What is Final Expense Insurance and Why is it right for your family?
Most people think of life insurance as protection for their loved ones in case of an unexpected death. While that is the primary function, it also can provide peace of mind knowing your final arrangements are taken care of and your loved ones won’t have the burden financially or otherwise.
Final expense life insurance is a great way to protect your loved ones in the event of your death. This type of policy does not require a medical exam, making it a good choice for those who want to avoid one.
We will explain what final expense life insurance is and why it’s a good choice for your family. We’ll also discuss the different options and coverages available so that you can make an informed decision about which policy is right for you.
What is Final Expense Life Insurance Policy?
Final expense insurance policies are whole life insurance plans with small death benefits with an easier approval process than traditional life insurance policies. They are also called funeral and burial insurance, these policies have face values ranging from $1,000 to $50,000. The primary difference between final expense policies and other life insurance is the size of the policy offered by the insurer.
What is a whole life insurance policy?
A whole life insurance policy is a type of permanent life insurance that provides death benefits and cash value accumulation. Whole life insurance policies are one of the oldest and most common types of life insurance. Universal life indexed universal life, and variable universal life are all types of whole life insurance.
What is the difference between whole life insurance and final expense insurance?
The main difference between whole life insurance and final expense insurance is the death benefit amount and the approval process. They are both permanent life insurance however, final expense policies have smaller death benefit amounts and do not require a medical exam for approval whereas whole life policies have larger death benefit amounts and require a medical exam for approval.
Which is better, whole life or final expense insurance?
The best type of policy for you depends on your needs and budget. If you want a policy with a death benefit that is larger than what is offered by a final expense policy, then whole life insurance may be the better option for you.
If you do not want to undergo a medical exam or if you have health conditions that may make it difficult to qualify for a whole life insurance policy, then final expense insurance may be the better option for you.
What is the purpose of a final expense life insurance policy?
The purpose of final expense insurance is to financially protect your loved ones in the event of your death.
The death benefit can be used to cover expenses such as funeral costs, medical bills, credit card debt, or any other final expenses.
This type of policy is a good choice for those who don’t want to go through a medical exam, as it typically doesn’t require one.
How Does Final Expense Insurance Work?
Final expense insurance works by providing a death benefit to your beneficiaries that can be used to cover final expenses. The death benefit is typically paid out within 24 hours of the policyholder’s passing, which can help to ease the burden on loved ones during an already difficult time.
Final expense insurance exists to cover the costs of funeral and burial services, similar to prepaid or pre-need plans. However, final expense insurance additionally helps pay for outstanding debts, probate fees, and other leftover expenses not included in preneed planning. This type of life insurance also allows policyholders to choose their beneficiary which is something that is not possible with preneed or prepaid funeral packages.
A preneed plan is paid to the funeral home in advance, but a final expense benefit goes directly to the person you choose. Final expense insurance whole life insurance covers you until age 100; if you live that long, then the insurance company will pay out the death benefit to you directly.
- Think of this policy as a savings account, the longer you have it, the more valuable it becomes.
- Your initial premium will be more costly the older you are, but your premium’s price won’t increase as you age.
- With final expense insurance policies, you get to select a beneficiary, which is the person responsible for receiving the policy’s payouts.
- Accidental death benefits may also be available.
- You don’t have to pay for your whole policy at once. You can choose to pay for it monthly, quarterly, or yearly.
- Final expense insurance is a type of insurance that not only gives your loved ones peace of mind but also covers expenses like medical bills or legal fees. This way, if something happens to you, your loved ones can use the money from the insurance to pay for whatever they need, instead of just burial costs.
- Final expense insurance also offers you the benefit of flexibility with your provider choices. This means that you won’t be limited to a specific funeral home, area, or plan when it comes time to use your policy.
- A final expense policy is a good way to help your family financially in the future. You can also borrow money from the policy’s cash value in an emergency.
- Final expense insurance is a type of permanent life insurance that is flexible and can mitigate some of the worries preneed or prepaid plans may leave unresolved.
What is the difference between pre-need and post-need insurance?
Preneed insurance is insurance that you purchase before you need it, while post-need insurance is insurance that you purchase after you need it.
Pre-need insurance can help to cover the costs of your funeral or other end-of-life expenses, while post-need insurance can help to cover the costs of your final expenses if you die unexpectedly.
Understanding Preneed Plans and Prepaid Funerals
Preneed insurance is a type of funeral insurance that you purchase before you die. It can be used to cover funeral costs, burial expenses, or other debts the individual may leave behind. Prepaid funerals are a type of preneed funeral arrangement in which you pay for your funeral services in advance. This can be done through a funeral home, cemetery, or another funeral provider.
