No one likes to think about their own mortality, let alone having to set aside money for the expenses involved. However, given that end-of-life costs can range anywhere from $18,000 to more than $42,000, you’d be wise to start planning for this now by finding affordable coverage.
While most people think about the cost of death as having a funeral, that’s just the start. There are other expenses to consider in addition to the cost of the ceremony. If you don’t already have a comprehensive life insurance policy, then it may be smart to consider something called “final expense life insurance.” In this post, we’ll explore what a final expense life insurance policy is, its advantages over other types of life insurance policies, and who would benefit from having one.
What is final expense insurance?
Final expense insurance is a special, bare-bones version of whole life insurance that’s intended to cover the typical end-of-life costs. For this reason, you may also hear it referred to by some companies as:
- End-of-life insurance
- Burial insurance
- Funeral insurance
How does final expense insurance work?
Final expense life insurance is designed to provide affordable, guaranteed coverage. It does this by selling a permanent-style life insurance policy with a face value (i.e. death benefit) that typically ranges between $5,000 and $50,000.
Applicants can usually buy final expense insurance outright without a medical exam. They only need to answer a short questionnaire about basic lifestyle attributes like gender, age, whether they’re a smoker or non-smoker, etc.
Upon death, the policy benefits are intended to be used for any expenses that may have been incurred. These might be expenditures such as:
- Funeral/burial
- Embalming
- Cremation
- Casket
- Headstone
- Cemetery plot
- Funeral reception costs
- Outstanding doctor and hospital bills
… and many others.
What are the benefits of end-of-life insurance?
There are several good reasons why you should consider buying an end-of-life insurance policy.
Coverage Is Lifelong
Final expense insurance is not like a term policy that will expire in 10 or 20 years. Death benefits are guaranteed for the rest of your natural lifetime (up to 100 years of age for most policies).
It’s Permanent Insurance
Unlike other types of insurance policies where benefits decrease, the face value of a final expense policy never changes. It remains the same for as long as the policy is in effect.
Premiums Never Increase
Your payments will always be the same for final expense insurance. You don’t need to worry about them going up with old age or inflation.
Death Benefits Can Be Used at Your Discretion
Even though coverage is intended to be used for end-of-life costs, your beneficiaries can do whatever they please with the funds. That means if there’s any money left over after covering end-of-life costs, they can use it however they see fit.
Death Benefits Are Not Taxable
Just like other life insurance policies, the money your beneficiaries will receive is exempt from income tax by the IRS. To put it another way, your end-of-life costs will be tax-free!
Applications Do Not Require a Medical Exam
You don’t have to be worried about being denied coverage if you’re a little older and in poor health. End-of-life insurance does not require a health screening and only requires answering a short questionnaire.
More Affordable than Traditional Whole Life
Compared to a regular whole life policy, the cost of end-of-life insurance will be much cheaper (thanks to the lower death benefit). Applicants can expect to pay premiums anywhere between $20 and $100 per month.
Who is Final Expense Insurance Right For?
There are lots of different types of people who would benefit from getting final expense insurance. A few examples include:
- Someone who’s older and has developed underlying health issues such as diabetes, heart disease, or cancer. Although no one is to blame for developing these conditions, they may prevent them from purchasing other types of insurance.
- Someone who had life insurance through an employer but is now retired and no longer covered. Many working Americans are covered by a group term policy that typically provides a death benefit up to one year’s salary. However, once you separate from work, you’ll no longer have this coverage and will need some other alternative.
- Someone who had a term life policy, but it has since expired. Perhaps you and/or your spouse had a 20-year or 30-year term policy, but it has lapsed. Renewing that policy at an older age could cost significantly more than when you first got coverage.
- Someone who only wants minimum coverage. Suppose you’ve already paid off your home and have money saved for retirement. Rather than letting the costs of a funeral burden your surviving family, a final expense insurance policy can cover end-of-life costs in the most affordable way possible.
If you’d like to learn more about final expense insurance, the professionals at Principled Life can help. Our insurance brokers are able to set you up with the best life insurance to cover funeral expenses and other end-of-life costs. Give us a call and find out how easily you can get coverage today.
