What Is Final Expense Life Insurance?

Final expense insurance, burial insurance, guaranteed whole life insurance—they all refer to the same type of permanent life insurance. You can buy final expense life insurance to ensure your loved ones have the necessary funds to pay for your funeral, burial, and any other expenses you may leave behind when you die.

How Final Expense Life Insurance Works and Its Features

Guaranteed Approval

Final expense insurance is typically for individuals ages 50 to 80. No matter your health, you will be approved for this type of life insurance. Coverage can begin as early as the next business day after applying.

No Medical Exam Required

To be approved for most types of life insurance, you need to have a medical exam. This exam helps the life insurance underwriters determine your mortality risk. The higher the risk to insure you, the higher your premiums will be.

However, with final expense life insurance, there is no medical exam required and your medical records are not even taken into consideration. You pay based on your age and coverage amount. Don’t smoke? You pay less.

Level Premiums

Once your policy is approved, your insurance premiums will never increase. The table below gives an example of premium costs of a final expense insurance policy.

For example:

Let’s say you’re a 70-year-old father and grandfather and you were just diagnosed with congestive heart failure. If you aren’t a smoker, you can purchase a $15,000 final expense policy for just under $170 per month—no matter what your medical records say.

Fifty percent of people diagnosed with congestive heart failure have an average life expectancy of less than five years. Let’s say you pass away after three years. You will have paid approximately $6120 into the policy and your beneficiaries receive $15,000.

This final expense lump sum, which is paid often as soon as one business day, will help your loved ones cover your funeral, in addition to medical expenses you may have accumulated.

Final expense insurance is typically for individuals ages 50 to 80. No matter your health, you will be approved for this type of life insurance.

Lifelong Coverage

Unlike term life insurance which is designed to last a specific period of time, final expense life insurance is a type of permanent life insurance—it’s active until you die. With most final expense products, you are only required to pay the policy’s premiums until you turn 95 years old. Even if you are still alive, your final expense policy is still active, but you no longer have to pay for it.

Graded Death Benefit

Something to note is that final expense policies often come with a two-year graded death benefit. This is what that means:

• With the exception of accidental death, if you die within two years of buying a final expense policy, your beneficiaries will only receive the total amount of premiums you paid, plus a little interest, but not the full death benefit amount.
• If you die because of an accident within two years of buying a final expense policy, your beneficiaries will receive the full death benefit amount.
• After two years have passed since buying the final expense policy, your beneficiaries will receive the full death benefit amount no matter what causes your death.

When to Buy Final Expense Life Insurance

If you are relatively healthy, applying for traditional life insurance is a better idea. With traditional term life insurance, you can get more coverage for your premiums. With final expense life insurance, you are paying higher costs in order to be guaranteed approval and not have your health come into play.

However, we understand that sometimes life doesn’t go as planned. Perhaps a friend passed away unexpectedly, they didn’t have life insurance, and you saw its devastating impact. You don’t want your family to deal with the same devastation, but you’ve waited too long and your health is declining. If traditional life insurance isn’t an option, final expense life insurance can save your family from financial struggle.

In 2017, the average funeral cost in the U.S. was $8,755. Also, 75% of families spend more than $10,000 on end-of-life medical bills. If you’re worried about leaving debt behind to your loved ones, it’s not too late to buy life insurance.