Final Expense Insurance

After a loved one passes away, close family members rarely have much time to grieve properly. Adult children of the deceased, or other family members, usually need to ensure that burial and funeral arrangements get properly made and guests get notified. Also, some people may need to travel, take time away from their jobs, or arrange to house and feed out-of-town guests.

Shortly after the funeral, whoever is named responsible for handling the estate, even a small estate, may need to settle debts, clean out a home, or handle dozens of other matters that crop up after a death. The reality is that this period of mourning usually consumes a lot of time, and often, it requires a lot of money.

The Need For Final Expense Insurance

All these expenses, from the funeral to making sure affairs are put in order properly, are called final expenses. The reality is that many middle-class families are quite unprepared for even the burial costs, much less all the other expenses. Elderly people often live on very tight budgets after retirement, and they cannot always be expected to have several thousand dollars saved for their funeral and related costs.

When the possibility of losing time from work, needing to travel or house guests, and handle plenty of other details gets added to the mix, it can cause a severe financial and emotional strain. The solution to this for many families is a product called final expense insurance.

Consider some facts about average American Funerals:

• The cost of an average US funeral in 2020: Over $9,000
• The cost of an average US cremation in 2020:  Over $3500
• Percentage increase in funeral costs from 2000 to 2020: 161 percent

There is no way to predict the cost of average US funerals in five or ten years, but it is reasonable to assume that it will increase. Meanwhile, final expense insurance has been specifically designed as an affordable and simple way for families to plan for all final expenses and not just the funeral and burial.

How Does Final Expense Insurance Work?

These final expense plans, sometimes called burial policies, are low face amount simple whole life policies from top life insurance companies. This is good for consumers because the insurance industry is very strictly regulated, so people can be sure they will get what they are promised.

These are how typical final expense insurance plans work:

• Cash benefits: These plans quickly pay cash to the beneficiaries after the death of the insured person.
• Amount of benefit: Typical policies offer from $5,000 to $50,000 in death benefits, so they can be customized for a family’s needs.
• Qualifying: The plans are usually open to applicants from about 50 years old to over 80 years old.
• Health questions: Some ask a few health questions, but some ask none and accept all qualified applicants.

The Cost of Final Expense Insurance

Of course, you probably want to know how much these plans cost. Insurance companies know that people who need help with final expense planning lack huge budgets, and that is why they need help in the first place. Typical premiums are affordable for many middle-class families. In some cases, the elderly person to be covered will pay for the plan, but very often, one of his or her adult children will offer to step in and make monthly payments.

Final Expense insurance is a “whole life” policy, not term insurance.  The coverage will continue, as long as premiums are paid, for the life of the insured.  Premiums are fixed when the policy is purchased and will not increase as the insured ages, even if health deteriorates.  Coverage is also fixed and will not decrease.

Consider a final expense quote for a resident of Florida who does not smoke or have other significant health problems. These were obtained on 1/12/2021.

                                                Female Age 70                    Male Age 70

• $5,000 in cash benefits:        $ 28.07                           $ 36.47
• $10,000 in cash benefits:      $ 53.12                           $ 69.93
• $20,000 in cash benefits:     $103.23                           $136.84

Please note: These are just sample quotes, and rates will vary because of the applicant’s age, sex, use of tobacco, location, and health conditions.  Also, rates will vary from each carrier.

This is where you need a knowledgeable insurance agent that specializes is final expense insurance. He or she can help you select the carrier that will offer the best coverage and rates for the specific needs of the proposed insured, based on residence state, health conditions, medications and any other specific considerations. 

Most families would say that making affordable monthly payments like these would be much easier than trying to come up with several thousands of dollars after one of their family members passes away.

How To Buy Final Expense Insurance for Yourself or an Elderly Loved One

The first step is select your insurance agent, making sure that he/she specializes in Final Expense Insurance and is licensed to sell in your state of residence.  An independent agent is free to shop for coverage for you, based on your individual health conditions, from the best Insurance Companies who issue final expense Insurance policies.

By contrast, a “captive agent” works for one insurance company and can only offer you policies offered by that company or their affiliates.

Some insurers also offer guaranteed acceptance plans for middle aged to elderly people who suffer from serious health problems.  These plans have higher premiums and have a waiting period before paying benefits, usually 24 months.  If the insured dies, during the waiting period, all premiums which have been collected are paid to the beneficiary with interest.  If your agent determines that a Guaranteed Issue policy is the best way for you to qualify, he/she will shop for the most competitive rates for you.

Either way, it does not pay to wait. Premiums only increase as people get older. Remember that these policies pay a cash benefit, and the beneficiary is free to use this money in any way he or she needs to. That means, part of the proceeds could be used to pay for a funeral, but any money that is left over can be spent or saved. Learn more about final expense insurance. After that, you are free to simply relax and enjoy the time you have left with your loved ones.