What Is Final Expense Insurance?

Final expense insurance helps your loved ones pay for costs after you die, like funeral or hospice bills. This insurance, also called burial insurance, is often cheaper and easier to get than other life insurance. But it usually pays out a maximum of about $50,000, less than traditional life insurance.

How Final Expense Insurance Works

Final expense insurance is a type of 澳洲幸运5官方开奖结果体彩网:whole life insurance. This means you’re covered until you die, as long as you keep paying your premiums. When you die, your 澳洲幸运5官方开奖结果体彩网:beneficiaries will receive a death benefit paid to them unde🍌r the ter𝓡ms of your policy.

Although designed to cover the expensive and often unexpected costs of your funeral and burial, the payout from a final expense insurance policy can be used by your beneficiaries for anything they want.

While final expense insurance works like a whole or 澳洲幸运5官方开奖结果体彩网:permanent life insurance policy, it differs in♏ several crucial ways. 

Final Expense Life Insurance Can Be Affordable

Final expense insurance’s death benefit, usually reaching no more than $50,00, is significantly lower than what’s available from a traditional whole life insurance policy, where payouts can exceed $1 million.

However, final expense insurance’s trade-off comes from its comparably lower premiums, ranging from $40 to $60 per month for a $10,000 policy for a 60-year-old woman in good health. Traditional whole life insurance, on the other hand, can cost hundreds of dollars per month, especially if you take out the policy when you’re older or less healthy.

Since funerals can cost as much as $10,000, if you don’t already have life insurance, a final expense insurance policy can offer just enough coverage to protect your loved ones from a painful financial burden. 

Fina♎l Expense Insurance May Be Easier to♔ Qualify For

With many types of individual life insurance, you’ll need to undergo a 澳洲幸运5官方开奖结果体彩网:medical exam during the under༒writing process. The life insurance medical exam affects your premium—healthier people could pay less for the same amount of coverage ൩as someone with a riskier health profile—and could even result in the insurer denying coverage.

Final expense insurance uses simplified issue underwriting, under which most applicants will be approved for coverage without needing to take a medical exam. That makes it especially important for seniors, who, because they’re older or possibly less healthy, may not be able to get other forms of life insurance.

꧟Final Expense Insurance Can Sometimes Be Redeemed for Cash

Like other types of whole life insurance policies, final expense insurance may build a cash value over time. You can withdraw the 澳洲幸运5官方开奖结果体彩网:cash value or borrow money against it, although doing so will reduce your policy’s deat🍌h benefit.

Also, it’s possible to outlive your final expense insurance and get the money yourself, in the form of its entire cash value. The rules differ for each insurance company, but whole life insurance can end if you live past a certain age, like 95, 100, or 121, depending on your policy. This is known as maturing.

Who Needs Final Expense Insurance?

For many, final expense insurance won’t replace a regular life insurance policy. It usually only pays out enough to cover end-of-life costs, not replace your income like a ꦬtraditional life insurance policy. But there are several reasons why you might need final expense insurance.

You Need Life Insuranไce Coverage But Can’t Afford a Traditional Whole Life Policy

If you take out a life insurance policy when you’re young and healthy, you’ll save a lot of money on your premiums. At age 40, a 10-year term life insurance policy with coverage of $250,000 will cost you around $18 a month, as long as you’re a nonsmoker. Granted, that policy will expire at the end of it꧟s term, but at that point, with your kids grown up and your mortgage (hope💎fully) paid off, you might not miss it.

But if you still need life insurance at that time, traditional whole life insurance might be out of your price range. At age 50, a whole life insurance policy could cost as much as $543 per month for a 澳洲幸运5官方开奖结果体彩网:coverage amount of $250,000. You migh๊t decide you don’t need that much coverꩲage, so final expense insurance could offer just the right amount.

You’re a Senior or Have Pre-Ex🎉isting Health C𓂃onditions

For seniors or people with chronic health conditions, a standard life insurance policy may be impossible to qualify for. And if you do qualify, your premiums could make the coverage too expensive to be worth it. Because final expense insu꧑rance typically doesn🐼’t require a medical exam, and its premiums are relatively low, it may be a cost-effective option for people who might otherwise be declined or priced out of coverage.

You Don’t❀ Have Enough Savings to Pay for a Funeraꦫl

Funerals and related costs can be very expensive, averaging close to $10,000. Final expense insurance can prevent your family from paying these costs out of their own pockets. And it allows ꦚyou to plan for your funeral and related expenses, reducing the burden on your loved oඣnes. Final expense insurance can be more accessible to people with limited budgets, with lower coverage amounts and lower costs. 

Pros & Cons of Final Expense Insurance

Pros

• Final expense insurance can be easier to qualify for than traditional life insurance, often with no medical exam required, meaning that seniors and less-healthy individuals can still get coverage.
• Premiums for a final expense insurance policy are more affordable than other types of life insurance, especially for older adults.
• Final expense insurance builds cash value over time, which you can borrow from or withdraw.
• The final expense insurance 澳洲幸运5官方开奖结果体彩网:death benefi🅰t is not usuall꧒y taxable to your beneficiaries, unless you’ve earned interest on cash value distributions.

Cons

• Final expense insurance is affordable because its coverage amounts are limited, usually topping out at $40,000.
• Premiums for final expense insurance can be relatively high compared to the death benefit, as even an extra $60 per month may be expensive to someone living on a fixed income or with costly medical bills.
• Some final expense insurance policies have waiting periods and may not pay out until after the 澳洲幸运5官方开奖结果体彩网:waiting period has ended.

The Bottom Line

Final expense insurance is designed to do one thing: make sure your loved ones aren’t left footing the bill for your funeral, burial, or other end-of-life expenses. While it won’t replace the protection offered by traditional life insurance policies, it can be a solid, affordable option for people who need just enough coverage to avoid passing on a financial burden. It’s also easier💦 to qualify for than other life insurance options, especially for older adults or those with health issues. If you don’t have enough savings to cover final expenses or have been priced out of other policies, final expense insurance may be worth considering.