How Does Final Expense Insurance Work and Do I Need It?
Final expense insurance, also referred to as burial insurance or funeral insurance, is a type of permanent life insurance that provides coverage to pay for end-of-life expenses and funeral costs. It ensures those left behind have financial support through a challenging time. Facing unexpected funeral expenses, some families may take on debt, borrow money from friends, or ask for donations. They may opt for a low-cost burial solution.
On average, a funeral can cost $7,000 – $12,000. That includes viewing, burial, basic service fees, transporting to a funeral home, casket, embalming, and other preparations. These costs do not include a cemetery, monument, marker, flowers, or other end-of-life expenses such as final medical bills. These costs can quickly add up. Instead of leaving grieving loved ones with a financial burden, burial insurance guarantees funds are available to handle expenses directly related to your death. One insurance company calls it your final love letter to those left behind.
What Are The Different Types of Final Expense Insurance?
Investopedia explains that final expense insurance is basically “a small whole life insurance policy that is easy to qualify for.” There are two main types of final expense insurance: guaranteed issue and simplified issue.
Guaranteed issue is for applicants with serious health issues who do not want to go through underwriting or a medical exam. Everyone qualifies for this type of policy, and because of this, it is more expensive and offers less coverage.
Simplified issue is for applicants in good to moderate health who are most interested in value and can answer a detailed medical questionnaire. That is your best bet for getting affordable coverage up to $50,000.
Many policies also have a graded benefit during the two-year waiting period. For instance, it might pay 30% to 40% of the death benefit if the insured dies during the first year of the policy, 70% to 80% in the second year, and 100% after the two years waiting period. You can also add riders to the policy, such as Great Western’s accelerated death benefit rider at no additional cost or the child/grandchild rider.
Should I Get Final Expense?
Final expense is not for everyone, but there are some advantages to this type of coverage. Policygenius explains that term life insurance is a better alternative to final expense, but if poor health disqualifies you from getting traditional coverage and you don’t want to leave your family with the financial burden of your burial, a final expense policy is a good option.
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