Final Expense Insurance
Protect your family from the burden of an expensive funeral. Speak with our burial insurance specialists to learn more about your options today. Final expense insurance is a type of permanent life insurance that can help older adults ease the burden of end-of-life expenses on their loved ones.
What Is Burial Insurance?
Burial insurance covers the cost of funeral homes, burial expenses, and other final expenses when you die. For example, the life insurance company pays a surviving spouse a death benefit for getting your body treated, a funeral, or a cremation.
This type of whole life policy is for seniors who don’t have any other life insurance policies or can not get approved for a policy due to serious health issues. Funerals can cost a lot of money, so you should get this type of life insurance to relieve the financial burden on your loved ones.
Burial policies are permanent and never expire as long as the insured pays the premiums. Burial policies are backed by the claims-paying ability of the issuing insurance company, and the financial strength of the provider should be considered.
The permanent policy is for small amounts only and is designed for when senior citizens don’t have the money to pay premiums on traditional policies but still want to pay for their funeral and other expenses ahead of time. In addition, the insurance is ideal for adult children of an elderly parent who can’t afford to pay for these expenses themselves.
What Is Final Expense Life Insurance?
The financial products provide a small amount of money ranging from $5,000 to $25,000 for funeral and “end of life expenses” costs such as funeral and burial costs, medical bills, credit card bills, and any other outstanding bills. These life insurance plans are also known as end-of-life insurance.
Seniors up to a maximum age of 80 can expect a short application process and immediate coverage.
The whole life policy has higher monthly premiums for limited coverage, so you’ll want to consider other forms of funding (savings account, investments, social security) if you or your family could otherwise afford the monthly payments.
How Does Final Expense Insurance Work?
Burial insurance is typically a whole life insurance policy. The proceeds are usually intended for end-of-life expenses, but technically your beneficiaries can spend the money on anything.
It’s important to note that burial insurance is frequently referred to as “final expense insurance” and “funeral insurance.” All three labels mean the same thing.
Because burial policies for seniors are usually whole life insurance, the following statements thoroughly explain how they work:
- Fixed monthly payments for life.
- Policy can’t expire at any age.
- The death benefit is guaranteed never to decrease.
- Builds cash value that you can borrow from.
The most unique and valuable feature of final life expense insurance is that seniors with virtually any health issue can qualify.
You will not be declined due to common health issues like diabetes or high blood pressure.
Another unique feature is the low coverage options. You can buy as little as $1,000 in coverage with some companies. However, most carriers seem to have a minimum of $2,000 or $5,000.
Essentially, once the insured passes away, the insurance company will pay out the total death benefit tax-free to the beneficiary(s). That gives your loved ones the money to pay for final expenses.
If there is any money left over, it belongs to your beneficiaries to use any way they desire.
You may select any of the following as beneficiaries:
- Children (step or adopted are acceptable)
- Spouse
- Parent (stepparent is acceptable)
- Niece or nephew
- Cousin
- Sibling
- Family friend
- Grandchildren
- Great-grandchildren
- Aunt or Uncle
- Funeral home
- Pretty much any family member or person you are close with
Funeral insurance policies will never require you to undergo an exam or provide your medical records as part of the application. You will only have to answer some questions about your health.
What are the benefits of final expense insurance?
Burial insurance is an affordable way to give your family financial protection. Here are some of the advantages:
No medical exam
Certain types of life insurance require a medical exam, but not a burial insurance policy. Unless you have a serious pre-existing medical condition, you'll likely be able to get coverage.
Lower premiums
Final expense life insurance rates start at just $53 per month, with coverage amounts ranging from $5,000 to $35,000. .
Payment flexibility
You get to choose if you want to pay your premium monthly or annually.
Quick approvals
The application process is quick and easy, and coverage can be issued in days, sometimes even on the day you apply. Once you've been approved, your coverage starts immediately.
What Is Preneed Funeral Insurance
Pre-need funeral insurance sets aside money for your funeral before you die. This type of insurance is suitable because it protects your loved ones from covering funeral expenses when you are dead.
The preneed insurance covers the cost of your funeral. The permanent life insurance will pay for things like the cost of a standard funeral home service, funeral arrangements, memorial service, and church and burial services. You can also lock into today’s prices for those things so that you do not have to worry about it if they go up in price.
Is burial insurance and funeral insurance the same as final expense insurance?
Final expense insurance is also called “burial insurance” or “funeral insurance.” These terms are often used interchangeably to describe a type of permanent life insurance intended to pay for funeral arrangements.
Unlike traditional permanent life insurance policies, burial insurance coverage amounts are much smaller, designed to only cover your funeral costs and related debts. It’s not meant to replace your income, cover large expenses, or work as a retirement plan. Final expense insurance also doesn’t require a medical exam, like many other life insurance policies do. You’ll only need to answer a few health questions to apply, and approval is quick and easy.
Reasons for Purchasing a Final Expense Insurance Policy:
- For individuals who want to pre-plan but are not 100% certain that they will remain in the same city and state throughout their entire lives.
- For individuals, whose preference for burial, entombment, or cremation may change.
