Starting a final expense life insurance policy is the perfect answer if you’re unhappy with your end-of-life affairs. Knowing your loved ones will have the help they need when you pass means knowing you’ve covered every base.
If you’ve heard about final expense insurance but aren’t sure what it is, this article’s for you. Let us walk you through how burial coverage work, what they cost, and why they matter.
Don’t let regrets be a part of your passing. Keep reading for the full final expense insurance guide.
What Is Final Expense Insurance?
What is final expense life insurance all about? Final expense coverage is a type of whole-life policy. The policy can pay for medical bills and different funeral expenses at your passing.
Sometimes final expense insurance is funeral insurance or burial insurance. Even though the name may change, the coverage work the same way. Typically, senior citizens are the biggest market for choosing final expense coverage.
However, that doesn’t mean younger individuals can’t benefit. With proper planning, your loved ones can be in a strong financial position at your passing. Unlike life insurance policies with broad coverage, final expense coverage are more specific.
Since final expense policies are more urgent and have smaller payouts, they activate faster than standard policies. After filing a claim, beneficiaries can receive a final expense payout in less than a month.
Common Final Expense Coverage Features.
A final expense policy doesn’t have any type of expiration. As long as you stay up to date with the premiums, you won’t have to worry about the policy stops.
The premiums should stay the same throughout the entirety of the policy. Unlike car insurance and home insurance, you won’t have to worry about rate fluctuations.
The only exception to the steady premium rule will be if you fail to keep up with payments. Failure to pay could mean a readjustment in your premium pricing.
If you’re going to be late with your monthly payment, let the policy provider know. You might be able to work out a late payment arrangement to avoid penalties.
Burial insurance is one of the most simplified and straightforward policies. There’s usually no medical exam, and the approval process can be pretty speedy.
Even though there isn’t a life insurance exam, expect to answer health questions. The easy application process and fast approvals mean that you can get life insurance coverage in days.
Common Pre-qualifying Questions.
There isn’t a medical exam for final expense coverage, but there is a detailed application. What type of questions will they ask you on the application? Typically the application questions will only cover the last two years of your health.
One of the most common questions is whether or not you’ve ever tested positive for AIDS or HIV. Next, the insurance company will want to know if you’re currently bedridden, in a care facility, or hospitalized. They’ll also ask if you’re now receiving hospice care.
Be completely honest as you disclose your current health conditions with the insurance company. If you have heart disease, a history of heart attacks, or heart surgeries, the insurance company will want to know.
Congestive heart failure is another one of the health conditions the insurance company is going to ask about. Any type of circulatory system disease or stroke will also be of importance.
The insurance company will also ask about your mental health. They’ll want to know if you have dementia or Alzheimer’s.
The insurance company will also inquire if you have a current problem with drugs or alcohol. Do you have a history of addiction? You can bet that the insurance company is going to ask.
Are you currently taking any medications? What is your health been like in the last 2 years?
Again, these are all the different questions you can expect to answer when you’re signing up for final expense life insurance. Even if you have congestive heart failure or something that seems disqualifying, you can still try to get coverage.
Final Expense Insurance Sample Rates.
The life insurance industry is highly competitive, and that’s good news for you. As you start calling around to get quotes for your coverage, you’ll find that the rates are pretty affordable.
When you consider the rising costs of funerals, paying insurance premiums makes even more sense. Over the past few decades, funeral costs have been growing exponentially.
The average funeral can easily cost over $10,000. Even when costs drop, they tend to pick back up pretty quickly.
How much will you pay for your final expense insurance? The rate is going to vary from one individual to the next. However, we can provide you with some average sample rates for senior citizens.
The earlier someone gets coverage, the easier it’ll be to lock in a lower rate. You’ll find that the rates substantially increase as each year goes by.
You’re looking to open up a $10,000 final expense insurance policy that includes funeral planning. At 50, this comprehensive coverage can easily cost anywhere from 25 to $48.
Women’s Final Expense Rates vs. Men’s
Women usually pay more for coverage, but not by a lot. For instance, at 55, women spend around $46 a month for final expense insurance. At the same time, males will find themselves paying closer to $55 a month.
Final expense and insurance rates will still be incredibly affordable as you approach your seventies. Most comprehensive policies will be available with monthly rates between $80 and $100.
Depending on your plan, you might get coverage as low as $50 even when you’re 70 to 75 years old.
Once you reach 80 years old, the rates will jump up slightly. On the low-end, individuals in their 80s will pay around 9,200. On the higher end, final expense, insurance coverage costs $140 to $190.
Keep in mind that these sample rate estimates are based on average health and for individuals who don’t use tobacco. If you’re looking for a policy covering more than $10,000, you can expect the rates to increase incrementally.
