What is final expense insurance?
Final expense insurance is a whole life insurance policy that has a death benefit designed to cover expenses such as a funeral or memorial service. The face value (death benefit) of final expense insurance policies is typical $2,000 to $50,000. Final expense insurance is also called “funeral insurance,” “burial insurance,” “simplified issue whole life insurance,” or “modified whole life insurance.” These are all marketing terms that the insurance industry uses to sell small whole-life policies. Unless these expenses are taken care of with other life insurance or money from your estate, these costs are typically passed on to surviving loved ones.
How does final expense insurance work?
Final expense insurance is designed to cover the costs of end-of-life expenses, such as funeral costs and medical bills. It is a type of life insurance policy that is typically smaller in value than other life insurance policies. This makes it more affordable for seniors, who may have poor health but still want to secure a policy.
What are the benefits of final expense insurance?
Final expense insurance is often looked at as a wise investment for individuals and families worried about leaving behind expenses.
The benefits of final expense insurance include peace-of-mind, financial security, and the assurance that your loved ones will not be burdened with your final expenses, and can grieve in peace when the time comes.
And because final expense insurance is a form of life insurance anything benefits your beneficiaries receive will be tax-free and can be used to cover any cost they incur in life.
When you purchase final expense insurance, the cost of your plan will be based on your age, health and lifestyle.
The cost of a final expense insurance policy will depend on the type of plan you choose, the amount of coverage you need, the benefits offered, and sometimes your health.
What does Final Expense Insurance Cover?
Final expense insurance is a type of life insurance used by individuals and families who worries about leaving loved ones to pay for their own funeral. It’s also known as burial insurance or funeral insurance. This type of policy is designed to cover the costs associated with end-of-life arrangements, such as:
Funeral Home Expenses
Because most Families have less than $1,000 in saving Final Expense Insurance has become a go-to for individuals and families worried about the debt their loved ones will have to incur to lay them to rest during their final moments. The benefits that are distributed from the final expense policy can be used at the beneficiary’s discretion unless set for in the policyholders last will and testament. Traditionally these benefits are used to finalize the policyholder’s funeral arrangements but can be used to cover any expenses the beneficiary deems necessary.
Cremation vs Burial Cost
The average cost of a cremation ranges from $1,000 – $8,000 depending on the state and services chosen. A cremation can cost almost as much as a funeral because of the various fees paid to the funeral home.
The average cost of burial can cost up to $9,000 or more and really depends on the smaller items chosen (such as flowers, transportation, headstone, etc.). While caskets can cost several thousand dollars, burial items like headstones and grave liners can also add thousands of dollars depending on the material used. Learn more about the cost of cremation vs burial and choosing what’s right for you.
Embalming Cost
Embalming is a service that typically costs around $500-$700 and runs as high as $1000. Embalming is not always needed but also depends on how quickly the service takes place and if the body is buried or cremation, as well as the cost of refrigeration after death. Refrigeration can be an alternative to embalming, which may even cost hundreds of dollars.
Funeral Plot
Many people don’t realize that cemeteries are often separate from funeral homes and carry their own costs.
The average burial plot will cost between $350-$5,000 but cities and congested areas may have a more expensive cost due to adding on the grave fees, which can get as high as $3,000 total. Public cemeteries usually have a set fee of around $1,000 and private ones typically have a set fee of around $3,000 or more.
If someone or a loved one is a veteran and was/is honorably discharged, the Dept. of Veterans Affairs (VA) can help with any of the different types of expenses that come with giving a funeral, including burial costs.
Those Veterans who can afford it, may be able to keep their costs low by purchasing a cemetery plot from the VA instead. Also, the family might be responsible for more additional expenses that go along with a traditional ceremony like flowers and obituary notices.
In addition to the plot (plot), there are costs associated with opening the ground, placing the casket, and covering the plot. These services usually add several hundred dollars or more to the overall funeral expenses, depending on the cemetery. When purchasing a gravesite, ask how much that service will cost and if it will be included in the overall funeral packages.
In addition to plot cost, you want to make sure you ask about maintenance of the gravesite ad how those costs are handled.
The associated costs of Gravesite maintenance or may range from $300-1000/year so make sure your final expense insurance policy covers those added cost as well.
