a lump sum payout to your loved ones and locks in costs now before they rise. Savings may earn low interest and be insufficient to cover final expenses when needed.

What is the maximum payout for funeral insurance in Canada?

The maximum death benefit for most funeral insurance policies in Canada ranges from $25,000 to $50,000 in total. Some simplified issue plans may go up to $350,000.

Can I get funeral insurance in Canada if I don't have a SIN number?

Yes, you can qualify for funeral insurance in Canada without a SIN number, as simplified and guaranteed issue policies do not require this information during application.

Is the payout from funeral insurance in Canada taxable income?

No, the lump sum death benefit paid to your beneficiaries from a funeral insurance policy in Canada is not considered taxable income.

Do most funeral insurance policies in Canada have waiting periods?

Many funeral insurance policies in Canada have an initial waiting period before the full death benefit is payable, often 24 months. After this, the full amount can be claimed.

Can I use funeral insurance in Canada to cover cremation costs?

Yes, the payout from a funeral insurance policy in Canada can cover all cremation costs, including the cremation itself, urn purchase, cemetery plot, etc.

Is funeral insurance in Canada guaranteed, simplified issue, or medically underwritten?

Funeral insurance in Canada can be a guaranteed issue, a simplified issue with limited underwriting, or fully underwritten depending on health and age.

How do I determine the right amount of funeral insurance coverage in Canada?

Factors like current funeral costs, location, burial vs. cremation, and any outstanding debts should be considered when determining coverage amount.

What medical conditions may impact eligibility for funeral insurance in Canada?

Heart disease, cancer, diabetes, obesity, high blood pressure, high cholesterol, tobacco use, and other major illnesses may impact eligibility and premium rates.

Can I cancel my funeral insurance policy in Canada at any time?

Most funeral insurance policies in Canada can be cancelled anytime, though some insurers may recoup initial policy expenses. Read terms carefully.

What documents do beneficiaries need to make a funeral insurance claim in Canada?

Beneficiaries will need to submit a death certificate along with any claim forms provided by the insurance company that issued the policy.

Who is a good candidate for funeral insurance in Canada?

Seniors, people with health conditions, individuals on tight budgets, and those without savings to cover funeral costs benefit most from funeral insurance in Canada.

Is the application for funeral insurance in Canada complex and time-consuming?

No, applying is quick and simple. Policies can often be purchased entirely online. At most, you may need a short phone interview about health.

Can I get funeral insurance in Canada if I am over the age of 85?

Most insurers set age limits of 80-85 for eligibility. However, you may still be able to get simplified issue funeral insurance over age 85 after providing health details.