What type of life insurance will cover my funeral costs?
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
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.
» Learn more: Do I Need a Medical Exam to Get Life Insurance?
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.
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.
|Final Expense Life Insurance Monthly Premiums – Male, Non-Smoker|
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.
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.
Watch the Life Insurance for Funeral Costs Video
Welcome to Quotacy’s Q&A Friday where we answer your life insurance questions. Quotacy is an online life insurance agency where you can get life insurance on your terms.
I’m Jeanna and I’m Natasha.
If I want to buy life insurance to cover my funeral costs. What should I buy?
Well, Quotacy mainly sales term life insurance. Term is ideal for most families because it’s affordable and designed to last during your family’s most financially vulnerable years. However, term life insurance doesn’t last forever.
If you are looking for life insurance coverage that will last guaranteed until the day you die you need to consider looking into permanent life insurance. There are a lot of options to consider when thinking about permanent life insurance.
Ask yourself these three questions to narrow your options down:
- How healthy am I?
- How much money do I want to leave behind?
- And how high of premiums am I comfortable paying?
If you are healthy or mostly healthy, you should look into a fully underwritten permanent life insurance policy. Both whole life insurance and guaranteed universal life insurance have guarantees in place to make sure the insurance company will pay out a death benefit as long as you have been paying your premiums. And with traditional permanent policies you can get anywhere between $50,000 in coverage all the way up to millions of dollars in coverage. But because they last your entire life and often generate a cash value, they’re much more expensive than your typical term life insurance policy.
Fully underwritten life insurance requires a large amount of information including:
- Basic identifying information
- Your health questionnaire answers
- Your medical exam results
- Your motor vehicle report
- A medical information bureau (MIB) report
- Your prescription history
However, if you aren’t in the greatest health, or maybe your budget doesn’t allow for a larger permanent life insurance policy, you can look into guaranteed whole life insurance also known as final expense life insurance.
Guaranteed Whole Life Insurance:
Also called “Final Expense” Life Insurance
+ You can’t be denied coverage
+ Fixed premiums that don’t rise over time
+ Lasts forever as long as you pay on time
– Higher premium payments
– Lower coverage amounts available
Guaranteed whole life insurance means that you are guaranteed to be approved. No matter your health, you can get coverage and there are no medical questionnaires or exams.
Guaranteed whole life insurance also features fixed premiums. This means you pay the exact same amount each month and the premiums will never increase. Because it’s a type of whole life insurance and lasts your entire life, if you buy it at age 50 and keep up with your premium payments it will remain active until the day you die.
» Compare: Guaranteed whole life insurance quotes
And with this type of life insurance the face amounts are pretty small often between $2,000 and $15,000 just enough money for your family to pay for your funeral and end-of-life expenses.
We should also note that guaranteed whole life insurance has what’s called a graded death benefit. And this means that if you die within the first two years of buying your life insurance policy your beneficiaries will only receive the total amount of premiums you’ve paid in plus a little interest, not the entire death benefit. The exception to this, however, is if you die by accident.
For example, if you bought your guaranteed whole life insurance policy on August 1st and died in a car crash on August 5th the insurance company will still pay your beneficiaries the full death benefit. After two full years, your beneficiaries will receive the full death benefit no matter the cause of death.
We are often asked by adult children if their elderly parents can still get life insurance and this is when guaranteed whole life insurance may be a pretty good option.
Guaranteed whole life insurance is more expensive than traditional life insurance because you’re paying for the convenience of guaranteed acceptance without your health coming into play. If you’re interested in guaranteed whole life insurance, you can actually go right on Quotacy’s website and get a quote to instantly see pricing.
If you have questions about life insurance make sure to leave us a comment. Otherwise, tune in next week when we talk about what a life insurance medical exam is. Bye!
» Compare: Guaranteed whole life insurance quotes
About the writer
Writer, Editor, and Co-host of Quotacy's Q&A Fridays
Natasha is the content manager and editor for Quotacy. She has been in the life insurance industry since 2010 and has been making life insurance easier to understand with her writing since 2014. When not at work, she's probably studying and working toward her Chartered Life Underwriter (CLU) designation while throwing a tennis ball for her pitbull mix, Emmett, or curled up on her couch watching Netflix. If it’s football season, the Packers game will be on. Connect with her on LinkedIn.