Having a way to pay for your funeral and other final expenses is essential. This is because today, when factoring in the cost of a memorial service, headstone and burial plot (or alternatively, cremation services and an urn), flowers, transportation, and the printing of funeral notices, the average overall tab can run into the five figures.
Unfortunately, many families do not have this amount of money in place that can be used for these expenses. So, often, loved ones will be required to either dip into their savings, or worse yet, put these expenses on credit. This could, in turn, lead them into financial hardship, possibly for many years.
The good news is that there are ways that you can ensure that loved ones don’t have one more thing to worry about at an already difficult time in their lives. One of the best strategies is to purchase final expense insurance.
What is Final Expense Insurance and How Does It Work?
Final expense insurance is a type of life insurance coverage that is designed to pay one’s final expenses.
It is typically purchased by those who are between age 50 and 85 – although there are some life insurance carriers that will offer final expense insurance to people who are older. This type of coverage is also often referred to as either funeral insurance or burial insurance.
Often, the amount of coverage that an individual will have on their final expense insurance policy is between $5,000 and $25,000. That is because, in most cases, this will be enough for paying off the final expenses.
However, there are some people who may add more coverage to their stated benefit. That way, their loved ones can also pay other potential expenses, such as uninsured medical bills, the cost of end-of-life hospice care, or even unpaid debts.
Some people want to purchase additional coverage to so that there is some extra money available to fly in a good friend or relative that may not be able to come otherwise. We helped one lady that lived in Georgia recently to do this.
She wanted to make sure that her long time best friend that lived in Arizona would be able to fly in for the funeral. Since she was disabled and was on a fairly low fixed income her friend would probably not be able to afford to do so otherwise.
Those who own a final expense life insurance policy can name a beneficiary (or beneficiaries) who will inherit the proceeds.
It is typically recommended that the beneficiary that you choose be someone who is able to carry out your wishes in terms of funeral preparation and other final needs.
Alternatively, final expense insurance policyholders may also name a particular funeral home as their beneficiary.
In this case, the money will quickly be available to the funeral service provider for carrying out the memorial and other needs. (If you choose this option, another beneficiary that you name will be able to inherit any remaining proceeds from the final expense policy that are not used by the funeral home).
How Much Final Expense Insurance Coverage Should You Have?
Because everyone’s final expense life insurance needs will be different, there is not a set, one-size-fits-all amount of final expense insurance that should be purchased.
So, before purchasing a policy, it can be helpful to get an idea of how much a funeral and other services may cost in your area (or in the area where you wish for your final interment).
In doing so, it is beneficial to contact several funeral homes and inquire about costs. It is important to ensure that other potential final expenses or related costs will be covered, too.
For example, if your loved ones plan to have a gathering of friends and family following your funeral service, it can be helpful to have funds available for purchasing food, renting an area to host the gathering, and other related items.
Will You Qualify for Final Expense Insurance If You’re Over 50?
When purchasing a life insurance policy, the underwriters at life insurance companies will typically review an applicant’s health condition, gender, and age at the time the individual applies for the coverage.
This will often entail completing an application for coverage – which asks questions about health and health history – as well as taking a medical examination. During this exam, the applicant for coverage will usually be asked to submit a blood and urine sample.
However, with final expense insurance, this is not necessarily the case. Most final expense policies will not require you to undergo a medical exam.
And, in some cases, there may not even be any health questions to answer such as with guaranteed acceptance life insurance coverage. Know that guaranteed acceptance life insurance is not going to be your first choice. However, if you can’t qualify for any other type of coverage this can be a very good solution for you.
Fortunately, final expense insurance coverage can be easier to qualify for than traditional, medically underwritten life insurance protection.
Many final expense policies are a type of permanent life insurance coverage – whole life. These plans will provide you with death benefit protection, as well as a cash value component where funds can grow and compound on a tax-deferred basis.
This means that there will be no tax due on the gain that takes place in the policy’s cash component unless you withdraw the money.
If you opt to borrow or withdraw the funds that are in the cash component, you will be able to do so – and you can spend these funds on any item that you see fit, including paying off debt, supplementing your retirement income, or even going on a vacation.
It is important to note, though, that if any portion of the cash component has not been repaid at the time of death, the un-repaid amount will be counted against the amount of death benefit that the policy’s beneficiary will receive.
A final expense insurance policy that is whole life insurance coverage can provide you with a death benefit that is guaranteed, as well as an amount of premium that will not go up over time – even with increasing age, or if you contract an adverse health condition in the future.
Factors to Consider When Purchasing Final Expense Insurance
There are some factors to consider when you purchase a final expense life insurance policy.
First, because the applicants for this type of coverage tend to be older – which can be riskier to an insurance carrier – some policies will not pay out the full stated amount of the death benefit if the insured dies within the first couple years of the policy.
Also, just as with other types of products and services that you purchase, the premium amount that is charged for final expense insurance may differ – sometimes substantially – from one insurance carrier to another, even for the same type and amount of coverage.
Because of this, it will be essential that you compare plans from several insurance carriers before making your purchase.
How to Get the Best Rates on Final Expense Insurance Coverage
If you are ready to compare final expense life insurance policies, benefits, and premium quotes, we can help. We work with many of today’s top final expense insurance carriers, and we can assist you in shopping for the best premium price, as well as coverage that best fits with your specific needs.
We can do so easily and quickly by providing you these details directly via your computer. When you are ready to proceed, just simply fill out the form on this page.
Should you still have any questions about final expense insurance and you want to talk to someone directly give us a call.
We understand that the purchase of final expense insurance may be confusing, and you want to be sure that you are taking the proper steps. So, contact us today – we’re here to help.