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What exactly is Final Expense Insurance?
Final expense insurance is essentially a unique form of permanent life insurance that's designed to cover end-of-life bills such as medical bills and funeral expenses. It's not the same life insurance. While life insurance is designed to leave your family and loved ones with enough financial support when you die, final expense insurance is basically about covering funeral expenses and medical bills.
The Importance of Final Expense Insurance
Just like other parts of life, funeral expenses have never been immune to inflation. According to a study from The National Funeral Directors Association, the average funeral costs have increased ten times in the last decade. Today, the average cost of a funeral ranges between $8,000 and $10,000 without a headstone or flowers and can even be higher in some areas. Cremation may be less costly but will still cost you a whopping $4,000 even with the help of a funeral home.
When a person dies, it's generally the duty of his/her family members or close relatives and family to claim the body and arrange for the burial or cremation. If the body is unclaimed, the costs associated with the burial goes to the state.
That being said, final expense insurance is important in ensuring that your family won't cover your funeral expenses. Anyone can benefit from having a final expense insurance policy. It's a great way of ensuring that your loved ones have peace of mind when it comes to covering funeral expenses. If you'd like to get a quote, you can request a quote from our partners here.
Types of Final Expense Insurance
There are two types of final expense insurance:
Guaranteed Issue Life - This is tailored for those who do not have any terminal illness but can still cover high-risk individuals. It's more expensive than simplified issue life with the lower coverage minimum typically being around $25,000 but can even exceed $250,000.
Simplified Issue Life - This is for people who may not qualify for a fully underwritten life insurance policy. It is moderate risk insurance and you'll have to answer a detailed medical questionnaire, although medical examinations aren't required. This is your best bet of getting final expense insurance but the coverage is much lower with the maximum being around $50,000.
The Cost of Final Expense Insurance
Generally, final expense insurance doesn't involve a medical exam. This is because they're usually meant for less-healthy or older shoppers. In terms of costs, the average cost of final expense insurance is about $171 per month with a term policy that retires after 10 years.
Again, the exact cost of the final insurance expense will depend on your age. The older you are, the larger premiums you'll be required to pay. The idea is that it's riskier to insure more risk when insuring seniors given that they're closer to death. In other words, the premiums that you'll pay when you're 45 are less than what you'll pay if you're 75.
So When Should You Consider Final Expense Insurance?
You may want to consider final expense insurance if:
You have pre-existing health conditions - As we noted earlier, many insurance companies issue final expense insurance without a medical exam. But even with that, you can consider final expense insurance if you have a pre-existing health condition. All you have to do is pay the premiums on time and the policy won't be terminated.
If you're in your golden years - When you die, your family will be in mourning and all they need at that particular moment is readily available cash to pay for your funeral expenses. These are urgent and often unplanned for expenses that could be covered for by final expense insurance.
If you're looking for affordable coverage - Final expense insurance is generally affordable and the premiums won't increase over time. Even though the coverage premium is lower especially when compared to a traditional life insurance policy, it's a good fit in ensuring that your loved ones do not have to worry about covering your funeral and burial expenses.
How Does Final Expense Insurance Work?
Here's a perfect example. You're retired, your employer no longer pays your life insurance, and perhaps you do not have an individual life insurance policy. To compound these issues, you perhaps do not have a proper nest egg. You are probably worried about the financial burden that you'll leave on your loved ones when you pass on.
If you're in such a situation, final expense insurance could be the answer. All you have to do is contact a life insurance company and begin the application process. You'll answer a few basic questions about your health. The premiums may not be quite affordable but this may depend on your health and, of course, age.
So Is Final Expense Insurance a Good Deal?
Honestly speaking, we all do not like talking about our final expenses even though it can be a huge burden to your loved ones. But because it's relatively affordable especially when you're on a tight budget, final expense insurance can be a really good deal. With final expense insurance, you will give your loved ones the peace of mind at a difficult time. They won't have to dip into their savings to cover your funeral and burial expenses.
Here are some of the reasons why final expense insurance can be a good deal.
Easy to get - The most important thing is that you won't need any medical exam to attain final expense insurance, though you may have to answer a few questions regarding your health and condition. You can easily buy the final expense insurance online or the phone.
They're affordable - Final expense insurance is quite affordable and can be purchased in small amounts such as $10,000 or even $5,000. In essence, the final expense is a good deal but it's of great importance that you get into details, compare quotes, and find out how it can be beneficial to you if it's personalized.
It shows that you love your family - Final expense insurance is a superb way of showing that you dearly love your family even in death. This is because they don't have to struggle or worry about your funeral expenses. This is great insurance if you want a small policy and can't qualify for a more expensive or larger policy because of your health or age.
Do You Have Other Options?
As we've noted several times, final expense insurance can be a good fit for seniors who neither qualify nor can afford large life insurance policies but still want to cover their end-of-life expenses. Unfortunately, those who buy final expense insurance may not realize that there are other more cost-effective options. Although it's called final expense insurance, the beneficiaries do not have to spend the money on your burial, medical, or funeral costs.
If your main aim is to ensure that your end-of-life expenses do not become a financial burden to your loved ones, you can consider other options such as self-funded burial. This can, however, be a good option if you have enough money to live comfortably in your retirement. With a self-funded burial, you can make choices revolving around where you'll be buried, as well as the details of your funeral or memorial service. Other options that you can consider include term life insurance, pre-need insurance, and pre-need funeral trust.
You will be doing your family a huge favor if you buy final expense insurance to cover your funeral and burial expenses. We know that taking time to consider and document your end-of-life expenses and wishes may make you a bit uncomfortable but it will make a huge difference when your time comes.
In short, life expense insurance will ensure that your family and loved ones are protected from the burden of covering your funeral expenses at a difficult moment. But before making the decision on how to cover your end-of-life expenses, submit a lead form, get a quote, and take much of the stress out of planning your burial.