When it comes to planning for the future, we often focus on major life events such as buying a house, getting married, or starting a family. However, it is equally important to consider the inevitable expenses associated with end-of-life arrangements. That’s where final expense insurance, also known as burial insurance or funeral insurance, comes in.
Learn about the key aspects of final expense insurance and how it can provide peace of mind for both you and your loved ones.
1. Final expense insurance protects your loved ones from certain end-of-life expenses.
Final expense eases the financial burden that arises after someone passes away. It covers a range of expenses such as funeral costs, burial or cremation services, medical bills, outstanding debts — like remaining mortgage — and other related expenses. By having this insurance in place, you can ensure that your loved ones won’t have to worry about these financial obligations during an already difficult time.
2. Final expense insurance has more streamlined acceptance policies compared to other life insurance policies.
One of the advantages of final expense insurance is its simplified acceptance policies. Unlike other forms of life insurance, final expense insurance does not normally require a medical exam, instead usually relying on a health questionnaire to determine your eligibility and premiums.
There are two main types of policies:
- Guaranteed acceptance policies: You might be familiar with this term in the Medicare world, and it works the same. These are issued without any health information or exams.
- Simplified issue policies: Applicants must submit a health questionnaire, but a full medicare exam isn’t required.
TIP: While many final expense insurance plans do not require a medical exam, if a health questionnaire is required, it is important to answer it openly and honestly. These will be used to underwrite your plan, and any discrepancies in your answers could make it difficult for your loved ones to file a claim later on.
3. Monthly premiums for final expense insurance vary — but are generally less expensive than other forms of life insurance.
The cost of final expense insurance can vary depending on several factors, including the insurance provider, your location, age, and coverage amount. Keep in mind that while monthly premiums may differ, the overall aim is to ensure that the coverage adequately meets your needs while remaining affordable.
4. Final Expense Insurance won’t expire — as long as you continue to pay premiums.
Unlike term life insurance policies that have a fixed term, final expense insurance remains in effect as long as you continue to pay your premiums. This means that your loved ones will be protected no matter when the inevitable happens. There is peace of mind knowing that your policy won’t expire, as long as you pay the premiums.
Final expense plans have fixed premiums — once you have purchased a policy, your rate won’t increase. However, enrolling in a plan at a younger age typically results in lower monthly premiums than enrolling at an older age.
5. Determining whether final expense insurance is the right choice for you requires a cost-benefit analysis.
Much like any insurance, deciding if final expense insurance is right for you requires evaluating your age, health condition, financial situation and potential expenses your loved ones may face upon your passing. However, because final expense plans typically have a lower payout compared to other life insurance ($2,000- $50,000), you also need to consider if your monthly premiums will eventually add up to more than the benefit provided.
Remember, though — when it comes to this difficult situation, it’s not just about the financial aspect, but also the emotional support it provides to your family during a challenging time.
Key Takeaway
Final expense insurance, also known as burial or funeral insurance, offers a practical solution to protect your loved ones from the financial strain associated with end-of-life expenses. With streamlined acceptance policies and varied average monthly premiums, it provides flexibility and accessibility. By conducting a cost-benefit analysis, you can assess whether it aligns with your individual needs and priorities.
Remember, planning for the inevitable is not a somber task but rather a responsible and caring act. By considering final expense insurance, you can have peace of mind knowing that your loved ones will be supported during their time of grief.
