Planning for Your Final Expense: What is Final Expense Insurance?

The pandemic has caused many of us to consider our mortality—and to make plans for the event that we pass away and leave loved ones behind who depend on our income.

However, dying itself can come with a considerable price tag—and that might not be something you’ve taken into account. In fact, according to the National Funeral Directors Association, the average cost of a funeral in 2021 was $7,848—although it’s possible to go much higher, depending on your wishes.

Fortunately, there are ways to anticipate these costs—and one of them is by purchasing final expense insurance.

What is final expense insurance—and how does it differ from life insurance?

Final expense insurance is also referred to as “burial insurance,” “funeral insurance,” “modified whole life insurance,” or “simplified issue whole life insurance.”

According to Investopedia, final expense insurance is actually a whole life insurance policy. Because it has a small death benefit of usually between $2,000 and $50,000, no medical exam is required, which makes it easier to get approved for. In addition, due to the lower death benefit, the premiums tend to be very affordable.

Other than the smaller death benefit, final expense insurance is exactly the same as a regular whole life policy. However, life insurance companies market it as coverage for expenses like a memorial service or funeral, cremation, or burial. But there’s no obligation for your beneficiary to use the death benefit for this purpose—they can use it as they see fit. As CNN points out, some beneficiaries use the death benefit to pay for medical bills, living expenses incurred in your final weeks, or hospice costs.

Do you need final expense insurance?

Before you purchase a final expense insurance, consider whether you actually need it. Perhaps your regular life insurance policy offers a large enough death benefit to cover your final expenses, or maybe you’ve made some other financial arrangement—for example by setting money aside for your own memorial service.

It’s wise to discuss your needs and options with an independent life insurance broker like Liberty Financial Group. We’ll help you assess the coverage you already have so you can determine whether or not you require final expense insurance. In addition, we can help you evaluate the offerings from different life insurance companies so you can be sure to get the best possible coverage for your situation. Contact us today to learn more.

Sources

https://nfda.org/news/media-center/nfda-news-releases/id/6182/2021-nfda-general-price-list-study-shows-funeral-costs-not-rising-as-fast-as-rate-of-inflation

https://www.investopedia.com/final-expense-insurance-4801018

https://www.cnn.com/2020/12/28/cnn-underscored/final-expense-life-insurance/index.html