What Happens to Left Behind Debt?
A lot of Americans are still in debt when they pass away. The average household debt in America is around $140,000, and it’s much higher for some.
Sadly, the debt left behind doesn’t simply disappear. In some instances, the estate will be able to pay off a large portion of the debt. However, if there isn’t enough money in the estate to pay off the debt, it can mean withholding assets.
Before family members start receiving assets or payouts, the consumer debt will have to be accounted for. If your family members are counting on your assets to cover the final arrangements of the funeral, they might be in for a horrible surprise.
Often, there isn’t enough money left behind. After all of the debts are paid and the bills are cleared, family members are left having to cover the entire funeral bill. Left behind debt includes student loans, auto loans, credit card debt, and personal loans.
Traditional vs. Final Expense.
If you have a traditional life insurance policy, it’s going to be able to help your loved ones in their day-to-day living.
Traditional life insurance works by offering the beneficiaries funds proportionate to your income. The funds will equal or close to the amount of money the beneficiaries lose with your passing.
Term life insurance or traditional life insurance is a type of income replacement. Traditional life insurance could have face amounts worth millions of dollars in some cases.
What makes final expense insurance different? You’ll find that most final expense policies are for $50,000 or less. These laser-focused coverage offer payment for a specific type of debt.
You don’t need high coverage amounts since you can only use the funds for cremation and funeral arrangements.
Remember, your estate might not be able to cover the cost of your funeral. Having the right final expense in insurance coverage in place means your loved ones will be able to avoid overspending.
Funeral Cost Checklist.
How can a funeral wind up costing $9,000 or more? Often family members are surprised by the high cost of funerals.
However, once you start breaking down all personal expenses, it’s easy to see where the $10,000 price point comes from.
Here’s a shortlist of the different services funeral home’s can perfect provide:
- Service car
- Memorial printed package
- Metal casket
- Ariel or vault burial
- Staff to run the funeral ceremony
- Facilities to host funeral
- Distance with viewing
- Preparing the body medically cosmetically
- Service fees
- Transporting remains to a funeral home
A burial vault is also referred to as a concrete grave box. A lot of cemeteries require burial vaults before you can use their plots.
The burial vault ensures that the ground isn’t going to buckle over the metal casket. The reinforced vault will also be able to preserve the remains from insect activity and groundwater.
Who Needs Final Expense Life Insurance?
Anyone over the age of 40 who wants money to cover their funeral expenses should look into final expense insurance. Remember, the younger you are when you take out the policy, the more affordable the premiums will be.
Typically, you’ll find that final expense insurance is mainly for seniors. However, the coverage is excellent for anyone concerned about leaving their loved ones financially secure when they pass.
Taking out a burial policy on yourself is a great way to guarantee that most people you care about will have the finances they need. Children can even buy life insurance for their parents.
It’ll be easier to find out exactly what type of final expense coverage you need by shopping around and getting multiple quotes.
Are you independently wealthy? Do you have enough money set aside in your savings? If you’re sitting on a lot of cash, you might not be a candidate for final expense insurance.
However, it’ll be up to you to keep an eye on the rising costs of funerals. You have to be vigilant and stay updated on all current funeral costs.
Otherwise, your loved ones might be caught by surprise. Take out a low-cost policy if you don’t want to worry about monitoring funeral costs.
Everyone Deserves a Quote.
No matter what age or health conditions you have, it’s worth your time to at least call for quotes. You won’t know until you try.
Are you over the age of 85? Anyone over the age of 85 or currently in hospice care might have difficulty taking out a final expense policy.
If you’re already hospitalized, you might also find it difficult to secure coverage. Different health conditions, such as terminal illness and AIDS, can also prevent you from qualifying.
Currently, there are over 1 million Americans with AIDS. You can look into online support forums to determine how these individuals are securing final expense coverage. You can also call an insurance agent and ask about terminal illness providers.
Even if you’re over the age of 85, in hospice, or battling a terminal illness, reach out for a policy. When you work with somebody who is an insurance broker, they’ll be able to shop around to explore all of your options.
Modified Final Expense Insurance Plans.
You might qualify for a modified final expense insurance plan with high health risks. Modified plans are usually only offered to applicants dealing with some type of serious health condition.
One of the ways insurance companies can offer modified plans is by increasing the waiting period. Sometimes the waiting period can be as long as 3 years.
Who should apply for a modified final expense plan? These plans work well for anyone taking prescription medications that disqualify them from a standard insurance plan.
If the insured passes away during the waiting period, the beneficiary will still receive a payout. However, the payout won’t be as generous as it could be.
The beneficiary receives every penny the insured already paid into the modified plan.