- When the cemetery, funeral home or memorial provider does not allow for pre-planning
- If the cemetery, funeral home or memorial provider charges too much interest for pre-paying.
- If the cemetery, funeral home or memorial company does not place all pre-paid money into an independently monitored trust.
- If there is any reasonable chance that the cemetery, funeral home or memorial provider may not be in business to fulfill its obligations at the time of need.
Reasons for Not Purchasing a Final Expense Insurance:
- The monthly insurance premium payments do not make economic sense.
- The cemetery, funeral home or memorial provider offers low-interest, or zero interest, pre-payment plans.
- The cemetery, funeral home, or memorial provider lock-in all costs and guarantees all goods and services.
- There is a significant discount offered by the funeral home or cemetery for pre-payments made directly with them.
Final expense insurance may either be issued as either term-life insurance or whole-life insurance. Term-life insurance remains in place for a specific, pre-determined term (or amount of time). If a death occurs during that term, the face value death benefit is paid to the beneficiary. If a death does not occur during the given term, no death benefits are paid. Whole-life insurance coverage never expires, therefore the face value death benefit is guaranteed to be paid upon the death of the insured. *Whole-life insurance policies may automatically become an annuity when the insured reaches 100 years of age. Such a change should not affect the payable death benefit.
The monthly premium cost of a final expense insurance policy depends on the proposed insured’s age, the type of coverage (term or whole life), the face value death benefit of the policy, and the credit rating of the insurer. The older the proposed insured is at the time of initial application, the higher the premiums will be. It is important to apply for final expense insurance as early as possible. Term-life policies will be less costly than whole-life policies. The higher a policy’s face value death benefit, the higher the monthly premiums will be. While keeping monthly costs low is important, it is equally important that a final expense insurance policy is underwritten by a highly rated and well-capitalized insurance company.
Ancillary information about Final Expense Insurance
The decision to purchase final expense insurance should be considered as part of final arrangement pre-planning and in conjunction with estate planning. While estate planners, financial professionals, insurance companies and insurance brokers all may be able to broker final expense insurance products, it is important to keep premium costs low in relation to the quality of the insurance provided.
Who Purchases a Final Expense Policy
A final expense policy is generally purchased directly by an individual for family or a specific beneficiary when planning in advance of their passing. The alternative types of insurance policies (i.e., burial and funeral insurance) are either purchased by an individual directly or funeral home. In general, a funeral or burial policy is purchased as part of the contract entered into by and between an individual and the funeral home. This insurance policy is purchase to ensure that the funds are preserved and available at the time of passing. When the death occurs, the proceeds of the burial and funeral insurance policy are used for the goods and services set forth in the contract.
How to Apply for a Final Expense Insurance Policy
An insurance company issuing a final expense policy generally needs to know the following information:
- Type of policy (e.g., Length of Term or Whole Life)
- Amount of policy (e.g., $5,000, $10,000, etc…)
- Name of insured
- Age of the insured
- Gender (male or female)
- State of Residency
- Smoker (Tobacco Use)
- Email Address
- Phone Number
Specifically, when applying for final expense insurance coverage, the proposed insured may be asked the following questions:
- Is the proposed insured currently in a hospital?
- Is the proposed insured currently in a nursing home?
- Is the proposed insured receiving hospice care?
- Has the proposed insured been told by a licensed medical professional that you have less than 12 months to live?
- Has the proposed insured been tested positive for HIV or been diagnosed with AIDS?
- Has the proposed insured been diagnosed with Alzheimer’s or dementia?
Pros and Cons of final expense insurance.
Pros of final expense insurance
Final expense insurance comes with many advantages, including:
- Helps loved ones cover end-of-life expenses :- End-of-life expenses, such as hospital bills and funeral expenses, can cost tens of thousands of dollars. A final expense insurance policy helps your loved ones pay for these costs so they can avoid debt and remain financially stable when you pass away.
- Lifelong guaranteed coverage :- Final expense insurance has lifelong guaranteed coverage. As long as you continue to pay premiums, you don’t have to worry about your coverage expiring.
- Low-cost :- Final expense insurance policy premiums tend to be much lower than other permanent life insurance policies. This can make it easier to fit the policy into your budget, and you can still enjoy the benefits of lifelong coverage.
- No medical exam :- Many life insurance policies require you to take a medical exam. If the policyholder is older or has a medical condition, this exam may strain approval chances. Final expense insurance, on the other hand, doesn’t require a medical exam. This means these policies can be faster and easier to qualify for.
Cons of final expense insurance
Final expense insurance can also come with drawbacks, such as:
- Small death benefit :- Final expense insurance policies typically provide a death benefit large enough to cover your end-of-life costs, but not much more than that. If your family depends on you financially, a final expense insurance death benefit may not provide them with enough funds after you pass away.
- The policy can lapse if you stop paying premiums :- Just like with any life insurance plan, you have to continue making premium payments to keep your final expense policy in force. If you stop paying premiums, the policy will lapse, meaning your beneficiaries won’t receive the death benefit.
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Call one of our agents and get your Final Expense Insurance quote.