Prepaid Life Insurance for Seniors


Life insurance refers to a contract between the insurer and the insurance company. The insured receives a cover that promises to pay death benefits to their dependents. Life insurance contracts require that premiums be paid for a defined period.

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Of course, there are many categories of life insurance. However, our focus here is on prepaid life insurance for seniors.

Notice that the prepaid option is becoming popular each passing day. But before we delve into the reasons that are making it popular, let’s look at what the prepaid option is.

It is a cover in which the payments are made in advance. The prepaid period is normally for one year.

Even though, some companies allow policyholders to prepay for more than a year. This type of cover is treated as an asset and it will be listed on the asset side of corporates that use the policy.

Another advantage is, you can buy this policy for seniors over 85.

Why Seniors Should Choose the Prepaid Policy?

Typically, seniors would need this type of policy to help them pay for their funeral costs. The policy is good for seniors interested in relieving their families from funeral expenses.

In most cases, the preneed policies are tied to funeral homes that in turn hold this money in trust. When the senior dies, the money is used to pay for the funeral expenses. It helps to ease financial pressure to the family of the deceased.

Other than giving the family a peace of mind, the prepaid life insurance plan allows the elderly to take part in their funeral arrangement. It enables them to plan for the funeral in advance. If they have wishes, this is the time they should express them.

They can do so either in writing or verbally to the nominated persons. Also, it enables the elderly not to be worried about their funeral expenses.

Funeral expenses have become a problem these days. It has soared to about $10,000. Thus, the policy ensures that these funds are available when the senior dies.

Yes, the cost of dying is high.

Don’t be shocked at the $10,000 figure; I will break it down for you.

First, there are the final medical expenses.

Depending on how long you have been ailing, the cost can range anywhere between $1,000 to $5,000. This money must be paid to the facility before your body is released for burial.

Also, the nominated person needs money to organize for a funeral service. It may cost another $2,000 to do this. About $1,000 may go to your urn or a casket and obituary.

Finally, you may need a piece of land where you will be buried or some money to pay for cremation services.

By the end of the day, the nominated persons may find themselves spending the entire $10,000 on the funeral expenses. When you add creditors’ claims and the fees to be paid to the attorneys, you will not have any money left.

In a nutshell, we can confidently estimate the cost of dying to $10,000.

Why Buy a Prepaid Life Insurance Cover?

Just like buying a home and a car, buying prepaid life insurance is an essential undertaking. It gives you peace of mind and allows you to enjoy your last days. Here are the reasons why people chose a prepaid life insurance policy

Provides Security

If you buy the policy from a registered provider, there is a guarantee that your burial expenses will be paid.   Some providers give their clients some extra protection. It includes allowing them to seek for an independent dispute resolution when a problem arises.

Cost Save You From Inflation

Investing in prepaid life insurance assures the senior will have a decent burial. This will happen even when inflation is high. The ever-rising burial cost makes the savings you may have inadequate. It may not be enough to foot funeral expenses.

As such, there is a need to invest in a prepaid plan. Such plans guarantees to avail the money to cover burial expenses when you breathe your’re last.

Also, it covers the funeral directors’ costs. It means that when the elderly die, the family will not need to meet such expenses.

Providers Work within Your Budget

Plans offered by directors of funeral homes are flexible. In some cases, they consider how much you can afford. They then allow you to make a local arrangement on how often to make the payments.

It means that you are free to choose a payment plan that suits you. Also, you will be allowed to make a lump sum prepayment and pay a small number of premiums every month.

You Can Choose What to Include in the Plan

Directors’ prepaid funeral plans allow you to choose a plan and what should be included.  It all depends on your needs. The basic plan may include a coffin, a hearse and bereavement service. So, you will need to evaluate the plans offered and chose one that suits you.

Planning the Funeral

Most prepaid life insurance plans allow you to plan for your funeral. They give you a chance to choose what want to be done. You are allowed to furnish your family or the nominated person with the plan.

The plan may include the hospital to be taken to and where you would love to be buried. It also gives you a chance to choose whether to be cremated or buried. Other things you may need to choose to include the music, the hymns, the flowers, and the readings.

All these are provided to ensure that you have peace of mind before you breathe your last. It allows you to share your final wishes and enjoy your life during the last days on earth. It guarantees a good send-off when you die.

Where Can One Get the Plan?

This type of plan is offered by all burial insurance companies.

Besides, you can get the cover from funeral homes. So if your insurance does not carry the policy, check out with the leading funeral homes in your area.

Why is the Policy So Popular?