If the passing happens during the waiting period, the beneficiary can often receive a small additional payout percentage. The best payout situations are going to happen after the waiting period.
You’ll also find that a modified plan involves extended payment options. Some life insurance policies offer 10 to 20-year plans that give you a payment time frame.
The beneficiary will access better coverage by paying off your policy within a specific time frame. Extended time frame payouts usually have higher premiums, and they’re common in the final expense world.
Why Not Just Get a Prepaid Funeral?
There’s a considerable debate among senior citizens. Should you get final expense insurance or invest in a prepaid funeral?
Final expense insurance gives you a lot more freedom. You’ll be able to choose how the funeral plays out. Loved ones will have a lot of options since the insurance policy will provide finances.
A prepaid funeral doesn’t provide options. Instead, it’s an agreed-upon cookie-cutter type funeral arrangement. There can’t be deviations.
When you have a prepaid funeral, the funds are tied up. If your loved ones want to alter the funeral arrangements, they won’t be able to.
This can be tricky if you or a family member decides to change location or services.
For instance, if you decide you want cremation but didn’t sign up for a cremation package, you’ll be out a lot of cash.
After prepaying for a funeral, there’s no way to get your money back. If your family members needed to use any money to help pay off existing medical bills or debts, they wouldn’t be able to.
Another thing to consider is the funeral home. Your prepaid funeral would be it. What if the funeral home goes out of business?
If you prepay and the funeral home you choose closes, you may never get a refund. If you want to have the ultimate freedom of dictating your last wishes, then final expense insurance is the right choice.
Make sure you have a clear will outlining how you want the funeral to be. It’s also a good idea to speak directly with one family member you trust the most.
Let them know your funeral wishes, and provide them with written instructions. The clear you can be about how you want the service to go, the easier things will be on loved ones.
How to Choose The Perfect Coverage.
How will the death benefits payout on your final expense insurance policy? The answer depends on the exact policy you choose.
Before signing up for any type of coverage, make sure you understand the ins and outs of each benefit payout. Only pick the benefits that make sense for your situation.
Are you looking for instantaneous coverage? A level benefit policy takes effect right away. Your beneficiaries will be able to enjoy the same payout regardless of how long your policy has been active.
A longer-term investment would be a graded benefit policy. Graded benefit policies payout when the insured passes away.
They have graded benefit policies too. These policies only become active a few years after purchase.
When the insured passes away, the graded benefit policy will pay as long as it’s past the determined time waiting for a period. Every year a graded benefit policy stays active; it increases in value.
If you decide to get a guaranteed insurance policy, it’ll probably use a graded benefit model. Once you have the right plan in place, make sure you do some research when choosing an insurance provider.
You can purchase your final expense insurance with the help of an insured broker. However, you can also purchase your burial insurance directly from an insurance company.
As long as you’re working with licensed and experienced insurance agents, you’ll be on the right path. It’s also wise to read a few customer reviews and get more than one quote. We find that getting anywhere from 3-5 quotes works best.
Get Discounts and Great Premiums.
As you start calling for final expense insurance quotes, be ready to take notes. Jot down the prices for coverage beginning at $10,000 and going up to $50,000.
Make sure the insurance agent providing you with quotes gives you a lot of variety. Along with varying coverage limits, you should also be quoting different types of policies.
Find out what a graded benefit policy will cost you vs. a guaranteed issuance policy. Please take advantage of the insurance agent’s expertise by finding out which policy choice they think you need.
Your specific life situations will play a significant role in choosing the right policy. If you’re on the younger side, a graded benefit policy will make a lot of sense. However, those who fear they’ll pass sooner should look into modified coverage.
Be sure to ask about special discounts that might be available to you. Sometimes being a part of a particular group or organization will qualify for a discount. For instance, being an A.A.R.P member might help you save on a policy.
Make things easier on yourself by having the insurance agents email you quotes. Email versions of the quotes will make it easy to compare prices and coverage.
Do you already have some type of policy in place but aren’t sure it’s the right one? A licensed agent should be happily willing to review your current coverage before making recommendations.
Getting Quality Quotes.
Set aside an afternoon or morning when you can call for insurance quotes. Plan on spending anywhere from 1-2 hours comparing coverage and rates.
If you plan on calling more than 5 companies, allot for a little more time. If you’re pressed for time, request quotes online rather than over the phone.
Navigating Life Insurance for Final Expenses.
You recognize the need to prepare your loved ones financially for your passing. However, that doesn’t mean you should rush out and buy the first final expense life insurance policy you find.
Simplified Burial Insurance can provide you with a team of licensed insurance agents. Our helpful agents will be happy to answer any questions you might have!
Funeral planning doesn’t have to be an overwhelming task. Let us help make things easier. Get your life insurance quote today.