An insurance funded contract will cover the full cost of the contract funeral if the purchaser were to die before the contract is fully paid off.
In order to qualify for an insurance funded contract, the purchaser/insured must answer certain health questions asked by the insurance provider. If a person is in poor health, and answers the questions accordingly, and dies within the two year contestability period from date of contract issue, the insurance company has the right to not pay the funeral bill.
Monthly payments are higher on an insurance funded contract depending on the age and health of the insured.
The contracts can be paid out over 3, 5, or 10 year plans.