Deciding to buy final expense life insurance is a big decision that can bring your family peace and comfort during a difficult time. If you decide to buy a final expense policy, you should know what you’re buying. Here are some frequently asked questions about final expense life insurance.
What is final expense life insurance?
Final expense life insurance is simply insurance you buy to pay for your final expenses, like funeral costs and burial or cremation.
How much does a funeral cost?
Your average funeral costs anywhere from $7,000 to $10,000 but can be as high as $20,000. Final expense insurance can give you peace of mind knowing your funeral and burial wishes will be followed.
How much coverage do policies offer?
Final expense policies generally range from $5,000 to $25,000, but some policies offer coverage as high as $50,000.
What can the death benefit be used for?
Death benefits are paid directly to the beneficiary and can be used for anything the beneficiary deems necessary. For example, the benefit may be used to pay for funeral needs or burial, but it can also be used to pay for any outstanding debts the policy holder had, like a mortgage or car loan. The beneficiary is not legally obligated to use the benefit on funeral expenses.
Is there a medical exam required?
Most policies do not require a medical exam. However, some types of policies (like modified or graded) will require you to answer a few questions about your health.
Is there an age limit?
Most insurers will cover anyone between 50 and 85.
How is final expense life insurance different from whole or term life insurance?
Final expense insurance typically has lower premiums and lower coverage when compared to whole or term life insurance. Unlike term life insurance, final expense insurance never expires and you will be covered for as long as you pay your premiums.
How expensive are premiums for final expense insurance?
The premium for your final expense policy depends upon how much coverage you buy, but premiums can be as low as $20 per month. Premiums are also based on your age and health, but they will not increase over time if your health changes.
How is final expense insurance different from burial insurance or funeral insurance?
Final expense insurance and burial insurance are essentially the same thing by a different name. However, funeral insurance (sometimes called pre-need insurance) is different. With final expense insurance, the death benefit is paid directly to the beneficiary to pay for anything the beneficiary needs. With pre-need funeral insurance, you buy funeral items and services ahead of time (like a casket or grave plot) and lock in your prices before they are hit by inflation.
Can I get final expense insurance if I have a health condition?
In short, yes, you can get final expense insurance if you have a health condition or illness. However, you might experience medical underwriting in which an insurance company may charge you more based on your health. If you have one or more chronic health issues, you may elect to buy a guarantee issue policy in which you can’t be denied coverage.