Even if you have a well-designed financial plan that includes life insurance, there may be some items that could take your survivors by surprise. For example, many people are unaware of just how much a funeral can cost – and if there are no plans made ahead of time for paying these expenses, it could put your loved ones in a financial bind if the unexpected should occur.
That is why many people purchase final expense insurance. By having this type of coverage, funds can be quickly available for paying the high price of a funeral, as well as other final expenses. Even if you have been turned down for traditional, medically underwritten life insurance in the past, a final expense insurance policy may still be purchased – and in many cases, for a very affordable premium price.
What is Final Expense Insurance and How Does It Work?
Final expense insurance is a type of life insurance coverage that is designed primarily for paying the high cost of one’s funeral and other related final expenses. Today, the average cost of a funeral can be in the range of $7,000 to $10,000.
This is especially the case when factoring in the price of a memorial service, as well as flowers and transportation, a burial plot and a headstone, and the cost of printing up funeral announcements.
In some instances, an individual may also have other unanticipated end-of-life costs, such as medical expenses that are not covered by health insurance and the cost of hospice care that may not be picked up by health insurance or other coverage options.
When you have a final expense insurance policy, a death benefit is paid out to a named beneficiary upon the death of the insured. Just like with other types of life insurance, the benefit that is received by survivors will not be subject to income taxes. This means that your survivors will be able to use 100 percent of the funds that they receive, without having to allocate a certain percentage of it to tax.
Some people who buy final expense life insurance will name a funeral home or other related service provider as the beneficiary of their policy. That way, the funds can quickly be disbursed to the entity that is providing the final services. (If, however, there are any funds left over from the policy, that amount can be paid to a named beneficiary who is a loved one or another named individual).
Final expense insurance – which is also often also referred to as burial insurance or funeral insurance – is typically purchased by those who are in the age range of 50 to 85. However, there are some life insurance companies that will offer this type of insurance coverage to people who are older than 85.
In many cases, the stated amount of benefit that is purchased with final expense insurance can run between $5,000 and $25,000 – but in some situations, an insured may be able to obtain a higher amount of benefit, depending on the company that is offering the coverage, as well as the insured’s age at the time of application.
The Advantages of Having a Final Expense Insurance Policy
There are many advantages to owning a final expense insurance policy. This can be the case, even if you already own a regular life insurance policy. This is because you may have other financial needs that your current coverage is earmarked for – and because you also have final expense insurance, the total amount that is received from the other coverage can be used for its intended purpose.
Final expense life insurance can also oftentimes be easier to qualify for than a regular, medically underwritten policy. With most traditional life insurance policies, an applicant will need to qualify based on age and other health factors.
For example, when applying for traditional life insurance, you will usually be required to fully complete an application for coverage which inquires about your age, gender, health and health history. It will also ask if you are a smoker, and if you take any medication.
It will also typically be necessary to undergo a medical examination when applying for traditional life insurance coverage. During this exam, a paramedical professional will ask some additional health-related questions. They will also take from you a blood and a urine sample.
With final expense coverage, however, many policies will not require you to take a medical exam – and some final expense insurance plans that are considered to be guarantee issue will not even ask any medical questions on the application. In this case, provided that you pay the premium, you cannot be turned down for coverage – even if you have an adverse health condition.
Because many final expense insurance policies are whole life insurance coverage, once you have qualified for the policy, it cannot be canceled by the insurance company (unless you stop paying the policy’s premium).
In addition, the amount of the premium that you pay will usually be locked in, never to be increased. Also, in addition to providing a death benefit, these policies will also build up cash value. The funds that are in the cash-value component of the policy will be allowed to grow on a tax-deferred basis. This means that there will be no tax due on these funds unless or until you withdraw them.
Cash from the cash value component is allowed to be borrowed or withdrawn for any reason that a policyholder sees fit – such as for paying off debt, supplementing retirement income, or even for going on a vacation.
Who Should Consider the Purchase of Final Expense Insurance Coverage?
There are many who may want to consider the purchase of a final expense insurance policy. For instance, even if you already have life insurance coverage that is in force, if you do not have a portion of the coverage that is intended to pay for your funeral costs, then it could be beneficial to also purchase a final expense insurance plan.
Also, if you have certain health conditions which could deem you as being uninsurable for a regular, medically underwritten life insurance policy, a final expense policy could provide you with the life insurance protection that you need.
Likewise, if you are someone who is fearful of needles and who would prefer not to undergo the blood draw and other parts of the medical exam that is required for traditional life insurance coverage, then a final expense insurance policy can allow you to get life insurance coverage, yet without going through an uncomfortable situation.
Because there are no medical requirements to review with a no medical exam life insurance policy, these plans can often be issued very quickly. So, if you are in need of life insurance coverage quickly as a provision for a loan or other similar situation, this type of coverage may be a good solution.
When shopping for a final expense life insurance policy, it will be important to know how much coverage you will qualify for, as well as how the death benefit will be paid out. This is because different insurance companies may offer different types of final expense life insurance plans.
Where to Find the Best Final Expense Insurance Premium Rates
If you are shopping for final expense life insurance coverage, it makes sense to first compare the policies and the premium rates from several different life insurance carriers. This is most easily done by working with an independent life insurance brokerage or agency. That way, you will be able to compare the final expense plans of many different life insurance carriers – all in one place – and from there you can determine the coverage and the price that will be the best for you and for your budget.
When you are ready to move forward, we can help. We work with many of the top final expense insurance providers in the marketplace, and we can assist you with obtaining all of the key details that you will need for making a well-informed purchasing decision. If you are ready to begin the process, then please just simply fill out the form on this page.
Should you find that you still have any questions regarding final expense life insurance – or even if you have a question about life insurance in general – then feel free to contact our experts directly. We can be reached via phone, toll-free, by dialing 888-389-8676.
We understand that the purchase of final expense insurance may seem a bit confusing. There are several different variables to consider – and you want to ensure that you are getting the right type and amount of coverage. But the good news is that you may have a lot of good options that are available to you – and we can help you in narrowing down the plan that is right for you. So, contact us today – we’re here to help.