It may not be a pleasant thought knowing you have to plan for the end of your life, but it is a critical part of securing your family’s financial future. As you get older and begin this foreign phase of planning, you may be wondering about ways to cover funeral costs so as to relieve any burdens that would otherwise fall to your dependents and loved ones.
In this article we’ll cover the basics of final expense insurance, and then dive into strategies for finding the best final expense insurance for your needs.
What Is Final Expense Insurance?
Let’s start at square one: What is final expense insurance anyway?
This life insurance option is essentially a small whole life insurance policy that offers a death benefit in exchange for affordable monthly premiums. You can typically get anywhere from $2,000 to $50,000 in coverage, which gives you a wide range to cover funeral expenses, medical bills, or any other outstanding debts you have at the time of your death.
Here are a few helpful facts on final expense insurance:
- A medical exam is not required for approval.
- Coverage does not expire unless payments lapse.
- Beneficiaries may use all proceeds at their discretion.
Another term that you may have heard is guaranteed issue life insurance. This term alludes to the fact that it does not require a medical exam or medical history questionnaire; you’re essentially “guaranteed” to be approved.
Guaranteed issue life insurance is not to be confused with simplified issue life insurance, which offers more flexibility and larger payouts. However, it does require you to fill out a medical questionnaire, and then your premiums are determined based on any risk factors.
Who Needs Final Expense Insurance?
Final expense insurance is a very specific type of policy and it may not be right for everyone. However, it may be a good choice for you if:
- You haven’t paid for your final expenses up front. If you’ve already made your final arrangements and paid for them in advance, then final expense insurance may not benefit you, unless costs increase unexpectedly. However, for anyone who hasn’t paid all their funeral costs up front, final expense insurance is an excellent option.
- You don’t have a mortgage or other significant debt. Final expense insurance does not offer the high payouts that a term or whole life policy does, so it may not be able to pay off your debts in full. However, if you’re largely debt-free, this option could be a way to pay for your final arrangements.
- You are looking to supplement your current coverage. Say you already have a life insurance policy designed to pay off your mortgage and other debt, but now you’re thinking it may not be enough coverage. A final expense insurance policy can help supplement any gaps in coverage so you can rest assured.
Pros and Cons of Final Expense Insurance
Of course you may be wondering about the upsides and downsides of final expense insurance. Let’s weigh a few of the major pros and cons of this insurance option.
Pro: Coverage is more affordable than other types of life insurance policies.
Con: Death benefit payouts are lower amounts, typically not exceeding $50,000.
Pro: Final expense insurance doesn’t have term limits, so it never expires.
Con: If you lapse on payments you could lose your coverage and have to pay penalties to have it reinstated.
Pro: Premiums never increase, and the death benefit is not taxable.
Con: Some insurers may try to sell coverage options that their customers don’t really need.
Get More Guidance from Americo Senior Life
Looking for final expense insurance companies that can provide you the coverage you need? Americo Senior Life offers a range of coverage up to $30,000, with affordable premiums and no medical exams required. Apply online today, or contact one of our representatives to get started with life insurance that works for you and your family.