The Purpose of Final Expense Insurance
Final expense insurance is meant to cover funeral and burial expenses, which can be thousands of dollars for even a basic casket, burial plot, and ceremony. In addition, the payout may be used for any purpose your beneficiary(ies) choose. If you pass away and leave behind debt from end-of-life medical care, this insurance can help. It can also be used to pay off credit card debt or other bills.
While the premiums for these policies can be high, final expense insurance is a wise option once you reach a certain age or develop health issues. If an insurance carrier considers you to be a high risk, final expense insurance could be easier to obtain than other policies.
How Does It Work?
Final expense insurance can keep your family from having to pay out-of-pocket expenses for burial costs, credit card debt, or medical bills. A final expense insurance policy, also called burial or funeral insurance, includes a higher premium and lower death benefit than a traditional policy.
Your policy may be a simplified issue or guaranteed issue product. Generally, payouts for these policies are smaller than term and permanent life policy death benefits. While there are different requirements for eligibility, neither simplified nor guaranteed issue insurance require a medical exam for acceptance.
Many guaranteed issue policies are utilized for final expenses, like burial and funeral costs. But not all final expense policies are guaranteed issue policies. Final expense insurance could be a simplified issue policy as well. In this case, you may have to answer a few basic health questions but you may have a lower premium.
When to Buy a Final Expense Policy
Burial or funeral insurance is a popular purchase for mature adults or seniors. In reality, most final expense carriers have a lower age limit for eligibility. Some final expense policies are available when you turn 50, and you can apply for most of them up until age 85.
There are also age limits for final expense coverage, which depend on your carrier and policy. Some policies stay in effect until death as long as premiums are paid. Other policies pay out at age 100.
