Final Expense Insurance

What is Final Expense Insurance

Final Expense Insurance is a type of Whole Life Insurance that provides a small death benefit to beneficiaries. Since the value is lower, Final Expense is an easier policy for which one can qualify. There is little to no difference between Final Expense and “Normal Life Insurance”. In the insurance industry, it can also be called “funeral insurance”, “burial insurance”, “simplified issue whole life insurance” or “modified whole life insurance”. It typically has a “face value” (or death benefit) of $2,000 to $50,000, and the death benefit is not taxable. The death benefit is typically designed to cover expenses like a funeral, a memorial service, embalming, a casket, and cremation, although it can be used for other purposes by its beneficiaries. Final Expense Insurance is usually appealing to those who are older and can’t afford larger face value policies. Most seniors, even who are in poor health, can still receive a Final Expense policy. Many times, people choose Final Expense Insurance because it is easier to qualify and claims on Final Expense policies are usually paid faster than larger policies.

How Final Expense Insurance Works

The policy is available to applicants that are even in poor health. There is no medical exam, and there is no request for medical records, although there might be a questionnaire. Depending on how the health questions are answered, the policy might not provide immediate coverage. Like other types of insurance, premiums are determined by age, health, or gender. The policy is permanent, lasting the lifetime of the holder, and is guaranteed to the beneficiaries, as long as the holder continues his premium payments. The policy premiums usually never increase and the benefit usually never decreases. Although it might be large enough to pay off a large mortgage, it should be adequate to help one’s loved ones to pay the bills that might be related to death, that couldn’t be paid during a terminal illness, or whatever else they decide. One disadvantage is that, because the benefits are relatively lower, the holder can lose money over time, paying more in premiums than the death benefit that the beneficiaries will receive. It is possible to borrow against the policy’s cash value, which might decrease the death benefit for beneficiaries. Some policies and some insurance providers require a minimum and maximum age. The face value of the policy might also be lower for older people.

Guaranteed Issue Final Expense Insurance

If a person has serious health issues, he might only qualify for a policy that doesn’t require medical questions, an exam or medical records. However, these Guaranteed Issue policies that provide a guaranteed payout normally have a two- or three-year waiting period before qualifying for a death benefit payout. However, if the holder dies during this initial period, the beneficiaries should receive a return of the premiums that the policy holder has paid, and usually an additional 10% annual interest rate. If someone is healthy, it is more advantageous to not consider Guaranteed Issue policies, since they require higher premiums and delayed coverage.

Graded Benefit Final Expense Insurance

Graded Benefit policies provide an in-between option for a person who might die during the first few years of his policy. This policy provides a graded benefit within the first few years. Although there might still be a partial waiting period, if the insured holder dies within the first year, this policy might pay 30% to 40%, and if he dies during the second year it might pay 70% to 80%. Then, after those initial years, the policy would provide the full death benefit to his beneficiaries. If someone has health concerns that aren’t as serious, he might be approved for a Graded Benefit policy, instead of seeking a Guaranteed Issue policy at a higher rate.

The Best Rate for Final Expense Insurance

It is best to use an independent agent to get the best rate for Insurance. There is no single insurance provider that offers the best Final Expense Insurance, let alone other policies. It is best to get offers from different insurance companies to find the one that is best for you. It is always best to try to qualify for a policy that requires health-related questions, because they are typically less expensive. Even if your answer to some questions are not ideal, it doesn’t necessarily produce a rejection. Even with less-than-ideal conditions, due to the different coverage and premium options, there is a good chance we may get you a better policy than you’d expect. If you work with an independent broker, like Insurance Warehouse, who provides policies from various insurance providers, you can more easily find an insurance provider that is easier to work with, that is less expensive, and that provides the best options.