WHY FINAL EXPENSE INSURANCE?

Nobody likes to think about their own death, but the fact of the matter is funerals and burials aren’t cheap. Depending on the situation and one’s personal preferences, they can actually cost thousands of dollars.

FUNERAL PLAN BASICS

If you haven’t given much thought to your funeral plan, you might be surprised to learn how much goes into it. For instance, you’ll need to decide whether you’d like to be buried, interred in a crypt or cremated. If you’re seeking a burial or interment, you’ll have to decide where that will take place and what type of casket you’d like to have. With cremation, you should also consider how your remains will be stored.

You’ll also need to give thought to what kind of funeral service you’d like to have and where it will be held. For instance, you may want to go the more traditional route and have a small service at your church or at a funeral home. Or, you may want your loved ones to gather together for a celebration of your life at a memorial party to counter the somber nature of the event.

Thinking about these types of things may be overwhelming and even seem a bit morbid but creating a funeral plan in advance can ensure that your funeral reflects your personal wishes without adding any additional emotion strain for the people you leave behind. It also gives you the opportunity to account for specific costs, create a funeral budget and determine how those expenses will be paid for.

WHAT IS FINAL EXPENSE INSURANCE?

Burial and funeral planning are an important element of any long-term financial plan. The costs for both can be high; the average funeral expense ranged from $7,000 to $10,000 and up, which includes a funeral service, burial, and installation of a headstone. Burial insurance can help make those costs easier to bear for your loved ones. Burial insurance, referred to as funeral insurance or final expense insurance, is a specific type of life insurance that’s designed specifically for paying end of life expenses. This is most often whole life insurance, which means it stays in place throughout your lifetime as long as premiums are paid, although some insurers offer term life coverage for burial expenses.

Depending on how your policy is structured, a whole life burial policy may or may not allow you to accumulate cash value that you can borrow against. Burial insurance policies typically range from $5,000 to $50,000, and this death benefit can be paid directly to your beneficiaries to manage burial costs. This is different from traditional life insurance, which may offer $1 million or more in coverage and can be used to pay burial expenses, as well as everyday living expenses, college costs, mortgages, or other debts. If burial insurance is a missing piece of your financial plan, consider reaching out to discuss plan providers and options, consider these companies for getting the coverage you need to pay for final expenses.

THE TYPES OF FINAL EXPENSE INSURANCE

There are four main types of final expense insurance: guaranteed issue, graded, modified, and level (preferred or standard rating). We’ll go more into detail about each of these product types, but you can gain a quick understanding of the differences between them via the table below

TYPE OF FE POLICY BENEFIT FOR ACCIDENTAL DEATH BENEFIT FOR NON-ACCIDENTAL DEATH UNDERWRITING
GUARANTEED ISSUE Guaranteed approval, no waiting period, full death benefit Waiting period, death benefit is equal to return of premium + interest rate for a specified number of years No underwriting
GRADED No waiting period, full death benefit Waiting period, death benefit is equal to a percentage of the death benefit Simplified issue underwriting
MODIFIED No waiting period, full death benefit Waiting period, death benefit is equal to return of premium + an interest percentage declared at policy issue Simplified issue underwriting
LEVEL (PREFERRED OR STANDARD RATING) No waiting period, full death benefit No waiting period, full death benefit Simplified issue underwriting

Note: Exact benefits and payout schedules may vary depending on the carrier, plan, and state.

HOW DOES FINAL EXPENSE INSURANCE WORK?

To sign up for a final expense policy, you will need to answer a few health-related questions. Unlike when buying traditional term or whole life insurance, you will not need to undergo a medical exam, nor will you need to give the insurer access to your medical records. That said, if you have serious or multiple health issues, you may not qualify for this kind of policy.

Some insurers offer policies with a modified benefit or a graded death benefit, rather than a level benefit, to those who cannot pass the health screening questions. These policies typically have a waiting period of two to three years until the full death benefit will be paid. If the insured dies within that time, beneficiaries would receive a return of premium or only a portion of the death benefit.

WHAT MAKES FINAL EXPENSE INSURANCE GREAT FOR POLICYHOLDERS?

  • Lower face amounts and premiums than other types of life insurance
  • Easier to qualify for than other types of life insurance
  • Premiums are guaranteed to remain level for the life of the policy
  • The death benefit will never be reduced
  • The policy will remain in force as long as the policyholders pay their premiums
  • Policyholders can take a loan against the cash value of their policy
  • Provides policyholders with peace of mind
  • Way for policyholder to ease the financial and emotional burden on their loved ones after
    they pass away

WHERE TO RECORD YOUR FINAL WISHES

When you think of your final wishes, it makes sense that a last will and testament comes to mind. You can include your funeral arrangements in your will or trust, but it should not be the only place where you list your final wishes.

Having a last will and testament or revocable living trust is an important part of your estate planning because it’s where you record how you want your property to be distributed after you die. Those documents should also include who should be in charge of making sure your property goes where you want it to go.

Usually, by the time your will or trust is located, your loved ones will have already made all of the decisions about the disposition of your remains and memorial. You should have a separate document detailing your funeral arrangements and tell your family about it while you’re still alive to ensure your wishes are carried out

Not sure what you need? Let us help you eliminate the guess work to make sure your life’s work is protected from the unexpected.

  • We can review your current plan or policies to insure they still meet your goals.
  • Let us provide a no cost insurance policy and/or plan review to make sure your life’s work is protected from the unexpected.
  • We can review any life changing events like weddings, death, college, divorce, new family additions, promotions, or home purchase.