What do burial insurance, funeral insurance, and final expense insurance have in common? Everything.
They’re all different ways of describing the same thing. The term final expense insurance (or burial insurance, funeral insurance, etc.) describes a type of whole life insurance policy that typically offers a smaller death benefit and easier approval process compared to other types of life insurance.
Here’s how you can help your family with expenses like funeral costs and bills after your passing.
Nearly all applicants between the ages of 50 and 85 are accepted.
Health is not a factor for guaranteed issue policies.
Know that you’ll help cover your final expenses.
After purchasing a final expense insurance policy, the purchaser will select a beneficiary. The beneficiary will collect the death benefit and spend it in accordance with the policyholder’s wishes. In many instances, seniors have the opportunity to simplify the process by appointing a funeral home as their policy’s primary beneficiary.
It’s important for policyholders to select beneficiaries they can trust and discuss the steps they should take after receiving the policy’s death benefit. You shouldn’t surprise someone with the information that they’re a beneficiary on a life insurance policy of any sort.
Final expense insurance is a type of whole life insurance. While term life insurance plans cover policyholders for set periods of time (10 and 30-year plans are both popular choices), whole life insurance provides a lifetime of coverage. As long as premiums are paid, coverage stays in place.
On average, this type of senior final expense insurance is the less expensive of the two. Individuals between the ages of 45 and 80 can apply, and most applicants will answer a medical questionnaire instead of receiving a physical examination. Some carriers may also ask to review an applicant’s medical history in more detail.
Guaranteed issue life insurance is a kind of no-medical exam life insurance. Anyone between the ages of 50 and 85 who applies for a guaranteed issue life insurance policy is all but certain to be accepted. Policies may also include a waiting period of up to several years after a policy is in force before death benefits are paid out, but premiums will be returned if the insured dies during this period.
The cost of funeral and burial services can add up quickly. Even relatively modest ceremonies often leave families with fees in the thousands. According to the National Funeral Directors Association, the average burial and viewing costs more than $7,500. This sum includes a number of common expenses like hearse rentals and caskets, but notably doesn’t account for additional costs like headstones, obituaries, or other memorials. Even families who opt for cremation can expect to pay more than $5,000 for a viewing and hundreds of dollars more for an urn. Material costs probably aren’t the first thing on a grieving family’s mind after the death of a loved one, but that doesn’t make these expenses go away.
Technically speaking, terms like funeral and burial insurance don’t accurately describe this type of insurance. Though death benefits from final expense insurance policies are particularly useful for addressing the costs mentioned above, there’s no restriction on how your beneficiaries can spend these funds. They can provide peace of mind and the knowledge that your family won’t be buried under medical debt, credit card bills, or other expenses that you may accrued during your lifetime.
Final expense insurance is especially appealing to seniors whose age or health would otherwise make it difficult or impossible to purchase life insurance. It may be a useful option for seniors who would otherwise struggle to cover end-of-life expenses. Final expense insurance payouts usually aren’t large, but even the minimum possible death benefit can make a difference for low or fixed-income policyholders without many assets.
The payouts from final expense insurance are mostly meant to help with immediate expenses. These plans are generally not a good choice for seniors who are hoping to provide for loved ones over the long term. Investopedia writes that policies for enrollees under 55 could offer up to $50,000 in coverage, but that policyholders over 75 are usually eligible for $25,000 at most.
Final expense insurance isn’t the right choice for everyone, but it could provide the level of coverage you need to feel you are not leaving your dependents with additional stress and expenses after your passing.
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