What is Final Expense Insurance?
Final Expense insurance (also known as Burial Insurance) is an insurance policy used to pay for burial expenses and funeral services when you die. A Final Expense policy helps ease the financial burden placed on a family when a loved one dies. Life insurance policies in this category are called final expense or burial insurance. These no medical exam polices are traditional life insurance policies where the named beneficiary can use the proceeds for any purpose. They can be used to pay for the funeral, to help with debt/medical bills or to leave money to a love one, a charity or your church.
Features of a Final Expense Insurance Policy
*No Medical Exam Required
*$2,000 – $75,000 in coverage
*Whole Life that builds cash value
*Premiums will never increase ~ Benefits never decrease
*Beneficiaries can use proceeds for any purpose
Types of Final Expense Insurance
Level – First day coverage for the full Face Amount. Ages 0-89
Graded – Pays reduced benefits for non-accidental death in the first 2 years. Depending on the company pays 30-40% first year/50-75% second year/100% in third year. Pays full benefit for accidental death in first two years. Ages 45-89
Modified (Guaranteed Issue) – For death other than accidental in first two years, returns premiums paid plus 10% interest. Accidental death in first two years pays full benefit. Ages 40-85
Whole Life versus Term
Whole Life Insurance – Whole Life Insurance is Permanent. It covers you for your Whole Life and it builds up cash value that you can actually borrow against if you ever fall upon hard times. The premium never goes up and the Face Amount never goes down.
Term Life Insurance – Term Life insurance is temporary insurance that pays for a term of usually 5-30 years. The premiums go up at the end of each term and the benefits will end. Term Insurance has no cash value.
Beware of the insurance that’s sold through the mail or on television. Much of it
is 5 year renewable term which means the premium goes up every 5 years and
after an increase it often becomes unaffordable which would leave you without
insurance. Many of these plans run out at age 80 or 85…leaving you without
insurance when you need it the most.
Cost of a Funeral vs. Cremation
*Median Cost of an Adult Funeral With Viewing and Burial in 2004 was $5,582…in 2014 it was $7,181, a 28.6% increase.
*Median Cost of an Adult Funeral with Viewing and Cremation in 2014 was $6,078.
Rates of Cremation and Burial
Cremation was the method of disposition for 45.4% in 2013; 48.7% of people were buried in 2013. Fortunately, there are many tools you can use to reduce the cost of funeral services to a more reasonable level. I recommend searching and comparing local funeral home pricing at Parting.com. I represent dozens of companies. They all underwrite differently. Even if you already have Final Expense Insurance, you might feel the need to take out additional insurance to keep up with inflation, or you might might want to compare to see if you’re able to improve your coverage or get more coverage for the same premium you’re currently paying. Even if you’ve been turned down before, I can get you covered.
Since we don’t know when we’ll need Life Insurance, NOW is the time to protect yourself…so your loved ones don’t have to deal with the cost of a funeral while they’re grieving.