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LIFE Insurance
LIFE INSURANCE INSIGHTS

Final expense insurance can be a wise choice, but it depends on what you need from a policy. Here's everything you need to know about funeral insurance.

Funeral and final expense insuranceFinal expense insurance pays for your funeral expenses, as well as any debts accumulated at the end of your life. That includes outstanding nursing home costs not covered by Medicare.

Funerals are expensive and the price continues to rise. Even without a plot and headstone, the average funeral costs more than $8,000. That amount has risen more than 10 times since the 1960s. Most people don't want to leave this burden to their heirs.

KEY TAKEAWAYS
  • If you want life insurance to cover the cost of your funeral and other things, you can get funeral insurance or final expense insurance.
  • You can buy an insurance policy that will pay for your final expenses anytime between the ages of 45 and 85.
  • Depending on your age, final expense policy will cost you as little as $10 a month.
  • You can buy a final expense insurance policy online or on the phone without appearing for any medical exam.

Are there different types of insurance policies to pay funeral cost?

If you only want life insurance to cover final expenses and funeral costs, you can get funeral insurance or final expense insurance.

See “3 types of insurance to pay funeral expenses.”

If you need more coverage, 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.

When should I buy final expense insurance policy?

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.

How much does final expense insurance cost?

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.

That said, you can often find a final expense policy for as little as $10 a month depending on your age.

What are the advantages of funeral expense insurance?

  • Simplicity. You can quickly and easily buy a final expense insurance policy online or on the phone.
  • Guaranteed acceptance. There is no medical exam.
  • Inexpensive premiums. The younger you are, the cheaper the cost.

What are the disadvantages of funeral expense insurance?

  • Price. Final expense insurance is more expensive than traditional policies considering the eventual pay out.
  • Waiting period. There is usually a two-year waiting period before the policy takes effect.
  • Limited coverage. You have to make sure that a final expense insurance policy will actually cover all of your final expenses. Financial planners suggest you calculate the cost of your funeral arrangements, immediate bills and long-term obligations, and then subtract that sum from the amount already in your bank account. Your final expense insurance policy should make up the difference.

Final expense insurance can be a wise choice, but it depends on what you need from a policy. If you need a policy to help your spouse pay off a mortgage, a term life is likely a better choice. If you want to the freedom to tap into your policy while you're still alive and want to make sure your loved ones receive a death benefit, a permanent life policy, such as whole life, could be right for you.

Frequently asked questions about final expense life insurance

I am bombarded by TV ads, so is this the only way to buy final expense insurance?

No. Final expense insurance is also sold through the Internet, by phone or direct marketing.

Is it true that "You can't be turned down" as the TV ads state?

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. See more about guaranteed issue life insurance.

What if I die prematurely?

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 won't receive the full amount of the policy. However, they will usually get back what you paid in premiums, plus interest.

If your death is accidental, such as falling down a flight of stairs, most policies will pay the full benefit immediately.

Are there other options?

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.

What are the other end-of-life expenses?

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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