What Is Final Expense?

Final expense insurance is a whole life insurance policy that has a small death benefit and is easy to get approved for. Final expense insurance is also called funeral insurance, burial insurance, simplified issue whole life insurance, or modified whole life insurance.

Final expense insurance has a death benefit designed to cover expenses such as a funeral or memorial service, embalming and a casket, or cremation. However, beneficiaries can use the death benefit for any purpose, from paying property taxes to taking a vacation.

Key Takeaways

Final expense insurance is a small whole life insurance policy that is easy to qualify for.

The beneficiaries of a final expense life insurance policy can use the policy’s payout to pay for a funeral service, casket or cremation, medical bills, nursing home bills, an obituary, flowers, and more.

However, the death benefit can be used for any purpose whatsoever.

The death benefit is usually somewhere between $2,000 and $35,000.

The average cost of a funeral ranges between $7,000 and $12,000.

 

 

Understanding Final Expense

Final expense insurance is a type of whole life insurance. Once you have your policy, the premiums cannot increase, and the death benefit cannot decrease. Unlike a term policy, a whole life policy does not expire when you reach a certain age.
A whole life policy also accumulates cash value that you can borrow against during your lifetime. Any loans that are unpaid when you die will reduce how much money your beneficiaries receive.
When you apply for final expense insurance, you will not have to deal with a medical exam or let the insurance company access your medical records. However, you will have to answer some health questions. Because of the health questions, not everyone will qualify for a policy with coverage that begins on day one.
As with any type of life insurance, the premiums for final expense insurance depend on your age and health; where allowed by state law, they may also depend on your gender.
The older and less healthy you are, the higher your rates will be for a given amount of insurance. Men tend to pay higher rates than women because of their shorter average life expectancy. And, depending on the insurer, you may qualify for a lower rate if you do not use tobacco.
Some insurance companies issue final expense policies to people from birth to age 85. However, depending on the policy and the insurer, there may be a minimum age (such as 45) and maximum age (such as 85) at which you can apply. The largest death benefit you can select may be smaller the older you are.
Policies might go up to $50,000 as long as you’re younger than 55 but only go up to $25,000 once you turn 76. Some insurers offer the same maximum death benefit to all applicants regardless of age.

Final Expense Insurance In Action

Let’s say you’re retired, no longer have life insurance through your employer, and don’t have an individual life insurance policy. Neither do you have a nest egg large enough to ease the financial burden on your spouse and/or kids when you die.

 

You’re considering a new life insurance policy. So, you contact a life insurance agent and start the application process. This includes answering a few basic questions about your health. The death benefit is what you’re looking for, but the premiums are too expensive because of your age and health.

 

Unfortunately, the insurance company doesn’t issue policies with a death benefit that’s small enough to make the insurance premiums fit your budget. At this point you might give up, assuming that you can’t afford life insurance.

 

Final expense life insurance is designed to solve this problem.