Final expense life insurance is a simplified issue whole life policy usually purchased by individuals between the ages of 50 and 85 years of age. The death benefit of a final expense life insurance policy can be as little as a couple thousand dollars or as much as $50,000. The primary purpose of the life insurance is to pay the final expenses associated with funerals, cremations, burials, and celebrations of life.
These policies are permanent with a fixed monthly or annual premium. After approval, the premiums will not change. The death benefit is paid to a specified beneficiary such as a family member or friend.
Simplified or Guaranteed Issue
Final expense life insurance can have simplified underwriting or be guaranteed issue. With simplified underwriting there are no medical exams or paramedical exams. The applicant answers regular questions regarding age, height, weight, and alcohol and tobacco use.
There are question that focus on chronic illnesses and any major past events such as heart attacks or strokes. Based on the health condition of the applicant, they are either approved, denied, or offered another life product with different conditions such as a graded or modified policy.
Some life insurance companies also offer guaranteed issue or guaranteed acceptance final expense insurance. The premiums are higher, the death benefits may not be as large, and guaranteed acceptance may have age limitations.
Graded or Modified Conditions
There are also graded and modified final expense insurance policies. With a graded policy, the death benefits are reduce in the first 2 years of the policy. In the third year, if the insured dies, the full death benefit is paid. With a modified policy, if the insured dies in the first 2 years of the policy, all the premiums paid in, plus interest, are returned to the beneficiary.
Final expense life insurance is not a pre-paid funeral plan or funeral trust. The death benefit goes to the designated beneficiaries. The beneficiaries can be family members, friends, charities, or a nonprofit.
Affordable Life Insurance
The monthly or annual premiums will depend on the death benefit and age of insured. Because the death benefit is relatively small, compared to fully underwritten term or whole life policy with a higher death benefit, the premiums can be affordable. Monthly premiums of less than $50 for a $15,000 death benefit is not out of the ordinary.
There are many considerations when it comes to purchasing final expense life insurance such as your monthly budget, savings, and the type of funeral, burial, or cremation. Of course, some people don’t want or need final expense life insurance to cover death expenses. They purchase it to leave money to family members, church, or valued charity.
If you are interested in exploring whether final expense life insurance may fit into your plans, you may contact me and we can have a discussion.
