Final Expense
Final expense insurance, also commonly called funeral or burial insurance, is a type of whole life insurance that can provide coverage for final expenses, such as funerals, memorial services, medical debts, and more.
How Does Final Expense Work?
If for some reason you are unable to obtain a traditional life insurance policy, it is very likely that you will be able to obtain a final expense policy, as these policies are available to those who are older or are in poor health and may be considered high risk for other insurance policies.
Applying for a final expense policy is pretty straightforward, too. While traditional life insurance policies may require a medical exam, medical questions, and a longer process, a final expense policy may only ask you to answer a simple questionnaire and provide your history of prescription drugs. Most people are approved even if they have pre-existing medical conditions.
The death benefit of final expense policies may also be less than other traditional policies, but it can range from $2,000 to $50,000. Your beneficiaries are guaranteed these death benefits as long as you continue to pay the premiums (which never increase). Paying your premiums will keep your policy active, and once you die, the death benefit will be distributed to your beneficiaries.
Although your loved ones can use this death benefit to cover funeral expenses, medical debts, and other related costs, it can also be used for other things, such as taxes or credit card debt.
Who Is Final Expense For?
Overall, final expense insurance is targeted towards those who are not able to get a traditional life insurance policy.
Having this type of policy in place is great because even though it provides a smaller death benefit to your beneficiaries compared to other life insurance policies, it still provides some financial relief during a time of grief.
As mentioned before, the death benefit can be used to pay towards your funeral expenses or any medical bills that were accrued. With a final expense policy in place, you can ensure that your loved ones won’t be paying these costs out-of-pocket.
Are you saving money to pay for your funeral? Help your family by focusing on family, not finances.
Many Americans believe that Social Security will pay for their final expense needs. However, the government only pays a sum of $255 for those who qualify.
Don’t leave behind:
- Funeral expenses.
- Medical debt.
- Financial debt.
- Legal debts
Instead, leave behind:
- Good memories
- Inheritances
We specialize in life insurance and we can help you compare all of your options to help you find the best policy that meets your coverage and budget needs.
Final Expenses Can Be Expensive
Funeral cost estimates:
- Professional services, embalming, visitation, etc. – $7640.00
- Metal casket – $2,500.00
- Funeral vault – $1,500.00
Cemetery cost estimates:
- Cemetery plot – $400.00
- Monument – $500.00
- Opening and closing of the tomb (varies according to the cemetery) – $300.00
- Graveside service fee – $200.00
Range of Estimated Funeral Expenses $10,000 - $24,000
Other possible final expenses:
- May include immediate household expenses, auto loans, and loss of income
How Does Final Expense Compare To Term Life Insurance?
Term life insurance can be an affordable life insurance option for some. It provides a fixed death benefit for a premium payment, and provides coverage for a certain period, or term, of years.
Disadvantages of Term Life Insurance
- Premium payments for term life insurance increase after the initial guarantee period.
- Term life is designed to be temporary. If you do not pass within the given term of the policy, your beneficiaries will not get the death benefit and your policy will terminate.
- The policyholder does not have access to a cash value like they would with a permanent life insurance policy, like final expense.
Mortgage Protection?
Just bought a new home?
At Seeds Financial Planning, we understand that buying a new home can be both exciting and stressful. For many people, a mortgage is a great investment that they will make in their life. You have worked hard to create a home for yourself and your family. But if something happened to you, how long could your family pay the mortgage?
Your lender may offer you mortgage insurance, but it is important to understand what the difference is from life insurance.
Mortgage insurance:
- The lender is the beneficiary of the policy and decides the destination of the proceeds.
- Your coverage decreases as you pay off your mortgage.
- If you sell your home and buy a new one, you must reapply for coverage, which means your rates could go up or there is a chance that you won’t be approved for certain medical conditions.
Term life insurance:
- You determine who benefits from your life insurance, that is, you can choose the beneficiary and not your lender.
- Your coverage remains the same and it doesn’t matter what your mortgage balance is.
- If you move, your insurance goes with you, it doesn’t change, and your rates don’t go up.
- You could qualify for living benefits if you suffer from a medical condition such as critical, chronic and terminal
Want To Learn More?
If you are interested in more information about providing financial security to your loved ones after your death, contact Seeds Financial Planning today.
We specialize in life insurance, mortgage protection, and retirement plans, and we can help you compare all of your options to help you find the best policy for your coverage and budget needs.
