No one likes to think about their death, but it’s important to have a plan in place when something happens. Life insurance is one way to help protect your loved ones financially when you die unexpectedly.
Whole life insurance is a type of permanent life insurance that provides coverage for your entire life, as long as a person continues to pay their premiums. Whole life insurance also has a savings component, known as cash value, this can grow over time and provide a source of funds in retirement or during other financial emergencies, but this may not be an ideal fit for some.
Life insurance is not a one size fits all type of deal. Some may struggle to find suitable traditional whole life policies due to premium costs and poor health issues. With that being said a final expense insurance policy could be an affordable way to address both problems. So, how does final expense insurance work?
What is a Final Expense Insurance Policy?
A final expense insurance policy is a whole life policy that helps pay for expenses related to a person’s death, such as funeral costs, outstanding medical bills, and estate settlement costs. It can provide peace of mind to loved ones by helping to ease the financial burden created by funeral and burial costs during a difficult time. The cost of final expense insurance varies depending on factors such as your age, health, and the amount of coverage you need.
Is it Term Life Insurance?
No, term life insurance is a life insurance policy with a specified end date. For example, a 10-year term life policy will cover someone for 10 years. Final expense insurance policies are typically whole life insurance policies, which means they do not expire as long as you continue to pay the premiums. If you are considering a final expense insurance policy, it is important to shop around and compare policies to find the one that best meets your needs.
Be sure to read the policy carefully and ask questions about anything you don’t understand. You may also want to consult with an insurance advisor to get expert guidance on whether a final expense policy is right for you.
How much do funerals cost?
The average funeral can be between $7,000 to $12,000. This cost can be covered by a final expense policy. The questions you should ask yourself are,” Can I afford to die? Would my loved ones be able to pay for the final financial expenses that will be related to my funeral? Would my funeral expenses be a financial burden for my loved ones?
Now to help you determine how much final expense insurance you need, you can use what is called an online final expense calculator or you can speak with a licensed insurance agent like myself to help determine possible final expenses.
Coverage Amounts
A final expense insurance policy can have a face value, or coverage amount, of $2,000 up to $40,000. The average range of coverage is between $5,000 and $25,000.
To determine how much final expense insurance someone needs, they’ll want to consider their overall debt burden and funeral costs. A good rule of thumb is to add up any debts, including final expenses such as funeral costs, and multiply that number by two. For example, if a person will have $10,000 in debts and funeral costs, they’ll want a final expense policy with a face value of at least $20,000.
Benefits of Final Expense Life Insurance
There are several advantages of final expense life insurance, including:
- It can help cover final expenses related to someone’s death, such as funeral costs or outstanding medical bills.
- It usually has a lower face value than a traditional life insurance policy, since it is designed to cover specific expenses rather than provide a death benefit to beneficiaries.
- It can be a more budget-friendly option and more accessible option than other types of life insurance for people with health issues or limited incomes.
When To Get Coverage
There is no one-size-fits-all answer to the question of when to buy a final expense policy. You may want to consider a final expense policy if you are:
- Funeral planning: You can use a final expense policy to pay for your funeral and other end-of-life expenses in advance. This can be helpful for someone who wants to spare their family the burden of these costs.
- Concerned about leaving debt behind: If you have outstanding debts, a final expense policy can help pay them off so that loved ones are not left with this burden.
- Unable to qualify for other life insurance: For those who have health issues or are of advanced age, they may not qualify for a traditional life insurance policy. However, they may still be able to qualify for a final expense policy.
- Looking for an affordable option: Final expense policies can be more affordable than other types of life insurance, making them a good option for seniors on a budget.
No Medical Exam
One of the main advantages of final expense life insurance is that it does not require a medical exam. This makes it a good option for people who have health issues or are of advanced age, as they may not qualify for other types of life insurance as was stated earlier.
It’s important to remember that, although no medical exam is required, you will still need to answer health questions about your health during the application process. The insurance company will use this information to determine your premium and coverage amount.
Consider This
Let’s look at two scenarios to emphasize how a final expense policy can be a protection for families.
Scenario # 1
John is a 71-year-old man with health issues that disqualifies him from traditional whole life insurance with a large face amount. His life insurance agent tells him about a final expense policy that he could qualify for with a $20,000 face amount. John did not want a policy with such a low face amount so he declined. A few months later John suffered a heart attack and died. His funeral costs totaled 10,000 and left a huge financial burden on his wife.
Scenario # 2
Mike is a 67-year-old man with a limited income. He simply can’t afford the premiums for large face amounts from a traditional whole life insurance policy. However, his life insurance agent shows how he can afford a final expense policy for $10,000 and Mike decides to proceed with an application. A few months later Mike suffers a stroke and dies. His funeral expenses totaled $5,000. Although his family is grieving his death, they know they have $5,000 to cover his final expenses and $5000 will be left over for the family.
Recap
Looking back at both situations, it is clear to see that Mike made the better decision. True he could not afford the coverage he wanted, but he could afford what his family would have needed to cover his final expenses. John, on the other hand, could have taken the same policy but wasn’t satisfied with what a final expense policy offered and it put a huge financial burden on his family.
So, is final expense insurance worth it?
Final expense insurance can be a helpful way to cover the costs of your death, including funeral expenses, outstanding medical bills, and estate settlement costs. It can also provide peace of mind to you and your loved ones by helping to ease the financial burden during a difficult time.
Final expense insurance can be more affordable for seniors than other types of life insurance and does not require a medical exam, making it a good option for people with health issues or limited incomes. To find out the different final expense policies we offer here at Votre Health & Life Benefits, click here or call us at 1-888-318-6873!
