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Final expense insurance is a type of whole life insurance policy that provides a relatively small death benefit designed to cover funeral and other final expenses. These policies don’t usually require a medical exam and are easy to qualify for.

The average cost of final expenses is around $8,000 even if you’re just paying for a funeral. Other final bills can include medical and long or short-term care. A final expense policy prevents these final bills from burdening the family left behind. However, it’s not always the best way to save for those expenses.

Below we’ll cover how a final expense insurance policy works, the average cost of final expense insurance, and everything else you need to know.

KEY TAKEAWAYS
  • Final expense insurance is a type of permanent life insurance that pays out a small death benefit to help with funeral and other expenses.
  • Most final expense insurance policies are available to those between the ages of 45 and 85 and don’t require a medical exam.
  • The smaller death benefit compared to other life insurance policies makes final expense policies more affordable to older applicants.   

What is final expense insurance?

Although it’s marketed as a policy for final expenses, this type of policy is really just a low death benefit permanent life insurance policy. It’s called final expense insurance because it’s aimed at people who just want enough coverage to make sure those expenses can be paid.

Final expense policies are usually either simplified or guaranteed issue policies, and the majority of people who apply will be approved. Most policies have no medical exam and many also have no medical questions.

How much does final expense insurance cost?

Final expense insurance premiums vary depending on your age, the company you choose, and the amount of the death benefit. The younger you are when you buy the policy, the lower you can expect the monthly premium to be. However, younger people in good health will likely get a better deal from a traditional type of policy with a medical exam.

AIG advertises that its final expense policies start at about $21 a month for $5,000 in coverage, while Colonial Penn promises coverage from $10 a month. The actual rate you pay, however, may be much higher, and the best way to find out is to compare quotes.

Pros and cons of final expense insurance

Is final expense insurance worth it? There are a few things to consider before you buy a final expense insurance plan, both pros and cons. It’s always advisable to speak with an expert before you make a decision on life insurance.

Pros:

  • Simplicity. You can quickly and easily buy a final expense insurance policy online or over the phone.
  • Guaranteed acceptance. There is no medical exam for most policies.
  • Available to older applicants. Most companies will sell policies up to age 80 or 85.
  • Level premiums. Premiums don’t go up over time and as long as you pay them, coverage won’t expire.

Cons:

  • Limited benefit period. There is usually a two-year period during which benefits under the policy are limited.
  • Limits on coverage. Final expense policies have smaller death benefits, so they aren’t a good fit for anyone needing a larger death benefit.
  • You will likely overpay. Life insurance that doesn’t require a medical exam is more expensive because it’s a blind risk for the insurance company. If you’re healthy and on the younger side, you’ll likely get a better rate by going through the exam.
  • It’s not the best investment. You might do better to put the money into another type of investment and have more than enough for final expenses by the time you die.

Frequently asked questions about final expense life insurance

When should I buy a final expense insurance policy?

There’s no specific right time to buy life insurance, but the younger you are, the less you will pay. You can purchase a final expense insurance policy anytime between the ages of 45 and 85. However, at a younger age, you may be better served by a different type of policy.

What if I die prematurely?

Some policies include a two-year limited benefit clause that will limit what is paid out during the first two years of coverage. It’s important to read the terms of the policy before you buy.

What are considered final expenses?

While the funeral and related costs are what come to mind as final expenses, there may be others. They can include medical bills, debts, long or short-term care expenses that were outstanding when the insured died, and any other expenses left behind.

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