Who should buy final expense insurance?
We recommend getting final expense life insurance if:
- You’re a senior or retired. If you’re in your golden years and no longer eligible for traditional coverage, final expense insurance ensures that your funeral, burial, and other related expenses are taken care of without depleting your savings or retirement funds.
- You have limited savings. If you haven’t saved enough to cover end-of-life expenses, final expense insurance can provide a financial safety net for your family.
- You have serious health concerns. Even people with serious medical conditions are eligible for final expense insurance, making it a viable option for people with health conditions that prohibit them from getting traditional coverage.
You should opt for traditional life insurance if:
- You’re young and in good health. Younger, healthier individuals who qualify for traditional term or whole life insurance can get more extensive coverage at a more affordable price. Final expense insurance costs more for less coverage.
- You have significant savings or investments. If you have substantial savings, investments, or other financial assets set aside, you likely don’t need a separate final expense insurance policy. Your existing funds can cover these costs without the need for additional insurance.
- You need substantial coverage. Final expense insurance typically offers lower coverage amounts, up to $50,000. If you need a policy with a higher payout, traditional life insurance — which can go into the millions — is a better fit.
What is final expense insurance?
Although it’s marketed as a policy for final expenses, it's really just a permanent life insurance policy with a small death benefit. It’s called final expense insurance because it’s aimed at people who want just enough coverage to pay those expenses.
Final expense policies are usually either simplified or guaranteed issue policies, and most people who apply will be approved. Most policies have no medical exam, and many also have no medical questions. There are limits on the amount of coverage available.
How much does final expense insurance cost?
AIG advertises that its final expense policies start at about $21 monthly for $5,000 in coverage, while Colonial Penn promises coverage from $10 monthly. However, the actual rate you pay may be much higher, and the best way to find out is to compare quotes.
Final expense insurance premiums vary depending on your age, the company you choose and the death benefit amount. The younger you are when you buy the policy, the less it will cost. However, younger people in good health will likely get a better deal from a traditional life insurance policy with a medical exam rather than a no-medical exam final expense policy.
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Based on the information you provided, you need a combination of term and life insurance policies.
Pros and cons of final expense insurance
Is final expense insurance worth it? There are a lot of factors to consider before you buy a final expense insurance plan. Speaking with an expert before buying life insurance is always a good idea.
Pros:
- Simplicity. You can quickly buy a final expense insurance policy online or over the phone.
- Guaranteed acceptance. There is no medical exam for most policies.
- Available to older applicants. Most companies will sell policies up to age 80 or 85.
- Level premiums. Premiums don’t increase over time; as long as you pay them, coverage won’t expire.
Cons:
- Limited benefit period. There is usually a two-year period during which benefits under the policy are limited.
- Coverage limits. Final expense policies have smaller death benefits, so they aren’t a good fit for anyone needing a larger death benefit.
- You could overpay. Life insurance that doesn’t require a medical exam is more expensive because it’s a blind risk for the insurance company. If you’re healthy and young, you’ll likely get a better rate through the exam.
- It’s not the best investment. You might do better to put the money into another type of investment and have more than enough for final expenses by the time you die.
If you want to ensure your funeral expenses are covered and don't have a better way of putting money aside, final expense insurance might be the right choice.
Frequently asked questions about final expense life insurance
When should I buy a final expense insurance policy?
There’s no right time to buy life insurance, but the younger you are, the less you will pay. You can purchase a final expense insurance policy anytime between the ages of 45 and 85. However, you may be better served by a different type of policy at a younger age.
What if I die prematurely?
Some policies include a two-year limited benefit clause limiting what is paid out during the first two years of coverage. It’s important to read the terms of the policy before you buy.
What are considered final expenses?
Funeral and related costs are the main final expenses. Others may include medical bills, debts, long or short-term care expenses that were outstanding when the insured died, and any other expenses left behind.
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