AFFORDABLE FINAL EXPENSE INSURANCE
Final expense insurance is a type of permanent life insurance that can help older adults ease the burden of end-of-life expense on their loved ones.
What is final expense life insurance?
Final expense is a smaller permanent life insurance policy typically intended to help older adults cover funeral costs and other end-of-life expenses.
Also sometimes called “funeral insurance” or “burial insurance,” final expense life insurance typically provides a guaranteed payout to help loved ones pay for a funeral service, burial or cremation, doctor or hospital bills, or other immediate expenses after a death. Like other types of permanent insurance, final expense insurance will never expire as long as you keep up with your premiums.
Since coverage amounts are lower than other types of life insurance, like term or permanent insurance, the premiums for a final expense policy tend to be affordable. Coverage amounts can range from a few thousand dollars up to $35,000, in some cases.
Final expense insurance is easy to qualify for, with no medical exam required. As long as you fall between the age limits of 50 to 85 years old, you can often get approved for a policy within days.
What does a final expense life insurance policy do?
Curious about the purpose of final expense life insurance? The definition of final expense includes any policy meant to help ease the financial burdens of your final send-off.
As an older adult, many of life’s biggest expenses are behind you, like paying off a mortgage or saving for a child’s college tuition. But there’s still one big expense to plan for: your funeral. The average funeral costs more than $9,000 today, burdening loved ones financially while they’re already grieving.
Final expense insurance can help. The payout comes with no strings attached, so your family can use it to pay for:
- A funeral service
- Burial or cremation
- A post-funeral gathering
- Flowers, music, obituary, or other funeral arrangements
- Medical Bills
- Nursing home or other residential care
- A nest egg for a child or grandchild’s future
- A special trip
- A donation to a charity that’s meaningful to you or the deceased
This kind of insurance is typically a good option for people whose age or health makes it difficult to qualify for other types of plans. While it’s more expensive dollar for dollar than term life insurance, the lower coverage amounts help to make it affordable. Once you lock in a premium, it stays the same for the entire policy, which is helpful if you’re on a fixed budget. You also can’t have your coverage canceled because of health issues once you’re approved, giving you and your family peace of mind.
Like other kinds of permanent insurance, final expense insurance builds cash value over time. You can borrow from that cash value during your lifetime or use it as collateral for a loan, giving you another way to pay for expenses as needed.
Final expense insurance offers guaranteed protection and level premiums, backed by insurance companies track record of financial strength.
Your family has the flexibility to use the death benefit to pay for burial or funeral costs, medical bills, credit card debt, or anything they choose.
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.
Find a policy that works for you
There are a range of affordable Fidelity Life products to choose from based on your situation and financial responsibilities.
How does final expense life insurance work?
Final expense life insurance is different from most kinds of life insurance, which people usually buy to replace their income and cover their family’s long-term financial needs in case they die.
There are two types of final expense insurance:
- Simplified issue final expense insurance. Simplified issue is best for people in relatively good health who are looking for a way to cover end-of-life costs. The application includes a few health questions, but there’s no medical exam required. Coverage amounts for simplified issue typically go up to $35,000.
- Guaranteed issue final expense insurance. Guaranteed issue is for best for people whose age or health prevents them from buying other types of life insurance coverage. There are no health requirements at all with guaranteed issue, so anyone who meets the age requirements can typically qualify. Coverage amounts generally go up to $25,000.
Is final expense insurance right for me?
Wondering if a final expense policy is worth it? If you don’t already have money set aside to help your family pay for funeral, medical, or other expenses after your death, final expense insurance can be an affordable alternative to saving the thousands of dollars needed to cover these costs.
Plan on having your estate or Social Security pay for your funeral? Those sources have limitations. Relying on your will to cover final costs can be tough on your family, since it’s typically read after the funeral and can take months to be settled. Social Security life insurance makes a one-time death payment of $255 if you qualify – far less than the average cost of a funeral. Final expense can provide your family with access to thousands of dollars quickly after your death with no waiting periods, giving them a way to pay for expenses in the weeks and months right after your death.
For people between 50 and 85, final expense insurance is an affordable way to give your family peace of mind during a difficult time. If you have an existing life insurance policy, a final expense plan can also offer guaranteed death benefits to cover unexpected expenses.
Keep in mind that the maximum amount of final expense coverage is around $35,000. People with kids or other family members who depend on their income should strongly consider a term or permanent policy that can provide additional coverage.
Alternatives to final expense insurance
There are advantages to buying final expense life insurance, including fast approvals and affordable premiums. However, final expense insurance isn’t for everyone. Depending on your health and financial goals, there are alternatives to pay for your funeral and other end-of-life costs, including:
- Term life insurance. Term life is the simplest, most affordable type of life insurance. It offers protection for anywhere from 10 to 30 years, and you can choose how long you want to stay covered. Once that period is up, you’ll need to purchase another policy (usually at a much higher rate) to maintain coverage. Term life also comes in larger coverage amounts, so it can help replace income or pay for other big expenses beyond funeral costs.
- Whole life insurance. Whole life is a type of permanent life insurance, which offers lifelong protection as long as you pay your premiums. Whole life also comes with a savings feature called cash value that grows over time. You can borrow from the cash value in your policy while you’re still living to help cover day-to-day needs or pay for big expenses. Whole life policies offer a much higher death benefit than final expense insurance. While that makes whole life more expensive than final expense, it can be a better fit for older adults who still have significant financial needs.
As you plan your final arrangements, your funeral home might also offer you pre-need insurance. This is a type of permanent life insurance that allows you to pay for your funeral before you pass away, reducing the financial burden on your loved ones. Keep in mind that the contract is often non-refundable and non-transferrable, so it may not be the best choice if your needs change.
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CITATIONS — 2 SOURCES
- 1. National Funeral Directors Associationhttps://nfda.org/news/statistics
- 2. Social Security Administrationhttps://www.ssa.gov/benefits/survivors/ifyou.html
