Workers' Compensation Insurance

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Workers’ compensation death benefits

Workers’ compensation insurance policies cover medical bills if an employee is injured or sickened on the job. If the employee dies as a result of an injury or illness, a policy can also pay for related expenses as part of its “death benefits.”

Every state, insurer, and policy has its own provisions and variations. In general, when a work injury causes an employee’s death, workers’ compensation death benefits can help:

  • Cover funeral and burial expenses
  • Provide financial support for the deceased’s family

For death benefits to apply in most states, the employee must have died from a work-related injury or illness. That means an on-the-job death that occurs outside of normal work activity might not be covered.

Funeral coverage: Workers’ comp death benefits vs. a life insurance policy

Funeral coverage isn’t limited to workers’ comp policies. Outside of the workplace, a funeral insurance policy is a type of specialized life insurance that helps individuals plan and pay for their own death expenses. This type of coverage is also sometimes called burial insurance or final expense insurance.

Like workers’ comp death benefits, this coverage can help pay for funeral expenses. Some funeral insurance policies also offer benefits that pay for the deceased’s outstanding medical bills and other debts.

The difference is that the workers’ compensation benefit is offered by an employer and is only valid if the cause of death is related to the employee’s work. The other kind of funeral insurance is a personal policy bought by individuals, and the cause of death does not need to be work-related.

Funeral expenses can add up fast

Losing a loved one is sad and stressful, and to make matters worse, funeral and burial costs aren’t cheap. The median cost of a funeral is about $8,755, not including the cemetery plot, which can easily add an extra $2,000 to expenses.

Workers’ comp policies are often required to include coverage for funeral and burial costs. However, some states only require coverage up to a certain amount. It’s not a guarantee that funeral insurance will pay for the full cost of a funeral, especially if the deceased’s family opts to purchase an expensive casket or entomb their loved one in an elaborate mausoleum.

Workers' compensation survivor benefits

In many states, it’s a requirement that workers’ comp policies provide cash benefits to the late employee’s family or dependents. Who can receive this money and how much they get depends on state law. Here are some factors to keep in mind:

  • Dependents, such as a spouse, children, or elderly live-in relatives, usually get priority.
  • Some states have specific eligibility requirements to receive benefits. For example, children may have to be born in wedlock or a partner must have been legally married to the deceased to be eligible.
  • If there are no eligible dependents, most states require the benefits to go to the deceased’s estate.

The state typically determines the minimum value of the benefit payments. In New York, for instance, the amount is equal to two-thirds of the deceased worker's average weekly wage for the year before the accident. In Oregon, the spouse and any dependents each receive a set amount determined by the state.

Since every state has its own laws governing death benefits from workers’ comp, business owners should research the workers’ comp laws in their state.

Workers' Compensation Insurance: Further Reading

Workers' Compensation in the Insureon Blog