The primary benefits of Final Expense Insurance:
- NO MEDICAL EXAM and SHORT APPLICATION
- YOUR COVERAGE IS GUARANTEED FOR LIFE
- YOUR PREMIUMS NEVER INCREASE
- YOUR POLICY CASH VALUE GROWS
- DEATH BENEFITS TYPICALLY PAID QUICKLY
Final Expense Insurance, also known as “burial” or “funeral” insurance is a life insurance policy with a low face value, typically $5,000 to $25,000, designed to help take care of the “final expenses” associated with one’s death. Many individuals are concerned with making sure that loved ones are not left shouldering the burden and costs associated with death. Some costs associated with a burial include:
- Cemetery Plot
- Headstone and Engraving
- Funeral Services
- Legal Fees
- Physician and Hospital bills
- Debts such as mortgage pay-off, car loans, credit card balances, etc.
Final Expense Insurance is purchased and issued directly from an insurance company and are typically either “term life” (which covers you for a specific time period or until a certain age, then expires) or “whole life” (which is permanent insurance and covers you for the rest of your life).
NO MEDICAL EXAMS are needed with Final Expense Life Insurance and usually involve a very short application asking questions pertaining to only the last 2-3 years. Final Expense Insurance is generally issued either as “simplified issue”, for which you are simply asked several medical questions but do not have to take a medical exam, or “guaranteed issue,” where the policy is issued to anyone who applies with no medical questions asked.
People who currently have a serious health problem may still qualify for a policy with a “graded death benefit,” which means the coverage amount increases over time and your beneficiaries won’t receive the full face value if you die within the first few years of the policy.
Much like other types of insurance, the insured will name a beneficiary who would ultimately make the claim and receive the death benefit, which is paid income tax free upon death of the insured. The elected beneficiary would then be responsible for using the money to carry out your wishes. The beneficiary legally could decide to use the money any way they want, so electing a trustworthy beneficiary is very important. Additionally, if the death benefit amount exceeds the cost of your funeral, the beneficiary keeps the difference. For example, if you have a final expense policy for $20,000 and your services and burial end up costing $15,000, your beneficiary would pay the bill and keep the extra $5,000. This “flexibility” in how the money can be used is an important feature of the Final Expense Insurance policy. Unlike pre-need or burial protection policies, in which funds can only be used cover the actual costs of burial.
A traditional funeral, including a casket and vault, costs about $6,000, according to the Federal Trade Commission (FTC), and additions such as obituary notices, flowers and limousines easily run up the total to over $10,000.