Do You Need Final Expense Funeral Insurance?

End-of-life planning can involve plenty of complexities, not to mention emotions. From financial support for your family to choosing a final resting place, it’s a challenging task. Final expense funeral insurance is a product to consider when making these critical decisions. Let’s explore this option to see if it’s the right solution for you. 

Final Expense Funeral Insurance Fundamentals 

After death, your loved ones could face plenty of financial hardships, such as medical bills, remaining debt, burial costs, and funeral expenses. What’s more, over 70% of Americans leave an average of $60,000 worth of debt after passing away. The remaining debt can create incredibly sticky situations with creditors. Your loved ones might be forced to deal with mortgages, car loans, student loans, or credit cards. 

Aside from the hassle of medical bills and debt, funeral costs have been rising steadily for many years. A funeral in the United States, including cremation, averages $6,000 to $8,000. If you opt for a burial, the price skyrockets to over $10,000. The financial challenge for loved ones could cause extreme stress — but final expense funeral insurance offers solutions.

Final expense insurance is permanent insurance coverage, offering death benefits up to $50,000. Most of the time, however, policies stay below $25,000. Initially, this policy was meant strictly to cover end-of-life expenses, including a funeral, burial, cremation, casket or urn. However, this coverage now has a two-fold mission: to provide capital to cover your desired funeral expenses and to pay off any remaining debt.

Life Insurance vs. Final Expense Insurance: Is It the Same?

Traditional life insurance comes in various forms, such as term life, whole life, and universal life. Term life insurance is known as “pure” life insurance as it provides only the death benefit. Whole life insurance offers investment opportunities and accumulates a cash value. Policyholders can borrow against the policy but must pay it back within a specified time frame. 

Although life insurance and final expense insurance provides many of the same benefits, they’re different products. For starters, many life insurance carriers require medical exams to qualify for coverage, whereas final expense insurance carriers typically don’t, meaning a quicker approval period for final expense applicants. However, a health questionnaire and prescription checks are typical for both types.

Furthermore, payouts are often smaller with final expense insurance than traditional policies, mostly because individuals tend to use final expense insurance for more specific reasons. 

Who Needs Final Expense Funeral Insurance? 

Life insurance is a good choice for anyone with financial responsibilities; however, final expense funeral insurance is designed specifically for those who don’t want to burden loved ones with the high cost of their final arrangements. This product is also suited for individuals who were turned down for traditional life insurance policies for one reason or another.  

Final expense insurance is also ideal for those dealing with severe health conditions, such as HIV, cancer, Parkinson’s disease, or another terminal illness. Many people who opt for this coverage live in a nursing home, assisted living facility, or a hospice care center. They are individuals who need to cover end-of-life expenses, such as funeral costs or medical bills. 

Those with the following characteristics are prime candidates for final expense insurance instead of traditional life insurance coverage:

• 45 to 85 years old
• Looking for a low-cost solution
• Want to avoid traditional life insurance underwriting
• Not concerned about using life insurance to leave an inheritance
• Want to take control of your own final arrangements and plan the details of your legacy
• Want to cover final arrangements so loved ones are not burdened with the steep costs
• Want to provide funding to pay off any small remaining debts like medical bills or credit card balances

How Much Does It Cost? 

Although term life insurance is typically the least expensive option, many older individuals’ policies have expired. Plus, the application for term coverage can be more stringent, involving medical exams and bloodwork. In many cases, final expense insurance is the best option, especially for older individuals. 

Still, it’s nearly impossible to provide exact figures for each case in a blog post. Talking with a licensed agent is an excellent way to get an accurate quote. That said, age is the primary factor determining premium cost. 

Many people turn to final expense insurance as a backup plan to ensure small amounts of coverage for loved ones to use toward last expenses and end-of-life plans. More than a form of income replacement, it provides enough to cover a funeral and perhaps some remaining bills. Naturally, this aspect makes it slightly more affordable because of the smaller payout. 

It’s easier to qualify for final expense funeral insurance than traditional insurance, so it’s a viable option if you’ve experienced some medical challenges. After all, a health questionnaire and a prescription check will be the extent of the application process. 

How to Get the Most Out of Final Expense Funeral Insurance

Final expense insurance was designed for beneficiaries to use the payout for end-of-life expenses and remaining debt or bills. However, it’s not set in stone or dictated how beneficiaries use an insurance payout. Therefore, they can use it however they please. 

Choosing a trusted beneficiary is your first step to ensuring proper payout usage. Perhaps a family member or faithful friend is a perfect choice. No matter, try to find someone who your passing will financially impact. They’ll most likely use the money to cover actual expenses. 

Another option is to name the funeral home as your beneficiary. This option isn’t always possible, but it’s worth looking into if you question your other beneficiary choices. Lastly, write out your final wishes, so there’s no question about what you want. You can select your funeral home, your burial plot, your casket or urn, and even specify the location of your service and the music and verses you’d like at your service. Be sure to give your written wishes to your loved ones, the beneficiary, and your financial advisor for safekeeping. 

Need advice about final expense funeral insurance? Please contact us today, call (833) 414-5520 to speak to a licensed agent, or get a free quote.