Final Expense Insurance

“What is Final Expense Insurance?”
Final expense is at once a simple-to-understand life insurance product while at the same time it’s hard for many to believe is necessary. It is also known as Burial insurance.

Simply put it pays for one’s funeral which, on average, costs over $10,000. So, is it necessary? For many the answer is yes.

Let’s, for a moment, take out of the conversation the obvious point: we all die. If you focus simply on that, it’s unlikely you will consider purchasing the product because no one wants to think about dying.

But if you look at dying as a part of living — consider for a moment those you invited into your life and promised to take care of. That is the context you should put final expense insurance into. Not only are their expenses associated with the funeral but there are leftover debts and even medical expenses that will be left behind. Here some thoughts to consider:

  • Children: No parent who loves their children believes it is their responsibility to create a plan for their parent’s death. Looking at final expense insurance is a strong motivating factor to start that process.
  • Liquidity: Funeral expenses happen lightning fast but your estate may not have the liquidity to pay them. This places the responsibility on a child or others you love to find the resources. That creates financial pressure in a time of grieving.
  • Relatives: Perhaps you know a relative with limited resources and whose family would find it difficult to cover the expenses of a funeral. Purchasing a policy is a gift of love to his or her family.

PRICING: Because the policies are issued using Whole Life Insurance, the premiums are guaranteed never to increase.

AVAILABILITY: The product is available typically for applicants from age 40 until age 85. Some carriers and states have restrictions and/or variations in this area.

UNDERWRITING: Final Expense policies are divided into two types – Guaranteed Issue and Underwritten. Each has its place depending on the insured’s health situation and the family’s needs…

GI COVERAGE LIMITATIONS: Because there is no underwriting, the policy maximum is relatively low, starting around $2,000 and rising to a maximum of $25,000. The standard limitation regarding suicide in the first two years (in most states) does apply.

FULLY UNDERWRITTEN – The carrier’s typical simplified underwriting protocol for that amount of coverage would apply.

Should I buy directly or from an agent?
Agent Review reiterates that there is no such thing as simple insurance. These policies may sound straightforward but there are questions that only a trained agent can answer.

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