Preneed plans are not the same as prepaid funerals. With a preneed plan, you simply purchase the insurance policy before you die. The funeral home or provider does not necessarily need to be involved in the arrangement. With a prepaid funeral, you pay for the funeral services in advance, and the funeral provider is usually involved in the arrangement.
Benefits of Preneed Plan
There are many benefits to preneed plans. Perhaps the most obvious benefit is that it helps to ease the financial burden on your loved ones after you die. It can also help to ensure that your funeral arrangements are carried out according to your wishes. If you have specific requests for your funeral, a preneed plan can help to make sure those requests are fulfilled.
Disadvantages of Preneed Plans
One potential drawback of preneed plans is that they may not cover the full cost of your funeral. Inflation and other factors can cause the costs of funerals to increase over time, so your preneed plan may only cover a portion of the total cost. Another potential drawback is that you may not be able to change your mind about your funeral arrangements after you’ve purchased a preneed plan. Once the contract is signed, it’s usually final.
If you’re considering a preneed funeral plan, it’s important to do your research and compare different policies before you purchase. Be sure to understand the terms and conditions of the policy, and make sure it meets your needs and budget.
We would suggest speaking with a life insurance agent to also learn about the different types of policies available and to help you choose the best policy for your needs.
When is regular life insurance better?
If you’re young and in good health, regular life insurance or traditional whole life insurance is generally a better option than final expense insurance. This is because regular life insurance policies are typically cheaper than final expense policies and offer more flexible coverage options. However, if you have health conditions that make it difficult to qualify for regular life insurance, final expense insurance may be the best option for you.
What is a life insurance medical exam?
A life insurance medical exam is a physical examination that is required in order to obtain a life insurance policy. The death benefit of a life insurance policy is paid out to the beneficiaries of the policyholder in the event of their death. In order to ensure that the death benefit will be paid out as intended, insurers require applicants to undergo a medical exam in order to determine their risk of death.
Medical exams for life insurance policies are typically conducted by licensed physicians or other medical professionals such as nurse practitioners. The examiner will collect information about the applicant’s medical history and current health status.
They will also take measurements such as height, weight, blood pressure, and heart rate. A urine sample may also be collected. Based on this information, the examiner will determine whether or not the applicant is eligible for life insurance coverage.
What happens if I don't pass the medical exam?
If an applicant does not pass the medical exam, they may still be able to obtain life insurance coverage by applying for a policy with modified terms. For example, the death benefit of the policy may be reduced or the premium payments may be increased. In some cases, applicants may be declined for coverage altogether.
It’s important to note that even if an applicant passes the medical exam, their life insurance policy may still exclude coverage for certain causes of death such as suicide or death due to risky activities such as skydiving. Be sure to read the fine print of your policy before you purchase it so that you understand what is and is not covered.
Is final expense life insurance no exam?
Final expense life insurance is a type of insurance that does not require a medical exam. This means that you do not have to go through the hassle of getting a medical exam in order to qualify for this type of insurance.
Some final expense companies will ask you questions about your health and your prescription history. With your permission, your answers will be verified through third-party companies, such as the Medical Information Bureau (MIB). Depending on your answers and verification, you will be placed in one of three benefit levels.
Final expense life insurance is a great option for those who do not want to go through the hassle of a medical exam. This type of insurance can be used to cover funeral expenses, outstanding debts, or any other final expenses that you may have.
Should I choose a traditional burial or cremation?
There are two main options for final wishes: burial or cremation. Both have their own unique benefits.
Burial is the more traditional option and often includes a death benefit. This death benefit can help cover the costs of the funeral, which can be expensive.
Cremation is becoming more popular as it is less expensive than burial. Cremation also offers more flexibility when it comes to final arrangements.
The decision of burial or cremation is a personal one. There are pros and cons to each option. It is important to consider all factors before making a decision.
What is the cost of Traditional Burial Expenses?
The average funeral costs between $7,000 and $15,000. This does not include the cost of a cemetery plot, headstone, or other end-of-life expenses. If you have life insurance, you may have a death benefit that can help cover these costs. funeral costs can be very expensive. It is important to plan ahead and budget for these costs.
There are many ways to save on funeral expenses, so be sure to do your research. There are also many funeral financing options available if you need assistance paying for funeral expenses. funeral costs can be a burden on your loved ones, so it is important to plan ahead and make sure your funeral expenses are covered.