  • It comes in handy when the elderly have been denied a cover under the traditional coverage. It allows them to easily invest their money in funeral funds. The funds will then avail funds to meet funeral expenses after they die. It is a good policy for the sickling elderly since it helps to reduce monetary worries upon their death.
  • The elderly who have not saved enough money may opt for this policy as well. All they need to do is to make the upfront payment. Once it has been made, the elderly will need to pay some little premiums per month.

How Prepaid Life Insurance Work?

The policyholder must make the payments in advance. After one expresses interest in buying the cover, the company decides the duration for making prepayments.

The period may range from one year to several years. What matters in each case is the company’s policy and rules. The nominee is free to spend the money on burial expenses as well as pay debts and medical bills.

But the policy has an expired period. This happens when the policyholder survives the period of the cover. When the policy expires, the senior has two options: they can choose to renew the policy or surrender the cover.

When they surrender the cover, they are entitled to a refund.  They can choose to renew the cover if the insurance company’s policy allows for that.

Benefits of Prepaid Life Insurance for Seniors

The benefits associated with this cover are many and varied.

  • First, since the elderly know that their funeral cost will be paid for when they die, they spend their last years in peace. It gives them dignity since they know that they are not a burden to the family. This is also critical to the family who takes pride in performing the rites as per the elderly’s wishes. It is a good policy for the elderly as it makes them lead a peaceful and dignified life.
  • The money can be refunded if the elderly changes their mind. If something happens so that burial costs ceases being an issue, the seniors can get back their money.
  • The money received can also be used to pay for after rites of the deceased. It can also be used to pay for debts the deceased incurred. Expenses such as those incurred due to poor health can be paid as well.
  • It is easier to secure a prepaid cover. In most cases, it is not based on the client’s health conditions. The client pays for the cover in advance and so medical examination may not be necessary.
  • Once the family has been paid, they are not restricted to the insurance homes. They can choose how they can hold and conduct the funeral. Even where the deceased made a choice many years ago, the family can choose where the funeral will be conducted.
  • The lump-sum given is normally tax-free

Drawbacks of the Prepaid Plans

  • First, you may be required to buy the policy from the funeral home. This is a bit tricky for people in good health. They find it difficult to visit a funeral home to buy such a policy.
  • Also, things change and people are likely to move to new places. So they find it difficult to make such a commitment.
  • Another drawback is that there is no proper regulation on pre-need contracts. Unlike the life insurance field which is aptly regulated, funeral directors have a lot of freedom. So they end up misappropriating funds meant for this purpose. It makes it difficult for the senior to get a decent burial when they breathe their last. It leaves the deceased family exposed.
  • Also, prepaid payments are rigid compared to burial life insurance policies. In some cases, the insured may need to pay the whole amount at once. This may be difficult.
  • Unlike other life insurance covers, the family of the policyholder may not get cash benefits. Also, things such as lost wages may not be recovered. It means that they will not take time grieving. There is no cash benefit to sustain them during this period. So they must either choose to suffer financial setbacks or go back to their places of work.

Comparing Prepaid Life and Funeral Insurance


Both the prepaid life insurance and funeral insurance are designed to lessen the pain for the family when the elderly die. It helps them deal with the burden of funeral expenses when you breathe your last. The prepaid plan allows you to buy the policy in advance. Together with the funeral director, you will have everything documented in a contract.

The document shows the upfront payment, the terms of payment and any other premium to be paid. Note that the funeral director invests the money you pay in funeral funds. But the money will be released upon your demise.

Funeral Insurance

The funeral insurance is a type of policy that allows you to pay monthly premiums to cater for the cost of the cover. The cover will pay benefits to your dependents upon your death.

Normally, the money is paid to a beneficiary named in the policy. This is not the case for prepaid where the money is paid to the nominated person.

In funeral insurance, you will not be paying for the funeral itself as it is the case with prepaid. Instead, you are buying a cover for the cost of your funeral in the future.

Prepaid life insurance is easier to set up. Once you have identified the provider, you discuss the terms. No exam is needed and it comes into effect immediately.

For the funeral cover, you may need to wait for some time before the cover comes into effect.  It means that failure to pay the premiums can lead to the cancelation of the policy. Also, the insured may not be entitled to a refund.


The prepaid life insurance for the elderly is growing pretty fast. It allows the elderly to plan and finance their funeral before they breathe their last.

It does not need exams as long as the insured pays a lump sum. The cover comes with many benefits and is something you may need to consider if you don’t want to leave a burden to your family when you die.