Ultimate Guide For Final Expense Life Insurance
Written by Daniel Ray, Life Insurance Expert |
✅
Fact Checked by
Lisamarie Monaco |
Editorial Disclosure
This ultimate guide to final expense life insurance has everything you need to help you get started! It is never too early to start planning for the future, but it can be hard to know where to start. We are here to help!
In this guide, we aim to demystify final expense life insurance, providing you with clear, trustworthy advice.
Whether you’re just starting to explore your options or are looking to fine-tune your existing plans. We’re here to help you make the best choices for your unique situation.
Get the facts today so that when the time comes, your family won’t have any regrets!
Table of Contents
What is a Final Expense Insurance Policy
Final expense insurance is a type of simplified whole life policy that covers medical bills and funeral expenses when the insured passes, making it popular with seniors.
It’s also known as burial or funeral insurance because most plans have these features:
- Whole life insurance provides coverage for an individual’s entire lifetime. In fact, as long as they continue to make the required monthly payments. If premiums are paid, cash value can be accumulated within a policy.
- Fixed premiums exist until these policies become payable-in-full (PIF) or insureds may withdraw funds using a policy loan .
- A simplified issue is one where no medical exam is required. Just health questions on the application process must be answered by applicants.
- Whole life has fast approvals and affordable rates.
Determining Your Coverage Needs
How much coverage do you really need? It’s a big question. Start by looking at potential funeral costs and any outstanding debts or medical expenses. This will help you figure out a coverage amount that’s just right – adequate without being over the top.
Understanding Eligibility and Costs
Good news for seniors – most of you will qualify for final expense life insurance. The key factors affecting the cost are your age and overall health. So, it’s wise to shop around and compare different plans to find one that’s both affordable and meets your needs.
Policy Options and Comparisons
Choosing the right policy can feel like navigating a maze. Focus on the policy terms, the benefits it offers, and any small print that might be important later on. Some policies come with extra perks or riders that might be useful, depending on what you’re looking for.
The Application Process Simplified
Applying for final expense life insurance is usually pretty straightforward. But, knowing what documents you need and understanding the steps involved can make the whole process smoother and less daunting.
Managing Your Policy
Life changes, and so might your insurance needs. Regularly reviewing your policy is a good habit. If you ever miss a premium payment, it’s important to know what options you have. Also, keep in mind how to adjust your coverage or change beneficiaries if needed.
Making a Claim
Understanding the claims process is crucial. It’s about making sure your beneficiaries know exactly what to do and when to do it, ensuring they face no hurdles during what will be a tough time.
Avoiding Scams and Finding Reliable Providers
In a world where scams are all too common, being cautious is key. Stick with insurance companies that have a solid reputation and glowing reviews – it’s your safest bet for peace of mind.
How Much Does Final Expense Insurance Cost (Sample Rates)
As shown in the table below, rates are lower when one is younger. Many seniors thus get coverage as early as possible to lock low rates before they rise substantially with age or medical condition.
$10,000 In Final Expense Coverage (Female/Male)
| Age | Female Monthly Rate | Male Monthly Rate |
|---|---|---|
| 50 | $20.26 | $27.35 |
| 55 | $25.08 | $32.77 |
| 60 | $32.08 | $41.74 |
| 65 | $41.00 | $52.87 |
| 70 | $51.92 | 69.23 |
| 75 | $71.64 | $96.58 |
| 80 | $97.50 | $134.16 |
| 85 | $131.66 | $183.29 |
| 90 | $337.32 | $387.32 |
Cost of Medical Bills
In the United States, 61 million people died in 2023 and eighty percent of them were on Medicare before they passed away.
Spending for healthcare was higher than expected as chronic conditions lead to expensive medical procedures. Health insurance doesn’t always cover consumer needs during the last year of life. Consequently, significant expenses occur due to hospitalizations or hospice care costs.
In 2022, the Medicare hospice payment rates for various types of care were as follows:
Routine Home Care: This included two separate rates depending on the duration of the care. For the first 60 days, the rate was $203.40 per day. For days beyond the 60th, the rate was $160.74 per day.
Continuous Home Care: For this level of care, which typically involves round-the-clock nursing care during periods of crisis, the full rate for 24 hours of care was set at $1,462.52, which breaks down to approximately $60.94 per hour.
Inpatient Respite Care: This level of care is provided on a short-term basis to give the usual home caregiver a rest. The daily rate for inpatient respite care was $473.75.
General Inpatient Care: This care is provided for pain control or symptom management that cannot feasibly be provided in other settings. The rate for general inpatient care was $1,068.28 per day
Final Expense Insurance Can Take Care Of The Debt Left Behind
The average American dies with an estimated $61,554 in debt. The estate pays off as many debts as possible before distributing any assets to surviving family members. 73% of Americans die with this burden.