Funeral costs can vary widely depending on the type of funeral you want and the services you choose. Examples include:
- funeral home charges for basic services and facilities
- embalming and preparing the body
- using the funeral home for visitation or a viewing
- renting a hearse to transport the body to the cemetery
- buying a casket
- purchasing a gravesite
- hiring a funeral director
- paying for an obituary
- floral arrangements
What is the cost of Cremation?
Cremation typically costs between $1,000 and $3,000. This does not include the cost of a funeral service or other end-of-life expenses. If you have life insurance, you may have a death benefit that can help cover these costs. Cremation is often chosen as an alternative to traditional burial because it is less expensive.
There are many ways to save on cremation costs, so be sure to do your research. There are also many funeral financing options available if you need assistance paying for funeral expenses. Cremation can be a cheaper and more convenient option for many people, so it is important to consider all of your options when planning for funeral expenses.
Cremation plus memorial service costs on average $6,000. This includes:
- funeral home charges for basic services and facilities
- embalming and preparing the body
- using the funeral home for visitation or a viewing
- renting a hearse to transport the body to the cemetery
- buying an urn
Additional costs associated with cremation include things like:
- purchasing a gravesite
- hiring a funeral director
- paying for an obituary
- travel to spread ashes
When deciding whether to choose cremation or burial, it’s important to consider not only the cost but also your own preferences and beliefs.
How much does final expense insurance cost?
This is a difficult question to answer because there are many variables that go into determining final expense insurance rates. Factors such as age, gender, and health all play a role in how much someone will pay for their life policy.
Most people’s final expense insurance plan falls within a certain range depending on gender, health, and age. For example, final expense insurance rates might be $30 to $75 per month for someone who is relatively young and healthy.
However, as you get older, your rates could increase to about $65 – 125 per month. Just keep in mind that cheaper policy options generally have smaller payouts. So it might make sense to invest extra now so your loved ones are taken care of later on down the road.
The health classification classes that the insurance company uses largely affect final expense life insurance cost. It is crucial to remember that the same classes which affect your life insurance premiums also change the death benefit payout you are eligible for.
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What are the final expense rate classes?
There are four classes that determine final expense life insurance rates: Level, Graded, Modified, and Guaranteed Issue (GI)
Level:A level policy means that the insurance company has determined you are a low-risk applicant. Level policy benefits, also known as immediate death benefit policies, are given to applicants in excellent health and will immediately cover the full death benefit with no waiting period.
The premiums for this type of policy are also a little bit less than the graded or modified policies, which we’ll go over next.
Graded:Some health conditions that might require a graded plan are Parkinson’s, systemic lupus, liver disease, or COPD. However, it is always best to check with your carrier of choice as benefits and waiting periods can vary.
Usually, beneficiaries must wait two years before they can receive the full death benefit payout; however, this may not be the case depending on when during the policy year you die. If non-accidental death occurs before two years, the policy will only pay a percentage of the death benefit.
Your premiums will be higher than someone in the level health class, but lower than someone in the modified or GI health classes.
Modified:There are health conditions that would label you as high-risk and, like graded plans, carriers have Modified plans for these individuals. Conditions include alcoholism, drug abuse, stroke, aneurysm, or cancer.
Usually, with Modified policy benefits, there is a 2-year waiting period before the entire death benefit can be paid out to the beneficiary. If non-accidental death occurs prior to those two years, then the policy will only pay back premiums plus interest.
Your premiums will be higher than someone in the level or graded health classes, but usually lower than someone in the GI health class.
Guaranteed Issue: Guaranteed Issue Life Insurance policy means that the insurance company has determined that you are a very high-risk applicant. Your premiums will be the highest of all the health classes. However, this is the only type of policy that is available to people with certain medical conditions.
Guaranteed Final Expense insurance benefits have a waiting period of two years before the full death benefit is available. If death occurs in the first two policy years and is not accidental, then the company will only return premiums plus interest. After the waiting period has passed, the full death benefit will be paid out regardless of how you die.
Optional Life Insurance Riders:
Depending on the final expense coverage you buy, you may also be able to add riders to your policy. Riders are additional features that life insurance companies provide for more death benefits or protection for your beneficiaries. Some common riders for final expense life insurance are:
- Terminal Illness Rider: This rider provides an early death benefit payout if you are diagnosed with a terminal illness and have a life expectancy of six months or less. This can be used to cover medical expenses or any other final expenses.
- Accidental Death Rider: This rider pays an additional death benefit if you die as a result of an accident.
- Dependent Child Rider: This rider provides death benefits for your dependent children (usually up to age 25) in addition to the death benefit for the policyholder.
The Advantages of Funeral Insurance That Can't Be Measured
Of course, the reasons to consider funeral insurance aren’t purely financial. Time, energy, stress, peace of mind, and other considerations can play a big part in the plan that’s right for you. Here are a few things to think about past the number on the calculator when you’re choosing a plan.