Headstone or marker
Upright headstones are usually the ones set on top of the grave to be used as the final marker of the deceased. Typically made of more durable materials such as stone or bronze, these amazingly detailed final markers typically cost around $2,000 – $7,000 depending on the design. Other markers designed to lie flat on the ground can range anywhere from $500-$1000. Ultimately the type of marker you purchase will be solely dependent on the availability of the cemetery and your loved ones’ affordability at the time of passing.
Casket
Caskets can rely greatly on style, material, design and price. In most cases, a typical casket costs between $2,000-$5,000 and is usually either metal or a cheaper wood, but some can go for more than $10,000.
It’s important to remember you’re not obligated to buy any funeral items directly from the funeral home. Buying outside of a funeral home can help you save thousands of dollars. More and more, people are buying caskets from third-party retailers like Amazon and Walmart and having them shipped directly to the funeral home. By law, funeral homes are required to use the casket you provide and can’t charge any additional fees to handle third-party caskets]:
Who is Final Expense Insurance For?
Final expense insurance is typically used by seniors who may not qualify for traditional life insurance due to their age. It’s also used by people with pre-existing health conditions or a family medical history that disqualifies them from a standard life insurance policy. People who want peace of mind knowing their loved ones won’t have to use their savings to pay for end-of-life arrangements often choose final expense insurance. Young and healthy people can usually qualify for term life insurance instead.
How much does final expense insurance cost?
On average, a final expense policy will cost between $30-$70 a month. If you have significant health conditions or are over the age of 70, your premium will be higher and may cost between $70-$120 a month. However, younger applicants who are in good health may qualify for rates in the $20-$50 range. It’s important to remember that a cheaper rate usually means fewer features and benefits for surviving loved ones. Therefore, a few extra dollars a month could make a big difference in the support your family receives when you’re gone.
How to get final expense insurance?
Final expense insurance is a type of life insurance that helps cover the costs associated with your death, such as funeral expenses and unpaid medical bills. You can get a free, personalized quote for final expense insurance online here. There are different types of final expense plans available, and at Clearone Insurance we specialize in all things final expense life insurance. When you purchase a policy from a Clearone Insurance Broker, you’ll receive a two-page final wishes form to help you decide the style of funeral you want and document any additional requests.
What are the different companies that offer final expense insurance?
There are many different companies that offer final expense insurance. Some of the more popular companies include:
- Mutual of Omaha
- Transamerica
- AIG
- Foresters
- Americo
- Royal Neighbors of America
- American Amicable
What are the different types of final expense life insurance?
There are three types of final expense insurance plans: graded, modified, and level benefit.
Graded Final Expense Life Insurance Plans
Graded plans are good options for clients who have certain pre-existing health conditions that you might uncover during your evaluation of the clients or through medical questions during the application process.
With a graded plan, if the policyholder dies within the first year of owning the policy, the beneficiaries will receive 30% or $6,000 (whichever is less). If death occurs during the second year, 70% or $14,000 will be paid out (whichever is less). Death in year three or later pays out 100% of the face value of the policy.
Modified Final Expense Life Insurance Plans
Modified plans work well for people who might not qualify for a level benefit plan due to their health history but do not want to pay the higher premiums associated with a graded plan.
With a modified plan, if death occurs in year one, two, or three benefits are reduced by 20%. So, if the face value of the policy is $10,000 then beneficiaries would receive $8,000 upon death during those years. Death occurring in year four or later pays out 100% of the face value of the policy.
Level benefit Final Expense Life Insurance Plans
Level benefit plans are the most popular type of final expense insurance. They are also the easiest to qualify for since there is no medical exam required and acceptance is guaranteed (in most cases).
With a level benefit plan, the full face value of the policy is paid out upon death, regardless of when it occurs.
Different companies have different payout schedules, so it is essential to understand the plan when explaining to your clients fully.
How to choose the best final expense insurance policy?
When you’re ready to start shopping for a final expense insurance policy, it’s important to compare prices from multiple insurers. That’s where our independent brokers at Clearone Insurance come in. We’ll help you save hundreds of hours, countless phone calls, and a few grey hairs by helping you shop and compare 15+ top final expense insurance carriers and finding you only the best options available period.
If you would like to speak with a live broker, call us at 1-(888) 403-4095. Our agents are knowledgeable and friendly. We’ll answer all your questions and give you honest advice.
Or get a free quote here today.