These may include:
- Student loans account for 25,391 of the average person’s debt. This means that many students are taking on a lot of bills to pay off their school costs. However, they might not have enough money left over once everything has been paid out. Remember, student loan payments can be quite high and college is incredibly expensive!
- Auto loans make up 17,111 dollars worth of debt
- Personal loans come in at 14,793 and
- Credit card debts bring $4,531
Although family members may need more resources after a loved one passes away due to funeral expenses etc., it seems like there isn’t much leftover when all these transactions clear from someone’s bank statement as most people owe around 100K+.
The most common type of life insurance is term, which can have face amounts in the millions. However, a final expense policy only focuses on paying for funeral arrangements and it’s uncommon to be over $20k.
Families don’t realize that funeral costs average $9,000 or more. Final expense insurance can help reduce the emotional cost of overspending on a loved one by providing an actual amount instead of guessing what they will need for all expenses.
It Does Cover Funeral Costs (Funeral Cost Breakdown)
The median cost of an adult funeral with viewing and burial was $8,755 in 2017.
Funeral expenses can be thousands of dollars depending on the material used for a casket or opening/closing costs at the gravesite.
The rising costs of funerals have been well-documented over the years. In 1960, an average funeral without a vault had only cost $700 – in 2019 that number rose to at least $7,640 with grave markers averaging around 200$-$400 each and additional expenses for obituaries or memorial services pushing the total closer to 10k.
The following is a list of the average costs included within that total:
| Funeral Item | Cost Of Item |
|---|---|
| Funeral home’s basic service Cost | $2,195 |
| Transporting remains to funeral home | $350 |
| Embalming | $750 |
| Preparing the body, such as makeup and hairstyling | $255 |
| Staff to manage a viewing | $425 |
| Facility to manage a funeral ceremony | $500 |
| Cost of Hearse | $340 |
| Cost of Service Car | $150 |
| Basic memorial printing | $175 |
| Traditional Metal casket | $2,500 |
| The median cost of a funeral and burial | $7,640 |
| Including a Vault | |
| Cost of Vault | $1,495 |
| Overall Cost with Vault | $9,135 |
Grave vaults and concrete grave boxes are required by many cemeteries to ensure that the ground will not buckle over a person’s coffin.
Although this may seem like an unimportant detail, when planning funeral costs you should always budget for these items as they can be expensive.
What are the Pros & Cons of Final Expense Life Insurance
After-life expenses are expensive, but you can save your loved ones the trouble with a final expense policy. Caskets alone can cost up to $10,000 depending on their style and material. It’s not surprising that funeral costs overall typically total well above $10,000.
If left unpaid or unplanned for by life insurance policies families often experience financial burdens as they prepare for funerals. This is exactly why getting a more affordable final expense plan will protect those closest to you.
Whole life insurance is a type of permanent insurance policy. For most traditional whole life policies, the death benefit and premium remain constant for as long as you hold onto your policy; some accumulate cash value.
Whole life insurance is often called “permanent” because it doesn’t have an end date like term or temporary insurances do—it lasts until you pass away.
The average cost of a funeral is $10,000 – $20,000. A final expense policy costs less than other insurance policies because it covers smaller amounts for funerals and doesn’t need to cover the same range of expenses that traditional life insurances do.
Above all, final expense policies are easier to qualify for because they have lower coverage amounts. They don’t require a medical exam and can be issued based on health questions in the application.
The main drawback of a final expense policy is that the face amount on this type of life insurance policy is much lower than other types like term.
However, keep in mind that beneficiaries can use it for anything which means you could even take out a policy to help cover your funeral costs and still get reimbursed by them later!
Why Do You Need Final Expense Insurance
If you’re over 40 and worried about paying for funeral costs, final expense life insurance might be what you need. These policies can give you from $5,000 to $20,000 and don’t cost as much as other insurance types because they pay out less.
This insurance stays with you as long as you pay each month. Over time, it builds up some extra cash value. This is really helpful for older folks who need to take care of their funeral costs. The money from this insurance keeps growing and doesn’t run out, which is great for the long term.
Life insurance isn’t just for older people, though. Anyone who wants to help their family out when they pass away can get it, especially people over 50. You can even buy this insurance for your mom, dad, or grandparents. To find the best option, look at a few different quotes, including ones that cover funeral costs.
How Do You Apply For Final Expense Life Insurance
Every life insurance policy requires a quick application. It can be one to two pages long and contain questions about your height, weight, family history of diseases, or activities you engage in on a daily basis.
The process for applying for coverage can vary depending on the type of insurance. Most often you will need to fill out a form online or over the phone.
The quote provided by your insurer is free and should also include all available discounts associated with it. There are some cases where policies may be sold over the phone without needing further interaction.
