Final Expense Insurance

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What is Final Expense Insurance?

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The purpose of final expense insurance is to cover bills that your loved ones will have to pay when you pass away. These may include high costs like medical bills, funeral and burial expenses and possibly credit debt. Final expense insurance is often referred to as burial insurance. But these days, even the simplest funeral can cost thousands of dollars. Insurance can be very tricky but here is what you need to know about final expense insurance.

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Do you need final expense insurance ?

The answer to this question will vary according to your situation of course.

Do you already have life insurance in the form of a term or whole life policy?

If you do, that policy may provide enough to help your loved ones pay for your final expenses in addition to other support you want to leave them. Just keep in mind that if you have term life insurance and you outlive the policy term, then you’ve lost that coverage. If this could be the case, then you should consider final expense insurance. 


An alternative to final expense or life insurance is when you family has plenty of assets to pay for expenses associated with you passing.

 

This is called self-insurance. Self-insurance just means that you could use your own money rather than rely on life insurance to pay for expenses. 

Is your family in a position to self-insure your final expenses?

 

If so, then you probably don’t need final expense. If not, you should assume the cost of the funeral expenses could be around $10,000.

 

Don’t forget to include whether there will be a reception after the service and to include those costs as well.

 

Maybe there will be a trip somewhere to scatter you ashes. Maybe you’ll be leaving some big bills behind. If any of these sound like you situation, you may want to consider buying final expense insurance. Don’t count on a lump sum death payment from social security to help with the funeral costs unless you anticipate a funeral for $255.

Just as it is with health insurance, the older you are the more it costs. For the purpose of life insurance, the reasoning is that the older you are, the closer to death you become and the more risk insurance companies are required to take. If you buy final expense when you are 45, you’ll pay less each month than if you wait to purchase until you’re 65. Regardless, final expense insurance is worth consideration. Get a quote today.

 

The Basics

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  • Final expense insurance provides coverage that will be proportionate to the expense of your desired funeral and possibly other debt like credit cards.

 

  • While other forms of life insurance can be well into the millions of dollars, it’s rare for a final expense policy to get above $25,000 unless you have other debts you want to have covered. 

  • A final expense life insurance policy is designed to cover exactly what it says, the final expenses (funeral and final bills).

 

  • Final expense is not a policy in which you will be “insuring your life.”

 

  • Insuring your life means leaving your family and loved ones with enough long-term financial support to help them for years after you pass away.

 

  • Term and permanent life insurance values are usually proportionate to your earning power now and for the rest of your life. 

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Can I prepay for my funeral?

1. Prepayment for funeral services is an option and some people opt to do so. As with any decision, there are pros and cons when paying in advance for funeral services. When you prepay for your funeral you get to make all the decisions. You can choose the plot you want and the casket. This is an option that some people choose as it can provide some peace of mind to know that this is already taken care of. Death is certainly not a topic most people wish to discuss, especially their own. Prepaying for your funeral would hopefully spark some conversation between you and your loved ones about your choices.

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2. States have different guidelines regarding prepaying for funeral services. The guidelines are in place to protect you from paying for these services and having your money taken. If you decide to go this route, check your state guidelines as to how money will be held until your death.

As with any investment in your future, you should make sure that you know what you are paying for. The rates can fluctuate so make sure that you can lock in the rate that you are paying. This also helps to provide protection to you family so there are no surprise charges in the future. Make sure that you keep all documentation when making any prepayments. This way your family can have the records of your requests and all the arrangements that you made.

3. The major disadvantage to prepaying for your funeral is the lack of flexibility compared to final expense insurance. If you want to make changes to your funeral plans or if you move, you and your loved ones may not be able to get that money back. Worst case would be that the funeral parlor or cemetery could go out of business and that may cause you to lose all of your money that you paid in advance. Final expense insurance helps to provide your family and loved ones with a payout they can spend anywhere. This may give you less control but it provides them with flexibility and that brings peace of mind.