Final expense insurance is used to cover the charges of affairs specifically related to your death. This may include the cost of a funeral service, burial, and other expenses associated with your “final expenses.”
This coverage is often known as “burial insurance” or “funeral insurance.” The face amount of this coverage isn’t high, with benefits usually varying between $5,000 and $50,000 per policy.
The Federal Trade Commission figures that many funerals can cost well over $12,000. If you don’t have the prepared cash to pay for your burial or don’t want your estate to be taken up with fees incurred by your death, a final expense insurance plan may be for you.
Final Expense Insurance Facts
- Final expense insurance is a sort of permanent life insurance. This type of coverage does not run out and is more expensive than term life insurance. Term life insurance runs for a certain time frame before ending. Permanent life insurance stays in place for as long as the payments are paid.
- Permanent life insurance policies have a cash value. This value accumulates over the duration of the coverage. The cash value is paid out as part of the death benefit when you pass away. You can also withdraw funds out of the policy, assuming that the coverage built up cash value over the years.
- Final expense insurance seems to have a lot in common with guaranteed acceptance life insurance. Conventional life policies require an evaluation of your health along with a clinical exam. However, guaranteed policies don’t require exams. Instead, applicants are frequently insured after answering only a few questions.
Do I Need Final Expense Insurance?
That depends. If you currently have a term or whole life policy, your family can use your current policy to pay final expenses. If you have term life insurance and the term is about to run out, you may want to consider final expense insurance at this stage.
Alternatively, if your loved ones have adequate financial resources to take care of the final expenses when you die, then there is absolutely no reason to buy final expense insurance.
One additional point is that if you are considering relying on the death benefit payment from Social Security to pick up the slack, you may want to reconsider; it’s only $255.
How Does Final Expense Insurance Work?
Just like with other types of life insurance, the owner of a final expense life insurance policy may name an individual, or individuals, as their policy beneficiary to receive the death benefit payment. The beneficiary is a spouse or a family member that you trust to carry out the payment of your final expense payments.
A permanent final expense life insurance policy won’t have an expiration date. Thus, as long as the premiums are paid for, coverage will remain in place. In addition to the coverage that is offered with a permanent plan, this type of policy will also incorporate a cash value element where cash builds up on a tax-deferred basis over time.
Related: Burial insurance for seniors
Which Types of Policies are Available
Term Life Insurance
With their decreased costs, term coverage is a very popular form of life insurance. It does tend to be a policy that younger individuals will get, and if you are under the age of 60, then these policies can be quite beneficial. The greatest benefit to a term life policy is that you can usually receive the maximum amount of insurance coverage for the minimum monthly premiums.
The fact is that if you’re not in good health, you may have a harder time getting a term policy, or the premiums will end up being greater because of present health problems.
I wrote an article about term life for seniors over 70 here.
Guaranteed Universal Life Insurance
Guaranteed Universal Life, or GUL for short, is probably the best policy for seniors who are in good health and looking for more than $25,000 in death benefit. Unlike term life, GUL doesn’t expire based on a specific length of time (such as 10, 20, 30 years), but instead at a specific age (90, 95 or even 121).
So you can think of it as a permanent policy without the associated costs or the cash savings benefit you get in a whole life policy. If you are too worried to outlive your term, or dislike paying the cost of a whole life policy, you will find GUL is a really good option.
Whole Life Insurance
Whole life insurance will remain in effect throughout that person’s lifetime. Premiums happen to be considerably higher than term insurance, and the payouts may be higher. The coverage does accumulate cash value.
Honestly, this is possibly the worst option to go with because premiums are extremely high, and most people aren’t interested in building a cash value at this age.
No Exam Life Insurance
No medical exam life insurance will not require you to take a medical exam to get accepted. All you have to do is answer a few straightforward questions to start the process. The most significant benefit to this plan is speed; the policy typically gets approved in 48 hrs. However, you still have to be relatively healthy.
Guaranteed Issue Life Insurance
While many who have been rejected for life insurance coverage may feel that they have no hope, there is a feasible alternative – with a guaranteed issue life insurance policy. These plans will not require you to take a clinical exam as part of the underwriting process. Furthermore, you aren’t required to complete a comprehensive medical questionnaire.
