Final expense insurance

Final expense life insurance, sometimes called funeral expense insurance or burial insurance, is a limited, inexpensive policy designed to cover all of the costs associated with someone’s passing.

What is final expense life insurance?

Losing a loved one is never easy. The added stress of making final arrangements during a time of mourning can be very difficult for anyone. On top of that, funerals can cost a lot more than you think, which can further add a significant financial burden to those left grieving.

The average cost of a funeral has increased. Expect to need $8,000 to $10,000 or more.

Making a plan now to cover these end-of-life costs and protect your family can give you significant peace of mind. If final expense insurance is right for you, you’ll simply decide on a coverage amount, an agent will help you finish the paperwork, and you’ll begin to pay a small, monthly premium. 

What can final expense insurance be used for?

The name may imply that final expense policies can be used only on funeral costs, but that is not the case. They can be used on anything and are designed to help the beneficiaries avoid a financial crisis when a loved one passes. Funds are often used to cover funeral costs, medical bills, paying off a mortgage, auto loans, or even used as a nest egg for a new home.  

Should I have final expense life insurance?

If you have enough savings to cover your end-of-life expenses, then you may not need final expense insurance. If you’re unsure of how your family will handle the costs, it can be a way to ensure they don’t incur added debt in a time of need. In addition, if you’ve been unable to qualify for larger life insurance policies due to age or medical conditions, a final expense policy may be an affordable option that reduces the burden placed on your family when you pass.

Are there alternatives to final expense insurance?

Yes. Final expense life insurance is not the only way to cover your end-of-life costs. You can always put a little bit of your income into a savings account for that purpose. The benefit of a final expense policy over this kind of saving is that you and your family will know exactly how much they’ll receive no matter when you pass. Some also pre-pay their final expenses while they are alive. If you have funds readily available, this can also be a smart option. 

Another alternative is a traditional whole or term life insurance policy. These generally provide higher coverage amounts and can protect your family’s lifestyle as well as cover your last expenses.

Is final expense insurance different from life insurance?

Yes and no. While similar terms and concepts are used, a final expense policy is designed to cover small to moderate costs related to your passing. A life insurance policy generally covers a much larger amount to financially protect your family and help them maintain their lifestyle after you’re gone. Depending on your situation and wishes, one or both may be right for you. Here are some of the differences with final expense life insurance:

Coverage and cost

Since final expense policies tend to be for much smaller amounts than term or whole life (think $10,000 – $50,000), the premiums are often much lower. Full life insurance policies may be a better option if you qualify, but the premiums can vary greatly depending on your age, health, and situation. 

It’s easier to get approved for and doesn’t require an exam

Final expense policies usually don’t require medical exams like traditional underwritten life insurance policies. You simply have to answer a few questions and your coverage starts.

There is sometimes a waiting period

Certain types of guaranteed final expense insurance may have a waiting period of one to three years before benefits can be paid out. If you pass before that period is up, the policy won’t go into effect and your family usually receives your premium payments back with interest. Make sure you fully understand any policy before purchasing. If you are unsure on some of the details, an experienced agent can help walk you through it.

Do I need both?

Not necessarily. If you already have a life insurance policy, funds from that can absolutely be used for your final expenses. However, that means your family can’t use that amount for themselves. If you want all of your life insurance policy to go to your beneficiaries, it likely makes sense for you to have a final expense policy as well.

How much does a final expense policy cost?

That depends on your situation. As with all life insurance, there are a number of factors that will affect your insurance premium. The most important are:

The amount of the benefit

Final expense policies typically cover anywhere from $2,000 to $50,000. Depending on how much you’d like to leave your family, your premiums can change quite a bit.

Your age and health

The younger and healthier you are, the lower your final expense insurance premiums will be. However, that doesn’t mean if you are in your twilight years or have health problems that it’s unaffordable. This type of policy was can be an excellent addition to your financial safety net later in life.

If you would like to explore life insurance to cover the final expenses, the best thing to do is work with a trusted and experienced insurance agent. Be sure to ask lots of questions and fully understand each type of life insurance policy. I am available for you and your family and can help find the right mix of products to ensure your family’s protection when you pass.

Here is the funeral cost checklist included in the median funeral expenses in 2021, according to the NFDA:

Item	Cost
Funeral home’s basic service fee (nondeclinable)	$2,300
Transporting remains to funeral home	$350
Embalming	$775
Preparing the body in other ways, such as makeup and hair styling	$275
Facilities and staff to manage a viewing	$450
Facilities and staff to manage a funeral ceremony	$515
Hearse	$350
Service Car	$150
Basic memorial printed package	$183
Metal casket	$2,500
Median cost of funeral with viewing and burial	$7,848
Vault	$1,572
Cost with Vault	$9,420

Many cemeteries require a burial vault or concrete grave box to ensure the ground will not buckle over the casket. A vault is reinforced to preserve the remains from groundwater and insect activity. When calculating funeral costs, you may have to include the cost of a vault or grave box.