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Making final arrangements is something most people will eventually do for themselves or their loved ones, yet it's not an easy conversation to have. Making these arrangements means dealing with you or a loved one passing away, arranging a funeral, and managing the person's final expenses.
Funeral expenses can be costly. The National Funeral Directors Association reports that the 2021 national funeral cost with a viewing and burial is around $7,800, while the average cremation cost is over $6,900. Still, memorial, funeral, and burial costs can be higher depending on how a decedent wishes to be celebrated upon their passing.
Death can be unexpected, putting a financial burden on the deceased's surviving family. However, purchasing final expense insurance could offer financial relief and alleviate the stress often accompanying funeral planning.
If you want to ensure your loved ones won't have to concern themselves about how to financially support your final wishes, final expense insurance may be an excellent option. Learn more about this type of insurance with our guide below.
A final expense insurance plan is a type of modified whole life insurance policy. This plan specifically aims to cover a person's final expenses.
Getting a final expense policy is the most accessible form of life insurance. Since it only brings some monetary relief to the surviving family when making funeral, cremation, or memorial arrangements, a final expense insurance policy will only provide a modest death benefit. It likely won't supply a large windfall to cover the decedent's entire estate needs.
You can purchase final expense insurance in advance to cover almost anything relating to your end-of-life expenses, including:
In some cases, the money could also contribute to residential or nursing care facilities, medical bills, or family savings. Though the money is specifically for your final expenses, your beneficiaries can use the funds to settle other liabilities like outstanding credit card debt if enough money remains after taking care of your final arrangements.
The death benefit payout can be as low as $2,000 or as high as $50,000. However, the typical range is usually between $20,000 and $30,000.
After purchasing your insurance policy, you will pay a set monthly premium with a guaranteed payout upon your passing. The policy won't expire, nor will your insurer cancel your plan should you become unwell or age as long as you pay the premium.
Final expense insurance is easier to get than other life insurance policies because the criteria are more relaxed regarding end-of-life expenses. That doesn't mean everyone is eligible. The insurance provider you purchase a plan from will likely have age and health restrictions like no applicants over 85 or those with terminal illnesses.
You can have peace of mind knowing your family won't have to struggle to pay for your funeral when you have an insurance policy that covers your final expenses. In addition to that benefit, you can add others to your policy for added protection and coverage.
For example, final expense insurance is a permanent policy, which means it can have a cash value. The longer you pay for your policy, the more cash value it will accrue. You could borrow from your policy's accumulated cash value by taking a loan or withdrawing funds to use as needed before you pass away.
Many insurers also offer insurance riders for their policies. An insurance rider is a provision that increases the coverage of a life insurance policy in specific ways. Depending on what's available through your selected insurance provider, you could add a long-term care rider or a waiver of premium rider.
Policies for final expense insurance typically fall under two categories: simplified issue and guaranteed issue.
Simplified issue life insurance is a great option for someone who can't qualify for standard life insurance but has a moderate risk of passing away early. If you go for this type of final expense insurance, you won't need a medical exam. However, some aggressive cancers and terminal illnesses may make you ineligible.
Many insurers offer up to $35,000 in coverage. As such, it's one of the bigger payouts for final expense insurance.
With a guaranteed issue life insurance plan, anyone can receive coverage as long as they don't have a terminal illness. Coverage usually comes with higher premiums with lower coverage limits, but insurers will accept most applicants. This option is good for high-risk people who need financial assurance for their final expenses but don't qualify for simplified issue life insurance.
Many people know about life insurance as a whole and not final expense life insurance. So what's the difference?
The only real difference between these types of insurance is price. A final expense insurance policy is a small life insurance plan that doesn't have as many stringent requirements for applicants. Since they have smaller benefits, they're more affordable to the public.
End-of-life financial planning covers many facets. You would have to consider everything from your final medical bills to whether you want to have a traditional funeral or a memorial that celebrates your life. If you choose the traditional route, you'll need to pay for a casket, burial plot, funeral, viewing, and other related expenses.
Unfortunately, some people don't have enough funds to cover their final expenses when they pass away. With a final expense insurance policy, you can safeguard your loved ones and minimize their financial stress when you pass away. The policy will be active regardless of whether you're healthy or become ill.
The insurer won't deny you a final expense policy even if you aren't eligible for different term life, whole life, or universal life insurance. You won't need to submit documentation for a medical exam.
You and your loved ones can take solace in the fact that they can honor your life appropriately when the time comes. Your beneficiaries can use your death benefit as needed, or you can borrow from your plan's cash benefit. Withdrawing money from the policy's cash value will decrease your death benefit, but the money is at your disposal as long as you pay your premiums.
Purchasing a final expense life insurance policy is a cost-effective way to prepare for your final expenses. Premium amounts depend on the insurance provider. The average range is between $30 and $75 monthly, so it's reasonable to expect a premium payment under $100.
Factors that may influence how much your final expense plan costs are:
Final expense insurance comes with plenty of benefits, making it a worthwhile choice for anyone seeking help paying for their final expenses. Benefits include:
This insurance isn't without its drawbacks. You might find that the death benefits these plans offer are too small for your needs. You could also end up paying more in premiums due to lower lifetime coverage.
If you're considering using a final expense life insurance policy to cover your final expenses, follow these steps to get the best rate for your needs:
Taking care of anyone's final expenses without help can be a major financial burden. Thankfully, final expense insurance can provide comfort and stability during an emotional time. The service can help cover many end-of-life costs without expensive premiums. When you're ready to start exploring insurance companies offering coverage for posthumous expenses, turn to Insurdinary. As a respected insurance broker, we can quickly generate multiple quotes from some of the top life insurers in the country to ensure you get the best rates without the hassle. Contact our team today or complete our online quote form to begin.