Final expense insurance also referred to as “funeral” or “burial” insurance, is a life insurance policy that is designed for the purpose of paying the final expenses of the insured person that typically accumulate leading up to and immediately after the insured’s death. These expenses are typically made up of funeral and burial expenses, unpaid medical bills not covered by insurance, and unpaid nursing home expenses.
In most cases, the bulk of the final expenses that need to be covered are the costs of the funeral and burial. Most people who have never been involved with arranging a funeral or having to help with paying for one, are unaware of how expensive funeral and burial costs can be, even for one that is moderately priced.
According to Parting.Com, a well-known resource for end-of-life planning, the average cost of a traditional funeral has become substantial:
Funeral prices, like everything else, have increased with inflation. Today, the average North American traditional funeral costs between $7,000 and $10,000. This price range includes the services at the funeral home, burial in a cemetery, and the installation of a headstone. While cremation is gaining in popularity, the traditional funeral is still the most popular manner of disposing of the deceased. Here is a reasonable “ballpark” estimate of the main funeral costs. It’s important to notes that funeral prices vary considerably between funeral homes and geographic areas of the country:
fee for the funeral director’s services: $1,500
>cost for the casket: $2,300
>cost for the funeral home for the actual funeral service: $500
>cost of the grave site: $1,000
>cost to dig the grave: $600
>cost of the grave liner or outer burial container: $1,000
>cost of a headstone: $1,500
In this example, total costs would approximate $9,000….and that’s just for the “main” items. There could be additional charges for things like placing the obituary in the newspaper and buying flowers. Read More
Why Final Expense Insurance?
Final Expense is not the same as “insuring your life.” Insuring your life means that, upon your passing, you leave funds for your family that take the place of your income that has been lost. Term and permanent life insurance place a value on your wages as of now and for the rest of your life in order to fill this need.
Funeral insurance, however, is different. The only factor taken into account for the face amount of the policy is the expense of the insured’s desired funeral and other final expenses like outstanding nursing home bills. Many other forms of life insurance can reach face amount values into the millions of dollars; final expense insurance policies rarely go above $30,000.
Even When You Have Other Insurance?
For many people that already have life insurance, the insurance they’ve purchased is term insurance, which is not permanent. This means you could easily outlive your policy and be unable to afford to renew it or buy life insurance to replace it.
Many people get their life insurance through work and don’t understand that if they leave, get fired, or retire, their life insurance policy does not go with them. Here again, it’s likely that the cost of buying a new policy is not affordable or you may not qualify because of health issues.
There is also a large group of people who believe their church will take care of their funeral when they die. This may or may not be true, but even if it is, do you really want to pass on the cost of your funeral to the church members?
Finally, there is that group of people who are not married and have no children, so they figure why carry any life insurance? The answer is quite simple, if you expect to be properly buried (or cremated) when you die, someone will have to pay for it.
Why Use Whole Life when Term Costs Less?
Although term insurance is less expensive than whole life insurance, the fact that it isn’t permanent insurance makes it a less than ideal product for a legitimate final expense insurance policy. There are certain circumstances, however, when term life insurance makes a lot of sense for final expense insurance. For example, if you purchased a large term policy at age 40 and then you were subsequently diagnosed with a terminal illness that will likely result in your death before the end of your term policy, then it makes better financial sense.
Many individuals have multiple life insurance policies, and some of them designate each policy for a specific purpose such as paying off the mortgage, replacing income, paying off debt, or leaving a financial legacy to their children. Without a final expense policy in place, these other policy death benefits would be substantially reduced and thus likely fall well short of your intended purpose.
Is it Cheaper to Pre-Pay?
Prepaying your funeral expenses is possible, and many people do this. There are pros and cons that come along with this approach. One of the biggest benefits of prepaying your funeral is that you have the ability to personalize everything. You also have the ability to reach out to funeral directors and determine which ones you prefer. You have the ability to pick out the perfect casket, and the make a great choice on picking a plot in the cemetery. Most importantly, pre-paying will likely prompt you to initiate a conversation with your loved ones about the choices you have made. This may give both parties more peace of mind in the long run.
States have varying guidelines on funeral pre-payment. These guidelines work to prevent you from paying unscrupulous folks who can take your money and run. It helps protect you or your family from overpaying on top of what you pre-pay. Before you pre-pay, check your state guidelines for how the money will be held until your death.
Make sure that you fully understand the details in the pre-need plan you purchase. Be sure to determine whether or not you have the ability to lock in your rate. By doing this, your family will not be stuck with a much higher rate later. When pre-paying for your services, be sure to keep all the proper documentation to prove what has taken place. By maintaining the proper documentation, this gives you and your family the proper peace of mind that things will be taken care of properly.
