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Final Expense Insurance Overview
Final Expense Insurance is a whole life insurance policy with a small death benefit that is usually easier to get approved for, often requiring only a few health questions. Some companies may also refer to Final Expense Insurance as “funeral insurance” or “burial insurance.”
These policies typically have a face value (death benefit) ranging from $1,000 to $50,000 and are available to individuals aged 45-85, designed to help their families cover expenses when they pass away.
While there is no fundamental difference between final expense insurance and standard life insurance, insurance companies offer more minor policies under final expense insurance to make them more affordable. The smaller death benefit results in lower premiums, making the policy permanent.
Final expense insurance covers costs such as a funeral or memorial service, embalming, casket, or cremation. However, beneficiaries can use the death benefit for any purpose, including paying property taxes, outstanding medical bills, or other necessary expenses.
As with any life insurance, the premiums for final expense insurance depend on your age and health—the older and less healthy you are, the higher your rates will be for a given amount of insurance. Additionally, men generally pay higher rates than women due to their shorter average life expectancy. Depending on the insurer, you may qualify for a lower rate if you do not use tobacco.
Some insurance companies issue final expense policies to people from birth to age 85. The face value might be as high as $50,000 if you’re younger than 55, but it may only increase to $25,000 once you turn 76.
Since final expense insurance is a type of whole life insurance, once you have a policy, the premiums cannot increase, and the death benefit cannot decrease. Unlike a term policy, a whole-life policy does not expire when you reach a certain age. It also accumulates cash value that you can borrow against. However, it’s important to remember that any loans unpaid at your death will reduce the money your beneficiaries receive.
When applying for final expense insurance, you won't need to undergo a medical exam but must answer some health questions. Due to these health questions, not everyone will qualify for coverage that begins immediately.
Final expense insurance may not cover everything, such as paying off a large mortgage, but it can help your loved ones pay the bills directly related to your death or any bills they might struggle to pay without your income.
Below is a breakdown of average funeral expenses for 2024:
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Guaranteed Issue Life Insurance is a special type of Final Expense Insurance available to individuals with serious health issues, typically those who would only qualify for a policy that does not require medical questions or an exam.
People may choose a guaranteed issue policy because it does not require health questions; however, they should be aware that there is usually a two—or three-year waiting period before benefits are paid. If the insured dies during this waiting period, the beneficiaries will not receive the policy’s death benefit but will receive a return of the premiums paid by the policyholder, plus interest, usually at a rate of around 10%.
If you are in good health, this would not be the best plan for you, as the rates are higher, and coverage does not start on day one.
Planning for the future is one of the most thoughtful things you can do for your loved ones. Ensure they are protected from the financial burden of final expenses. Contact Torain White at TWhite Insurance today to discuss your options and find the right coverage for your needs. Don't wait—secure peace of mind for you and your family now.