Therefore, those who have certain medical-related ailments may still be able to be eligible for the life insurance coverage that they need. There are a few issues you’ll need to learn before deciding on this coverage. The first is that guaranteed life insurance typically has a waiting period of two to three years.
This suggests, that if the insured were to die, their beneficiaries would not receive the full payment. Rather they would get the amount in premiums that have already been paid. Second, these policies are usually more expensive than term insurance.
Here is another post about top guaranteed issue life insurance companies.
Top 20 Burial and Final Expense Insurance Companies
There are many companies that offer final expense insurance, each one with different benefits and stipulations. Working with a licensed insurance agent can help you match your individual needs and budget with the right company.
Below are some of the top companies that offer final expense insurance:
- Mutual of Omaha – Policies from $2,000 to $40,000 that also have a cash value option. There is also an accelerated death benefit rider which will pay out early if you are diagnosed with a terminal illness, or spend more than 90 days in a nursing home and will remain there for the rest of your life.
- Assurity – No medical exam policies $5,000 to $50,000, amounts vary by age.
- Transamerica – Policies from $1,000 to $50,000, depending on your age. This is one of the best policies for older applicants who need more coverage.
- Americo – Policies in amounts from $2,000-$30,000 for those 50- to 85-years-old. Some policies have an accelerated death benefit rider which will pay up to 50% of the face value early if you are diagnosed with a terminal illness.
- Settlers Life Insurance Company – Offers both level and graded benefit plans. Level benefit plans: from $2,500 to $50,000, ages 0 to 85. Graded benefit plans: from $1,000 to $15,000, ages 40 to 80.
- Illinois Mutual – Policies are available from $5,000 to $50,000, for those 60- to 85-years-old. Two plans are available: Level and modified benefit plan.
- Foresters – Policies are available from $2,000 to $35,000, depending on your age.
- Sentinel Security Life – Offers level, graded and modified death benefit plans up to $35,000, depending on your age.
- Government Personnel Mutual Life – Policies are available for ages 50 to 85 from $3,000 to $35,000. They offer three plans: Level, graded and modified death benefit.
- United Home Life – Policies from $5,000 to $100,000, depending on your age, but are available for ages 20 to 80.
- Aetna – Policies are available from $3,000 to $35,000, for those 45- to 89-years-old. Three plans are available: level, graded and modified benefit plan.
- Royal Neighbors of America – Offers both level and graded benefit plans. Level benefit plans: from $3,000 to $25,000, ages 50 to 85. Graded benefit plans: from $3,000 to $10,000, ages 50 to 88.
- Oxford – Level benefit policies only from $5,000 to $30,000, for those 50- to 85-years-old. There are some health questions you will need to answer, but if you can qualify, this is one of the best-priced companies.
- AIG – Guaranteed issue policies up to $25,000 for those 50- to 85-years-old.
- Gerber Life – Guaranteed issue policies are available from $5,000 to $25,000 for those 50- to 80-years-old. The policy also accumulates a cash value that can be borrowed against or used to pay premiums for a period of time.
- Liberty Bankers Life – Offers both level and graded benefit plans. Level benefit plans: from $3,000 to $30,000, ages 18 to 80. Graded benefit plans: from $1,000 to $20,000, ages 40 to 80.
- American-Amicable – Immediate death benefit (level benefit) max $25,000 to age 75, max $15,000 for ages 76- to 85-years-old. They also offer a graded benefit plan to be paid after the 3rd and subsequent years.
- Fidelity Life – Policies are available from $10,000 to $150,000, for those 50- to 85-years-old. Term and whole life are offered depending on your age. The graded benefit provides full coverage starting in year 4.
- Phoenix – Policies are available from $10,000 to $75,000, for those 60- to 80-years-old. Max $50,000 for ages 70- to 80-years-old, max $75,000 for ages 60- to 69-years-old.
- Baltimore Life – Policies have a graded death benefit, which means that they pay 25% coverage the first years, 50% coverage the second year, and 100% the third year.
Final Expense Insurance Sample Monthly Rates
Level Death Benefit
Level Death Benefit Male
Level Death Benefit Female
Graded Death Benefit
Graded Death Benefit Male
Graded Death Benefit Female
Modified Death Benefit
Modified Death Benefit Male
Modified Death Benefit Female