There are disadvantages to pre-paying a funeral. One of the biggest problems is that it is less flexible than burial insurance. If you decide to change your funeral arrangements or you decide to move, you and your family may not receive the money back that was already paid. Another negative possibility is that the funeral home could potentially go out of business altogether and there will be no means of retrieving those funds. Final expense insurance has the benefit of providing your surviving relatives with a payout that can be used in any way and anywhere they see fit. In this scenario, you have much less control; however, your family has much more flexibility in what they choose to do.
You Do Have Options
Most insurance companies that offer final expense insurance will have three different products available – level benefit that provides first-day coverage of 100% of the death benefit, graded benefits that pay a percentage of the benefit in the first year, a larger percentage in the second, and so on; and guaranteed issue that has a waiting period because the insurer does not take any medical issues into consideration:
Level Benefit Final Expense Insurance – This is a whole life policy in which the death benefit equals 100% of the face amount of the policy. It can be issued based on underwriting questions and rarely involves a medical exam or blood test. If you qualify based on your answers to the health questions on the application, the policy will be issued. If you do not qualify because of health issues you have listed, the company will generally offer you a guaranteed issue” policy.
Graded Benefit Final Expense Insurance – This is a whole life policy in which the death benefit typically equals 30% of the face amount in the first year, 70% in the second and 100% beginning in the third year. It can be issued based on underwriting questions and rarely involves a medical exam or blood test. If you qualify based on your answers to the health questions on the application, the policy will be issued. If you do not qualify because of health issues you have listed, the company will generally offer you a guaranteed issue” policy.
Guaranteed Issue Final Expense Insurance – This type of whole life policy does not have any health questions on the application, and the policy is generally issued without regard to any health issues you may be experiencing. These policies typically allow a maximum death benefit of $25,000 and contain a waiting period before the coverage is fully in force.
The waiting period is usually two to three years. If you die from natural causes during the waiting period, your insurance company will not pay the death benefit to your beneficiary. They would instead receive an amount equal to all the premiums you have paid in, and in some cases, an additional amount of 5 to 10 percent. If, however, you die within the waiting period as a result of an accident, the insurance company will typically pay the full death benefit.
How Much Does Final Expense Insurance Cost?
Like other life insurance products, final expense insurance rates are based on your age, health, and the amount of the death benefit. Below, we have listed actual rates for your review:
$10,000 Final Expense Insurance Quotes for a Male and Female Non-Smoker – Level Benefit:
Please note that men pay more for life insurance because women typically outlive men and the insurer has more time to collect premiums.
$10,000 Final Expense Insurance Quotes for a Male and Female Non-Smoker – Guaranteed Issue:
Use the quoter on the right to get final expense quotes now.
When is the Best Time to Buy?
All life insurance rates are based primarily on your age and your health. Knowing this, it would be advantageous to purchase your final expense insurance when you are younger to assure you are getting the lowest rate possible. The longer you put off purchasing the policy, the higher the rate you will pay.
For example, the monthly rate for a 45-year-old non-smoker for a $20,000 death benefit would be about $45. If that same person were to wait until age 65, the rate would then be about $108 per month. In this example, waiting until age 65 would end up costing you an additional $720 per year.
You should also consider health issues. It’s certainly more likely that you will have better health when you’re 45 years-old than when you are 65-years-old. Serious health issues could force you to purchase a guaranteed issue policy which is more expensive than a traditional one.
Get Your Final Expense Quotes Today
Things to Know Before Applying
When you’re ready to consider final expense whole life insurance, there are some things you need to know:
The age of application typically ranges from 50-80, but some plans will allow you to apply as young as 18 and as old as 89. It’s important to note, however, that the earlier you apply, the more cost-effective your plan will be.
The amount of coverage you may receive will typically range from $2,000-$20,000, but some plans offer coverage up to $100,000.
A guaranteed issue plan has higher premiums than a standard plan, but is suitable for those with serious health impairments; no health questions are required to be answered.
Intramark offers accurate, quick, and confidential quotes for coverage without compromising your privacy, typically with no exam required.
How to Obtain Final Expense Insurance
Now that you understand what comes with a final expense life insurance, or a burial insurance plan, you’re ready to start looking for a policy. At LifeInsure, you can get final expense insurance quotes from dozens of top-rated companies, quickly and easily. Simply complete the short form on this page and review your quotes. You can then instantly submit your application for consideration.
Generally, you will apply and then have a short phone interview, and you’ll have an approval decision usually within 48 hours, if not sooner!
During the phone interview, you will be asked a few simple questions about your health. Your answers to those questions will determine whether you will qualify for a level or graded benefit plan or if you will need to purchase a guaranteed issue plan.
Why Should I Shop My Final Expense Insurance with LifeInsure.com?
At LifeInsure.com, we’re here to help you every step of the way. You will have full access to information about different life insurance options with our client-focused and honest staff in a secure, pressure-free environment.