Final Expense Insurance 101: Here Is Everything You Need To Know

Final Expense Insurance 101: Here Is Everything You Need To Know
final expense insurance

No one likes to talk about death. Yet, we all know that no one can live forever.  Have you ever asked yourself what will happen the moment you are gone? How will your loved ones pay for your funeral expenses? How will your debts be covered?  How will your final journey look like?

These are hard questions that you need to answer before it is too late. Fortunately, purchasing final expense insurance can provide your family with much-needed relief when they are faced with the difficult moment and they have to deal with it.

With a final expense insurance policy, your loved ones won’t worry about covering your funeral expenses since the policy does that. Instead, they will have time to focus on accepting your death, grieving, and finally healing.

In this post, we discuss the basics of final expense insurance, death insurance tax, and everything you need to know about the policy. So, let us get started.

What Is Final Expense Insurance?


Final expense insurance is a unique type of permanent life insurance policy designed to cover the cost of your funeral and other end-of-life expenses such as housing costs, legal fees, or any other unpaid bills. It is also known as funeral insurance or burial insurance.

Unlike traditional life insurance policies that may expire, a final expense insurance policy remains active for as long as you pay the monthly premiums. If you purchase this policy and you pay your monthly premiums diligently, the policy will be in effect until the day you die, and your designated beneficiary will receive the full death benefit that doesn’t attract death insurance tax.

death insurance tax

Final expense insurance is different from term life insurance

Also, final expense insurance doesn’t require one to undergo a vigorous medical exam before an insurance provider accepts to insure him/her. In most cases, you will be insured after answering only a few simple questions.

Types of Final Expense Insurance


There are two main types of final expense insurance, namely: simplified issue insurance and guaranteed issue insurance.

Simplified issue insurance is designed for people who may not qualify for a fully underwritten life insurance policy, but insurance companies consider them as a moderate risk. Typically, you don’t need to undergo a medical exam to be insured, but the provider may request you to answer a few medical questions.

On the other hand, guaranteed issue insurance will be issued without being subjected to any medical questions. If you are asked any questions, they will only be a few knockout queries to ensure you don’t have a terminal illness.  However, guaranteed issue final expense policies are usually restricted to a much narrower range of ages and are often capped at $25,000 of coverage.

What Is the Cost of Final Expense Insurance?


The exact cost of a final expense insurance policy varies greatly depending on a wide range of factors, such as age and health.

For instance, the older you are, the higher your monthly premiums will be. This is because insurance providers take on a greater risk to insure older individuals, given that they are statistically closer to death compared to younger people.

Age plays a critical role in determining the cost of final expense insurance

If you decide to buy a final expense insurance policy at the age of 45, you may end up paying significantly less amount of money in monthly premiums compared to someone who waits until they are 70 to purchase the same policy.

Do I Need a Final Expense Insurance Policy?


The answer to this question may vary from one individual to another. Typically, if you have a whole life insurance policy, you may not need final expense insurance because your life insurance policy will help your loved ones pay for your final expenses.

However, if you only have a term life insurance policy, you should consider purchasing a final expense policy because your term life insurance policy isn’t permanent. Keep in mind that a term policy will terminate at some point in your life, leaving you uncovered.

Before you dismiss the idea of buying a life insurance policy, ask yourself if your family can afford the cost of your burial expenses without straining. On average, your family will require between $7,000 and $12,000 to cater to your funeral expenses.  Things might get worse if you leave behind other wishes, such as a catered party or a trip abroad to scatter your ashes in a specific location.

Now, if they cannot raise such amounts of money to give you a decent sendoff, make sure you purchase final expense insurance to relieve them of the financial stress that may accompany your demise.

Insurance Master Is Here to Help You!


Are you looking to purchase final expense insurance but don’t know where to start?  Our experienced and licensed insurance agents are here to help you. Contact us today and let us take care of all of your insurance needs.

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