How Final Expense Insurance Works

final expense life insurance. how it works

Final expense insurance is a type of life insurance policy that covers your final expenses, like a funeral, burial, or cremation. With the average funeral costing between $7,000 and $10,000, final expense insurance is a good idea if you don’t want your family paying out of pocket for an expensive funeral. Here’s a breakdown of how all the parts of final expense insurance work.

How does it work?

You purchase the policy, usually between ages 50-85, and pay monthly premiums on it like other insurance policies.

Who receives the death benefit?

When you purchase the policy, you’ll need to name someone as the beneficiary. This person can use the death benefit for anything they deem necessary. For example, it can be used for a funeral or burial, or it could be used for any outstanding debts like a mortgage or car loan. The beneficiary is not legally obligated to use the funds for a funeral and burial.

How do the premiums work?

Final expense life insurance premiums are generally lower than with other types of life insurance policies, some being as low as $20 per month. Your premiums may be slightly higher if you have a history of complex health issues. Your premium may also be slightly higher if you are on the older side when you purchase your policy. However, your premiums will not increase as you age.

Is there a medical exam?

Most final expense policies do not require a medical exam, but you may be required to answer several medical questions before you’re covered. If you have a history of complex health issues, you can still purchase a final expense policy, although your premiums may be slightly higher.

How is it different from preneed insurance?

Preneed insurance typically works by a person paying a funeral home directly for items and services for their funeral and burial. There is no cash payout with preneed insurance. This kind of insurance policy protects you from inflation because you lock in prices for items when you begin paying for them.

Is there a waiting period?

Most policies will pay the death benefit directly to the beneficiary immediately following the death, usually within 2-3 business days.

How much coverage do I need?

Final expense policies usually range from $5,000 to $25,000, but some policies offer coverage as high as $50,000.

A final expense policy comes with several intangible benefits. For example, it can give you peace of mind knowing that your wishes will be granted and your family’s financial security will be safeguarded. Search here to find a final expense policy.