Final expense insurance will pay for your funeral expenses, as well as any debts accumulated at the end of your life, which could include nursing home costs not covered by Medicare. Senior citizens used to refer to it as burial insurance.
Funerals are expensive and the price continues to rise. Even without a plot and headstone, the average funeral costs more than $8,000, and that amount has risen more than 10 times since the 1960s. Most people don't want to leave this burden to their heirs.
Yes. You can purchase a whole life final expense insurance policy that covers you until your death. Or you can buy a cheaper term life insurance policy that only provides coverage until you reach the age specified in the policy. Final expense insurance policies offer varying amounts of coverage and premiums. MetLife sells a $2,500 policy costing $10 a month for a 45-year-old woman because she is expected to live to age 82. (See “3 types of insurance to pay funeral expenses.”)
You can purchase a final expense insurance policy anytime between the ages of 45 and 85. Remember that the cost of the policy is lower when purchased at an earlier age since you will be paying into it over a longer period of time.
Even though premiums are usually lower because the amount of coverage isn't large, its critics still say that this type of insurance is expensive relative to what you get. They recommend exploring other types of insurance such as a traditional life policy if you want to have extra cash to cover funeral expenses.
No. Final expense insurance is also sold through the Internet, by phone or direct marketing.
Yes. There is no medical exam required to purchase final expense insurance. So those who have a medical condition that would prevent them from buying regular term or whole life insurance may want to consider final expense insurance instead.
The death benefit for a final expense insurance policy is graded. If you die within the first few years of coverage due to a previously known condition like heart disease your beneficiaries will not receive the full amount of the policy. However, they will usually get back what you paid in premiums, plus interest. But if your death is accidental, such as falling down a flight of stairs, most policies will pay the full benefit immediately.
You could consult with a funeral director about pre-need alternatives. Or you could open up a special bank account solely for this purpose and include it in your will. Social Security provides a small death benefit, and armed forces veterans can seek help through the Veterans Administration.
In all probability, your children and or family will inherit other end-of-life expenses such as the cost of probating a will, paying off a home mortgage if one exists or any expenses for your final care that were not covered by insurance.
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