What Is Final Expense Insurance?
Final expense insurance, also called burial insurance, is a life insurance product designed to help you pay for your funeral.
The death benefit can be used for any of your final costs, from probate to credit card debt to end-of-life medical bills.
Essentially, a final expense insurance policy is for any of your… well, final expenses.
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What does final expense insurance mean?
Final expense insurance is an insurance policy that’s purchased with the intention of using it to pay for your funeral or any other death-related costs.
When someone buys final expense insurance, it means that they want to be sure their funeral and arrangements are paid for. This is a huge service to your loved ones, as the children are often left with the burden of the funeral costs.
In order words, when you have final expense insurance, you’re making sure everything is taken care of.
Another common option is to prepay for your funeral, but we don’t recommend this for a variety of reasons. You can read about that by clicking the link below.
How is final expense insurance different?
Final expense insurance is a type of permanent life insurance policy, but it’s set apart because it has a specific purpose.
Other kinds of permanent life insurance, such as whole life, tend to have higher death benefits. Many of our clients would purchase $100,000 or more with a typical life insurance policy. This can be used to leave an inheritance, to pay off debt, or to replace lost income.
However, with final expense insurance, the death benefit is designed to closely match your anticipated end-of-life costs.
Typically, we’re talking about your funeral, since this is the most expensive part of dying. (Sorry to be so blunt.)
Since the death benefit you choose for your policy should be in line with the cost of a funeral, let’s go over how much a funeral really costs.
How much does a funeral cost?
A funeral with only standard selections can cost around $8,000. Depending on whether or not you want some upgrades, that cost can reach $16,000 or more.
And if you’re Pope John Paul II, your funeral could even top $11.9 million.
Seriously though, funerals have a lot of costs involved. There’s the embalming process, the casket, the funeral home fees, the viewing, the transportation of your body to the cemetery, your cemetery plot, flower arrangements, and more… there’s just a lot to it. And there’s also a lot of variation in price depending on how fancy you want things to be.
For example, you can get a low-end casket from Costco for less than $1,000, while a casket made from precious metals can cost more than $5,000. You can buy a flat grave marker for less than $200, or you could get something much more intricate, like an upright headstone that costs more than $10,000.
So, if you’re planning for a conservative funeral, you want a policy that’s equipped with at least a $10,000 death benefit. If you may want some upgrades or you anticipate some additional costs like probate, household expenses (mortgage, utilities), or medical bills, you’ll want a death benefit on the higher end.
Most final expense insurance plans have a maximum benefit, and that’s usually around $25,000.
What is a final expense benefit?
When we talk about a final expense benefit, we’re talking about the death benefit.
You have the option to choose what you want your death benefit to be when you apply for the insurance policy.
For example, since you know that a funeral costs around $8,000 for standard selections, you may decide to choose a death benefit of $8,000. On the other hand, you may choose to make your death benefit $15,000 to account for any potential expenses that you aren’t prepared for.
Be warned that there are plans with benefit options as low as $3,000. Be careful that you don’t underestimate your final expense costs. A $3,000 policy is not nearly enough to cover the most basic of funerals.
We’ve heard stories from a local funeral director, and it happens far too often that the death benefit isn’t enough. The family comes in and learns that their parent had a $5,000 benefit, and they need to come up with a few thousand more to actually cover the costs.
And if the family member didn’t have any kind of life insurance at all, we’ve seen this result in debt, GoFundMe pages, and you get the rest of the picture.
Be sure to talk with an agent here at Medicare Allies to ensure that your death benefit not only matches the costs of a typical funeral in your area but that it also accounts for inflation.
What does final expense insurance cost?
Final expense insurance is very affordable, which is great news!
We’ve posted four different examples of final expense rates on our Final Expense Insurance page.
You’ll see that the rates fluctuate a bit based on:
- Your health
- Tobacco use
Rest assured that even if you have serious health conditions, there are final expense plans for you. They are called Guaranteed Issue, which means you don’t have to answer health questions. They are just going to be on the more expensive side.
Who has the best final expense insurance?
The company with the best final expense insurance plan will depend on the state you live in. For states in the midwest, our favorite final expense company is KSKJ Life as they have amazing customer service and the best rates.
However, if you’re on the west coast, that’ll be different, and if you’re on the east coast, it’ll be different yet again.
Not every final expense company is available in all states, so we will tackle this with you on a case-by-case basis.
You can be confident that we’ll shop the market and will find you the best price for the coverage you need!
Related content you might like:
- Final Expense Insurance
- Do You Need Life Insurance In Retirement?
- Turning 65 Checklist: Getting Started with Medicare
Our team of dedicated, licensed agents can help you as little or as much as you need. Whether it’s answering a few questions about Medicare or creating a comprehensive Medicare Planner with you, we are your Medicare Allies.