What is Burial Insurance? Do I need a Plan? What does it cost?
These are very common questions in regards to Burial Insurance, also known as Final Expense plans. These plans are small whole life policies that are designed to last the insureds lifetime.
Age of issues , for most carriers , starts at 50. There are a few carriers that will issue plans at a younger age. Maximum age of issue is about 85. I do know of a carrier that will go a few years older. When you start looking at plans for someone in their 80′s , you can guess, that the plans start to get very expensive.
There are two benefit levels available with Funeral Insurance plans.
1. Level Benefit – Means the full face amount of the policy will be in-force the day the application is approved.
2. Graded Benefit- Generally there is a 24 month waiting period before the full face amount of the policy is in force. Should death occur to the insured , carriers will return premiums paid and add some interest to the money. Interest paid varies by carriers but 10% seems to be about the most common amount.
Graded Life Insurance plans are for those with severe health. They are Guaranteed Issue plans ( age range is 40-80) with no health questions. You cannot be turned down for this plan. For someone with a serious health impairment this is the way to go.
In order to qualify for a Level benefit plan the applicant can have some minor impairments and/or health issue is controlled via medications etc. I know there are many types of impairments and this is why we should speak prior to running quotes.
It is very common that children, of parents, will begin the process of looking for a plan. Be aware that if you do want to apply to a plan you can be the owner of the policy as well as the beneficiary of the policy. Your parent(s) must sign the plan ( Electronically or over the phone voice signature) and most carriers will call the proposed insured and do a quick interview to make sure they understand what they are applying for. This helps prevent fraud and protects your parents from someone taking a life insurance policy against them without their consent.
The younger the age the lower the costs. If you start the process in your early 50′s the cost can be quite low. These plans are designed to last a lifetime, your premiums will never go up so getting a plan sooner than later will save you some money.
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