Ease the burden for grieving loved ones. When people have to plan and pay for the funeral of a loved one, they might view the responsibility as a final expression of their feelings toward the deceased. This mindset can lead them to spend money beyond what their income allows for, causing even more stress during an already-trying time. When you choose to invest in funeral insurance, you are ensuring that your family and friends will face their grief without the extra burden of planning and paying for a funeral.
Be at peace knowing that your funeral will represent who you really were. When you buy funeral insurance, you don’t have to wonder whether your ceremony will reflect your personal values or whether your remains will be dealt with in a way that you find appropriate. In the case of prepaid or preneed plans, you will plan your service with your chosen funeral home. If you opt for final expense insurance, you will also discuss your wishes with a trusted beneficiary. In both cases, your family will know that the service is what you would have wanted.
Allow yourself time to think over what you really want. Financial decisions and other practical considerations surrounding the eventuality of your own death are never easy. Give yourself the time and space to find the options that suit your needs by planning ahead with some form of funeral insurance. Yes, this process can be difficult—but it would be difficult for your loved ones to pull a funeral service together just days after your death. Burial insurance or final expense insurance will do a lot to ease that burden.
Give your family immediate access to funds dedicated to covering your final expenses. Some options for financial coverage of your final expenses require initial payment from those handling your funeral and burial. They may have to wait to be reimbursed or have to deal with probate delays. Funeral insurance policies generally make the money available immediately so no one has to pay out of pocket.
Do I really need final expense life insurance?
We’ve been privileged to speak with some amazing people over the years, and they always seem to ask similar questions about final expense life insurance. We’ve gone ahead and answered some of the more common ones for you.
How does final expense insurance measure up to using savings?Although it’s beneficial to have some savings for your final expenses, you can’t always predict when you might need that money. Unexpected medical bills are a frequent cause of financial stress for many people, and one hospital visit could decimate all your savings. A final expense insurance policy gives peace of mind in knowing that you’ll be able to cover these costs.
Is final expense insurance necessary for veterans?For service-related deaths, the most a veteran can receive for burial benefits is $2,000; otherwise, it’s as little as $300. Additionally, veterans qualify for free burial in national cemeteries.
Yet, on average, funerals and burials cost around $7,848 meaning these benefits would not cover everything even if you do qualify. Final expense insurance makes up the difference by being flexible with its coverage.
The assets I allocated in my will should be sufficient, correct?Planning your funeral by making a will may not work out how you want it to. This is because wills are often read after the funeral has already taken place, and they have to go through probate court before any of the arrangements can be made. The process could take several months, even in best-case scenarios.
While there’s a chance that the person who ends up paying for everything will be reimbursed once the will goes through court and other bills are paid off, it’s unlikely that there will be any immediate help when it comes to funding your final expenses.
Do I need final expense insurance if I have Medicaid or Social Security benefits?Unfortunately, Medicaid and Social Security benefits only scratch the surface in terms of covering final expenses. Medicaid allows, at most, $1,500 to be applied toward funeral expenses, and Social Security provides just $255 to a surviving child or spouse to be used for the same purpose.
If I have or preneed insurance, is it beneficial for me to buy final expense insurance or burial insurance?There are several uncertainties that come with preneed insurance, which is why many people choose to buy an additional final expense policy. It’s important to remember that a prepaid funeral plan will likely only cover the cost of the funeral itself.
If you have any outstanding medical bills, attorney’s fees, taxes, or other debts when you pass away, preneed insurance will not cover those expenses.
If you are on the fence about funeral insurance, final expense insurance is the best way to be certain your remaining debts are covered according. This is because it’s not uncommon for funeral homes to mishandle prepayments or deceive customers about plans so if you want to steer clear of any potential problems, go with final expenses.
Is there any reason to buy final expense insurance if I already have a regular life insurance policy? Some people choose to purchase final expense insurance alongside an existing life insurance policy. By dedicating a policy exclusively to funeral and burial costs, the policyholder can protect their beneficiaries from having to take money out of the general life insurance payout.
If you are on the fence about funeral insurance, final expense insurance is the best way to be certain your remaining debts are covered according. This is because it’s not uncommon for funeral homes to mishandle prepayments or deceive customers about plans so if you want to steer clear of any potential problems, go with the final expense.
If you’re feeling overwhelmed after reading about all there is to know about burial insurance, don’t worry. We can help you select the best plan for your needs. Just give us a call at 888-306-2003 or Contact Us and we’ll be more than happy to assist you further.