What Are the Pre-Qualifying Questions
Above all, most final expense applications have time frame questions. In fact, most final expense carriers only look back for 2 years. Here are some of the most common Pre-existing conditions questions.
Have you ever been diagnosed with any of the following:
- HIV/AIDS,
- bedridden,
- hospitalized in a care facility or receiving hospice care?
- Do you have heart disease such as stroke and congestive heart failure?
- Have had alcohol abuse within last 2 years.
- Has it been over two years since your diagnosis for cancer?
- Alzheimer’s Disease?
One or more of the following questions may apply to you.
- Do you want coverage even if your health has declined?
- Are there family members that depend on your income for survival?
- Is final expense life insurance a good way to cover burial expenses and other costs associated with dying, including medical bills or debts owed by loved ones after death is imminent?
Do you have health issues like type 2 diabetes that prohibit coverage? With final expense life insurance, most people can get coverage even if they’ve had medical conditions.
What Are The Coverage Levels For Final Expense Insurance
Most policies are under $50,000 but the average is closer to $10-20k. The amount depends on your health and what you want to be covered; it can be less than a traditional final expense policy if you qualify for an adjusted plan.
The applicant is issued a modified plan that has an extended waiting period. If the insured passes, they will receive all of their premiums paid plus a small percentage bonus to show appreciation for loyalty.
The final expense industry offers a range of plans to meet the needs and budgets of people who have passed away. Some companies offer 10-year or 20-year payment options that allow applicants to pay their policy in full within ten years.
These will come with higher premiums than other plans but is more affordable as it covers costs associated with burial expenses such as casket and vault fees.
Insurance Tips For End Of Life Preparation
Being dishonest about your health or medical history can get you denied coverage when the time comes.
When applying for end-of-life insurance, it is best to answer questions honestly and disclose everything. If there are any discrepancies between what’s on paper vs. in person, companies will likely find out during a review of the records after death so honesty is key!
It is important to plan ahead and understand funeral costs in your area. You can request a general cost list from any local funeral home, which will give you an idea of how much final arrangements can end up costing those close to you.
It’s also helpful if the person who takes care of your affairs has copies of all relevant documents. Share what flowers or songs they would like at their services as well. Have every detail planned out ahead of time!
It’s important to review your coverage often so you have enough money to protect surviving family members.
As you get older, your health could change suddenly as well! It pays off in dividends when it comes to protecting those who depend on us most for survival.
What Types Of Beneficiaries Are There
When you pass, who gets to receive your life insurance benefits?
There are three main types of beneficiaries:
- Primary (the first person the insured names as a beneficiary),
- Contingent (if something happens to the first two within 30 days after death), and
- Tertiary
When it comes time for someone else besides these people or groups that rely on one another’s survival dates to be notified about receiving money from an account, they will call in Tertiary Beneficiaries.
There are multiple ways to split your death benefit and it is important that you specify the percentages each should receive.
Notify these individuals about how much of a percentage they will get beforehand so there’s no confusion when the time comes!
It is important to include your adult children as primary beneficiaries on life insurance policies because this will simplify the distribution of death benefits.
Make sure you provide relevant information about them (their address, phone number, date of birth) so that when a claim needs to be submitted their identity can easily be verified by an insurance company representative.
Life insurance is important to have, but it’s even more essential that your beneficiaries are updated along the way. It’s also crucial for you to always notify them of any changes in your address or phone number so they can update their records accordingly.
Are Pre-Paid or Pre-Need a Good Option
Before pre-paying for your funeral, check to see how the money will be held and what services it can cover. You might lock in a certain rate if you purchase the service ahead of time so keep detailed documentation as well.
Funeral pre-paying is not always a smart choice, above all, you must know exactly how it works.
In most cases, prepaying for your funeral has less flexibility than getting final expense insurance because the prepaid plan can only be used to cover funerals and not other desired wishes (ex: cremation).
For example: if someone moves or changes their goals (example: they decided they wanted to get buried), then that person will lose all of the money paid in order to do so when using this payment method.
Related Articles
FAQ’s
How do I know when my final expense insurance expires?
Final Expense insurance NEVER expires.
Can I get life insurance without a medical exam?
Yes these are simplified issue policies. No medical exam is required!
What features are included in a final expense policy?
The final expense policy you choose will depend on the life insurance company. Some companies offer additional benefits such as child riders, accidental death, and dismemberment.
What can the death benefit from a final expense insurance policy be used for?
The death benefit can be used for anything: medical bills, credit card debt, mortgage payments etc.
Conclusion
Opting for final expense life insurance is a smart move for any senior. It’s all about ensuring your final expenses don’t become a burden for your loved ones.
This guide aims to arm you with the knowledge you need, but remember, there’s no substitute for a chat with a financial advisor for personalized advice.
More Burial Insurance Resources
