What Is Final Expense Insurance?

Final expense insurance is a type of whole life insurance designed to cover end-of-life costs such as funeral expenses, medical bills, credit card bills, mortgage payments, and car loan payments. Often referred to as burial or funeral insurance, this policy ensures that your survivors are not burdened by these expenses after your passing.

This insurance is particularly beneficial for individuals who cannot qualify for traditional life insurance due to age or medical conditions. It is typically geared toward people aged 50 to 85, although some insurers offer coverage to those outside this age range.

How Does Final Expense Insurance Work?

Final expense insurance is a type of permanent life insurance with a focus on covering the costs associated with your funeral, final medical bills, and other end-of-life expenses. The death benefit from a final expense policy can be used for various death-related costs, including the casket, burial, or cremation, but there are no restrictions on how the benefit can be spent.

The monthly premium for final expense insurance typically ranges from $30 to $70, depending on factors such as age and health. The death benefit is guaranteed as long as premium payments are up to date, and the premium will never increase. Additionally, a final expense policy builds cash value, which you can borrow against if needed.

The application process for final expense insurance is simpler than that for traditional life insurance. You usually need to provide personal information, including your age, and answer a few health questions. A medical exam is generally not required, and coverage may take effect immediately upon approval. Some insurers offer “guaranteed issue” policies, which do not require any health questions and cannot be denied.

Pros of Final Expense Insurance

• Fixed premium: The premiums for final expense insurance never increase.
• No medical exam: Typically, applicants do not need to undergo a medical exam to qualify. This type of coverage is known as “simplified issue.”
• Affordability: Final expense insurance often costs less than other types of life insurance due to the smaller death benefit.

Cons of Final Expense Insurance

• Waiting period: Some policies come with a waiting period before the death benefit is paid. However, if there is no waiting period, beneficiaries might receive a payout within 24 to 48 hours after filing a claim.
• Smaller payout: The death benefit for final expense insurance is generally smaller than that of other life insurance policies, typically ranging from $5,000 to $20,000.
• Potentially higher premium: Depending on age and health, the premium for final expense insurance might be higher than other types of life insurance, potentially outweighing the death benefit.

The Bottom Line

Final expense insurance can be a viable alternative to traditional life insurance, especially for those seeking end-of-life coverage with low premiums and no medical exam requirements. However, it is important to consider the smaller death benefit and potential waiting period when evaluating this option.

At O1ne Mortgage, we understand the importance of planning for the future and ensuring your loved ones are not burdened by end-of-life expenses. If you have any mortgage service needs or questions about final expense insurance, please do not hesitate to contact us at 213-732-3074. Our team of experts is here to help you navigate your options and find the best solution for your needs.