What is Final Expense Insurance? 

Final expense insurance is a form of life insurance policy designed to cover your final expenses, such as funeral, burial, and remaining debts.

Final expense policies are guaranteed issue permanent coverage, meaning that they are issued to people regardless of their health, and without a medical exam or health questions.

These policies usually offer death benefits of up to $50,000. Most policies are issued through age 75, with some companies like Mutual of Omaha offering final expense insurance to people age 85.

Burial Insurance vs. Final Expense Insurance – Know the Difference

It is important to know the main differences between burial insurance and final expense insurance:

• Burial insurance covers strictly burial costs
• Some plans are not paid out to beneficiaries, but directly to funeral homes (called burial or funeral plans)
• Final expense insurance is paid to a beneficiary, who then decides how to use it

Final expense insurance can be used to pay for a remaining credit card bill, the cost of a funeral, flights for family members to a funeral, and burial fees where, by comparison, burial insurance can only be applied to the burial fees and cost of the funeral.

Funeral Insurance & Funeral Plans

Final expense insurance is an insurance policy issued by a life insurance company. When the policyholder passes, the beneficiary receives the payout to be applied as they see fit.

Funeral insurance, otherwise known as funeral plans, are plans set up ahead of time but through a funeral home and not an insurance company.

These plans only include pay for funeral expenses such as:  

• Cremation
• Ceremony
• Plot
• Headstone
• Flowers
• Transportation
• Funeral
• Etc…

Each state has their own set of funeral and burial insurance laws, which can make matters confusing for consumers, and plans often fluctuate in value. However, there is something to be said about having everything all said and done when it comes to funeral planning, which is never financially or emotionally easy on a family trying to process the loss of a loved one.

In certain situations, yes. Final expense insurance is best for those who are older, typically people with fewer options often the result of poor health.

For Example: Older folks whose term policies have expired, or those who never took out a policy to begin with might go shopping for a new policy only to find that their health and age increase life insurance rates and decrease their options. In some cases, people can be denied coverage for traditional term or whole life insurance policies because of health, age, or a combination.

In these cases, final expense insurance is a great backup plan, an option for providing small amounts of coverage for loved ones to handle any last minute expenses and funeral plans. This is effectively an option that gives your loved ones enough to cover the funeral and maybe some remaining bills, but not a form of income replacement thereafter like other life insurance plans.

For people who are younger and in good health, final expense insurance is probably not worth it. Age is the #1 most important factor affecting life insurance rates. Even for young people with pre-existing health conditions can usually find affordable coverage through a no exam or term life policy. This offers more coverage than final expense and is cheaper, with more additional policy riders.

Today the average cost of a funeral including cremation in the United States is $6,000-$8,000 including burial, the average cost is $10,000-$12,000. 

Some funeral homes require the vault or grave box in order to prevent the ground from bucklet over the casket. It is important to take into consideration this cost when calculating your funeral costs.

Beyond these immediate expenses, you also have to take into consideration other final expenses like existing debts. This includes:

• Tax debts
• Car debts
• Mortgage loans
• Student debt

If you do not have insurance to handle your remaining debt when you pass, your loved ones might be legally required to shoulder that financial burden. It is important to work with an independent life insurance agent who can help you compare the best final expense insurance plans, determine how much coverage you need, find the right policy, get the best rate, and more.

When you are ready to buy your final expense policy, you not only need the help of an independent agent, but you need to know what key things to look for when comparing options. The price, the policies themselves, contract terms, and premiums are very important and should not be overlooked. Review each of them carefully before you sign on the dotted line.

1. Price 

In terms of price, you want to compare many options. Why? Because each company varies not just in terms of the price for the premiums, but the amount of coverage given in exchange. Take it upon yourself to review prices carefully before you make your decision.

2. Policy Options 

Not all policies are the same. While two policies might claim to offer the same amount of coverage in tandem with the same price, one might have better riders and additional coverage where the other does not. These riders serve as extras or features you can add to a policy and your situation could dictate the need for one of these.

3. Contract Terms 

Take care to read your contract fully. Sometimes the coverage you receive is not available for a set period of time, such as two years. The last thing you want is to purchase final expense insurance only to have it not pay out to your family when they need it most.

Moreover, you also want to check to which situations the terms apply; there are situations where final expense coverage will not apply and in those cases, in which case your family members also will not receive the death benefit. Working with an agent really helps to avoid these inconvenient surprises.

4. Fixed Premiums 

Look for fixed premiums. This means that the premiums remain the same for the duration of the policy. Fixed premiums allow for easy financial planning in terms of payments. If you do not have fixed premiums, your costs can rise exponentially near the end of the term, making your insurance nearly impossible to pay for with your income – voiding coverage.

The approval time is contingent upon the type of policy you get and the company you choose. If, for example, you are taking out a final expense policy with no medical exam required, the approval can be completed in a matter of days. In other cases, with limited medical requirements, it can take only a matter of weeks.