WHAT IS FINAL EXPENSE INSURANCE?
The reason people purchase Final Expense for a death benefit, period. Everything else is secondary.
Final expense is WHOLE (PERMANENT) LIFE insurance for people over the age of 50, although a few companies have policies for ages 45+ (i.e. Mutual of Omaha). Final expense whole life policies are also LOWER FACE VALUE (LOWER BENEFITS) designed to cover end-of-life expenses. Because these policies have lower benefits, final expense policies are designed to be affordable for any and all budgets. SUMMARY: Affordable and low cost final expense policies are available for EVERYONE!
HOW DOES FINAL EXPENSE INSURANCE WORK?
Like most life insurance policies, beneficiaries will receive a death benefit when someone passes. For a final expense insurance policy, the benefit amounts are generally lower and are designed to cover the funeral and burial expenses.
A person, however, might have outstanding debt or anticipate they will leave medical bills behind. In this case, they should plan for coverage amounts to pay off these debts. This should not be confused with long term care, i.e. while someone is still alive.
Coverage amounts range from $2,000-$5,000 (depending on carrier) up to $35,000-$100,00 (depending on carrier), although the higher the benefit payout the higher the premium. Upon passing, either accidental death, terminal illness or natural causes the beneficiary will receive the benefit, so that they can pay off of those remaining obligations. In most cases, beneficiaries are family members.
ESTIMATING HOW MUCH COVERAGE YOU NEED?
The average cremation is between $3,000-$5,000 while the media funeral costs between $8,000 and $10,000. Social Security offers a benefit, but right now that amount is only $255.
Funeral planning with burial insurance requires that you and your family careful consider all your final expenses, not just the funeral or cremation. Consider how you want to be remembered, where your final resting place should be, whether you wish to be buried or cremated and what type of casket or urn you prefer.
It is recommended that you have a conversation with a locally a licensed, funeral director about the cost of the services you require. A funeral director should be able to provide a list or schedule of costs. The value of your senior life insurance policy should cover the expense of the package you choose, plus any additional costs.
The most basic, economical option is generally an immediate burial plan. An immediate plan is a modest service at the graveside and a simple casket. The expense of a viewing is not included in most immediate burial policies. The costs of the plot, a headstone and flowers must be paid for separately and should be included in the estimate you give your insurance provider. An immediate plan may be purchased with either burial or cremation.
A traditional full-service option, including a viewing, a hearse, a formal ceremony and entombment, and cremation is more costly than an immediate or direct package and should be considered when evaluating burial insurance.
When you consider the costs of a package, you must take every extra expense into account in order for an accurate estimate of your financial needs. Your final expense insurance benefits can include the costs of preparatory tasks like washing, dressing, and embalming. A procession, limousines, flowers and a wake can also be included.
Although most mortuaries offer packages with a pre-determined set of services and products, you have the alternative to choose only the options that you want. The overall expense of the ceremony, casket, entombment, plot and other options will represent the value of your funeral insurance policy. When you’re buying life insurance, it’s important to have a fairly accurate estimate of the total coverage you need to avoid leaving your loved ones with these financial responsibilities.
HOW MUCH IS FINAL EXPENSE LIFE INSURANCE?
The specific insurance rates will depend on your age, gender, health, smoking state and even such factors as driving record. Here is a handy link for general final expense rates for healthy people.
Securing final expense insurance is very simple. Many companies and carriers will accept an application over the phone or even online. You can apply for a simplified issue plan, which requires that you complete a basic medical questionnaire and meet specific qualifications.
There are also guaranteed issued policies, which requires no health questions (and no health exam) and guarantees acceptance of your application. If you have a serious health condition, you may be required to purchase a policy with a graded death benefit, which provides life insurance coverage after the first few years of your participation.
NOTE: IT IS VERY EASY TO BE CONFUSED OR EVEN MISLED INTO PURCHASING A GUARANTEED ISSUE POLICY WHEN YOU ARE ELIGIBLE FOR SIMPLIFIED, GRADED OR EVEN MODIFIED. YOU WILL PAY MORE FOR GUARANTEED AND YOUR FAMILY WILL RECEIVE LESS BENEFIT.
WHAT IS THE BEST AND CHEAPEST FINAL EXPENSE INSURANCE RATES / COMPANIES?
There are five independent agencies that rate the financial strength of insurance companies based on letter grades of A-D. The better the grade the stronger financially the insurance company is. The factors usually take into consideration the creditworthiness and how that specific insurance company performs financially compared to other insurance companies. Most people look for companies that have “A” ratings. But not all “A” ratings are the same.
Some of the independent agencies have a different degree of “A” ratings adding an “A+” for their highest rating. On top of the grading, there are other factors you might want to consider like customer service, insurance costs and even some research into average length of time a company takes to pay it's claim (try a Google search, something like "how long does it take Colonial Penn to pay a life insurance claim.").
HOW TO SELECT THE RIGHT LIFE INSURANCE PLAN?
Final expense insurance or burial insurance are interchangeable terms used to describe permanent life insurance for seniors, in that a policy may be issued on a term or whole life basis.
Term life insurance policies provide financial protection for a set period of time, often up to the age of 80. At that time, if no claim has been filed and the policyholder is still alive, the policy will expire.
Whole life policies cover you for your entire life once you’ve signed your contract, no matter when your death occurs. Age limits for purchasing a final expense policy may vary. Some insurers sell policies to qualified applicants up until the age of 75.
Although a standard term or whole life policy can cover your last expenses, traditional coverage is not the answer for everyone. If you do not qualify for a standard funeral policy because of a pre-existing medical condition, or if you have other means of providing for your loved ones after your death, final expense insurance may give you just as much protection as you need.
Before you sign a contract, compare life insurance quotes from several trusted, reliable providers. Our convenient online resources make it easy to compare final expense insurance quotes in the confidential setting of your home. However, if you need the help of an insurance agent please feel free to contact us so we can help.