What is Final Expense Insurance?
To be clear, Final Expense Insurance is not a “type” of life insurance but, rather a “purpose for an insurance policy.
To help consumers understand the purpose of buying life insurance coverage, many companies use marketing terms such as final expense insurance, burial insurance, mortgage protection insurance, and funeral insurance.
We find this type of marketing very helpful for consumers because it helps them identify a need (risk) that should be mitigated. Although almost every consumer shares these needs at some point in their lifetime, it’s very difficult to roll all of these risks into one policy.
A good example would be mortgage protection insurance. Since a mortgage is temporary, it makes better financial sense to use term life insurance since it is also temporary.
On the other hand, since final expenses will not be needed until the policyholder dies, it makes better sense to use Whole Life Insurance since it is permanent life insurance that lasts for a lifetime.
What are Final Expenses?
When people die, there are certain expenses that they leave behind that need to be paid for by using cash from their estate, funds from an insurance policy, or paid by surviving loved ones.
We’re not talking about consumer debt or car loans, we’re talking about end-of-life expenses like funeral and burial costs, unpaid medical bills, and outstanding nursing home expenses that were not covered by health insurance.
Certainly, the one final expense that has the highest priority would be funeral and burial expenses because funeral directors rarely offer payment plans.
This means if your loved one who has passed away and doesn’t have the cash available to pay for his or her funeral and burial, life insurance proceeds would be the only way to pay for funeral and burial services without having surviving loved ones to pay out-of-pocket.
Here’s an example of how much an average funeral will cost in 2021:
Certainly, there are steps you or your loved ones can take to reduce the cost of a funeral and there are online platforms that will help you with that. The most vulnerable time to shop is for your daughter’s wedding and parents or grandparent’s funeral.
Why use Whole Life Final Expense Insurance?
As we mentioned earlier, whole life insurance is the best product to use for a final expense insurance plan. Primarily, because the policy will provide coverage for a lifetime but also because of the guarantees and benefits that whole life final expense insurance brings to the table.
- A whole life policy cannot be canceled by the company as long as premiums are paid. In fact, you could be diagnosed with a terminal illness and have to live in a hospice facility and your insurer cannot cancel your final expense insurance policy.
- Once a whole life policy is issued, the monthly premium can never be increased by the insurance company, even when you get older or if your health begins to fail.
- Your whole life final expense insurance will build cash value over time that can be accessed via company loans for any reason and no credit check is required.
How Much Does Final Expense Insurance Cost?
Your cost for a final expense life insurance policy will be based on three primary things:
- Your age when you apply for coverage
- Your current health and health history
- The amount of coverage you wish to purchase
One of the benefits of buying whole life insurance for final expenses is there is no life insurance medical exam required by the underwriter.
In fact, companies that offer final expense insurance understand that seniors are more likely to have some medical issues, and knowing this, most companies have very liberal underwriting requirements.
You can get a confidential and instant quote by using our electronic quote form on the right side of the page (at the top for mobile devices). Our instant quote form will provide quotes from all of the highly-rated companies in ascending order.
When you find a quote that fits your budget, you can complete a portion of the application and submit to us electronically or you can call us at 844-528-8688 with any questions or complete the application over the phone with one of our final expense life insurance specialists.
What if I Don’t Qualify for a Final Expense Insurance Policy?
As insurance professionals who deal with final expense insurance for seniors every day, we have found over time that there are more prospective clients with some health issues than there are who are really healthy.
The good news is that insurers who specialize in the senior marketplace have developed three life insurance plans so that they can accommodate applicants who have above average, average, and below-average health.
- Level Benefit Final Expense Insurance
The level benefit plan is offered to applicants with average to above-average health. This plan offers the lowest rates and does not require a waiting period before your full death benefit is payable.
2. Graded Benefit Final Expense Insurance
The graded benefit plan was designed for applicants who cannot medically qualify for a level benefit plan. Applicants who purchase a graded benefit plan pay a little higher rate and have a graded benefit during the first two years of coverage.
If the policyholder dies from natural causes during the first two years, the beneficiary would receive a graded death benefit rather than the full death benefit.
The graded benefit can vary by company but the typical death benefit is paid at 30% the first year, 70% the second year, and then the full death benefit thereafter. The waiting period does not apply if death is the result of an accident.
3. Guaranteed Issue Final Expense Insurance
The guaranteed issue (guaranteed acceptance) final expense insurance was designed for applicants who cannot medically qualify for a level benefit or graded benefit plan. The underwriting for a guaranteed issue applicant does not consider the applicant’s health.
This means that virtually anyone who is alive and falls into the eligible age group can buy life insurance.
In exchange for issuing a policy to an unknown health risk, the insurance company will charge higher rates and have a waiting period of two years when they will pay a death benefit equal to 110% of the premiums that you paid to the insurance company.
Guaranteed issue (guaranteed acceptance) final expense insurance should be considered life insurance of last resort. Prospective customers should not purchase a guaranteed issue policy unless they have been denied for a level benefit or graded benefit final expense insurance.
How to find the Cheapest Final Expense Insurance
If you are searching for the cheapest final expense insurance, always look for an experienced and reputable independent insurance broker who represents many of the highly-rated companies that offer whole life final expense insurance.
Never purchase a final expense policy from companies like Globe Life or Colonial Penn because you will end up with an expense guaranteed acceptance policy even if you’re in good health.
Take advantage of an independent agency like LJM Life Insurance where the agents will shop your application with many highly-rated carriers to find you the lowest price possible.
Check out this list of Our Highly-Rated Final Expense Insurance Companies