Burial Insurance

Burial insurance is a whole life insurance policy with a cash death benefit that can be used to pay [Page 126]for expenses. Such expenses include burial plot, casket or urn, cremation, embalming, digging the grave, hearse, and grave marker. In the past, insurance premiums as low as 25 to 50 cents were popular among working-class American bluecollar workers and blacks, who held small amounts of disability and burial insurance and paid the premiums weekly or monthly through a funeral home or directly to an insurance agent (debit man) who collected premiums from policyholders at their place of employment or their home. In this area, many black Americans in the past were similar to the contemporary French and British, who tend to purchase small amounts of insurance for burial purposes. Low-cost burial insurance at $2 or $3 a week continues to be a significant investment for many low-income families and, more recently, the elderly.

Burial insurance is the final expense insurance, an expense that many people desire not to burden others with. Thus, burial insurance is a highly desired commodity in that it offers what some refer to as “peace of mind insurance,” especially among older individuals. In the southern portion of the United States, older blacks held burial insurance in high esteem, with a sense of security and pride, because to have this form of insurance was to ensure the financial costs incurred at the time of death would not be passed on to others.

Burial insurance costs range from as low as $250 to more than $10,000. Of the five types of life insurance available, burial or funeral insurance is perhaps the most important, especially for low-income families. Burial insurance also is referred to as “preneed insurance,” but these two forms of insurance should not be considered to be the same. Burial insurance is whole life insurance with a death benefit in varying amounts. Pre-need insurance, on the other hand, is a prepayment of funeral arrangements in which all aspects of the process are predetermined and paid for in advance.

The History of Insurance

In 1759, the first American life insurance company was founded, and it was joined in 1770 by its first competitor. By 1800, the number of life insurance companies doubled in size to equal four. Thereafter, the growth of the industry was dynamic, inhibited only during extended periods of economic depression that was cause for the collapse of financial markets.

Burial or industrial insurance was first sold to British factory workers. In 1875, with the founding of the Prudential Friendly Society, burial insurance was introduced into the United States and soon became popular among black families in the Southeast. The American life insurance industry thrived, with sales of life insurance policies to middle-income and labor-intensive lower-income families. From 1927 onward, an industry movement toward professional development held important implications for the door-to-door insurance agent (debit man) who sold small burial policies to low-income families. This was especially true for that majority of agents who, it is stated, held a humanistic orientation toward clients in that they believed the lifeblood of life insurance industry was catering to the needs of families with more modest incomes. Burial insurance represented one of these needs.

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