Final Expense Insurance

There are many different kinds of life insurance policies meant to fit a variety of life scenarios and situations. Included in these is final expense insurance, another form of end of life insurance that helps cover the cost of funeral and memorial arrangements. Also called burial insurance, final expense policies offer peace of mind by providing for your last wishes, and often at an affordable monthly price.

How Final Expense Insurance is Different From Life Insurance

It may seem a little confusing to have a form of insurance for funeral costs when many people utilize life insurance to handle the expense of their funeral services. But final expense insurance has significant differences from life insurance, specifically because the two kinds of policies have different end goals.

Life insurance: Life insurance is a tool used in estate planning to provide extra funds for family members, loved ones and business or personal expenses in the event of your death. Life insurance’s main goal is to provide for dependents and family members, especially in situations where you are the primary supporter or breadwinner for a family. In these cases, life insurance can help your family have a smooth transition as they grieve and adapt to a new normal, all without having to worry about how to pay bills or daily living expenses.

Final expense insurance: The purpose of final expense insurance is to help with the cost of funeral services and arrangements (hence its name). In many cases, final expense insurance, also referred to as burial insurance, can help cover medical bills related to your death or other pertinent expenses. Final expense insurance greatly differs from life insurance in that it is often a much smaller policy, specifically because it is meant to cover your final costs instead of supporting a family or clearing remaining debts.

Common Features of Final Expense Insurance

Burial insurance covers just what it says with its name: costs associated with funeral arrangements, services and burial. This kind of insurance policy is often a fraction of what a life insurance policy is, generally ranging between $2,000 and $20,000. For this reason, monthly premium costs are often much lower than traditional term or whole life insurance policies.

Final expense insurance policies often have quick payouts — an important benefit for families who are beginning to make funeral or memorial service arrangements. Since a final expense policy is specifically geared towards funeral home and burial costs, this promptness is often a large marketing point.

This kind of end of life insurance is also a popular option because of the lighter restrictions in comparison to other forms of life insurance. Final expense insurance policies can often be obtained without a medical examination or questionnaire, making them a strong choice for people who do not quality for other kinds of life insurance. In addition, the lower monthly premium allows people on tight or fixed budgets to still have some kind of insurance to help defray the costs of funeral arrangements. 

What Final Expense Insurance Covers

Burial or final expense insurance is geared towards covering the cost of burial expenses or other costs related to your memorial or end of life care. Many common uses for final expense insurance payouts include:

  • Funeral home services provided by funeral director
  • Memorial services provided by a funeral home or at another location
  • Cremation
  • Caskets
  • Cemetery plots and related expense
  • Hearse transportation
  • Headstones
  • Urns
  • Costs related to your last wishes, such as travel to a particular location to scatter ashes or transport of your body to a specific cemetery or region (such as a hometown or country)
  • Remaining medical bills

Final expense insurance can often be used for other necessary or related costs as determined by your beneficiary. In many cases, funds left over after your funeral expenses have been paid are sent to your chosen beneficiary. Just like other forms of end of life insurance, you may choose to designate how your beneficiary uses remaining funds, such as donating to a charity, creating a trust or simply gifting the balance to them.

How Funeral Expense Insurance Works

While burial insurance works similarly to life insurance, there are some differences. One of the main differentiating factors is how you can qualify for this kind of coverage.

Selecting a plan: There are a variety of funeral expense policies offered by countless insurance companies. For this reason, rates are competitive and companies often promote their plans as having more benefits with fewer restrictions. Unlike whole life or term life insurance policies, funeral expense plans generally do not require a medical examination or questionnaire. Companies that do require questionnaires still often accept people with pre-existing health conditions or other factors that life insurance providers often reject, such as a history of family illness, prior health situations such as heart attack or age. In fact, many funeral expense insurance plans will offer policies to individuals until age 75, if not slightly older.

Designating a beneficiary: As with other forms of life insurance, if you sign up for funeral expense insurance, you will be required to select a beneficiary. This person of your choosing — often a spouse, child, friend or sibling — will receive the insurance payout in a lump sum and can put those funds toward the cost of your final wishes, whether they be burial, cremation or another request.

Paying a monthly premium: After you have successfully signed up for your burial insurance policy, you will be responsible for a monthly premium. This cost can vary by person and often depends on factors listed in your medical questionnaire (if one was required) as well as age. Like most insurance policies, the younger you purchase the plan, the cheaper the monthly premium will be. Paying your premium on time and in full is necessary to ensure that the insurance company does not drop your coverage; so long as you do so, your policy will remain intact.

Considering insurance assignment: In some cases, you can choose to initially bypass a beneficiary and have your funeral expense insurance payout directed to a specific funeral home. Mortuaries that take insurance assignment — the lump sum payout from your policy — can use the funds to help cover the cost of your expenses, which is especially helpful if you have already made arrangements. Though, it is important to verify that the funeral home accepts assignment, as not all do; some funeral homes will require upfront payment or have terms that do not work well with assignment payout. With insurance assignment, any remaining funds are then dispersed to your beneficiary.

Payout upon death: Many funeral expense providers promote quick payout times, which is of importance considering how quickly funeral arrangements are often made. Many policies disperse funds within 48 hours.

Remaining funds: The average American funeral costs between $7,000 and $10,000 — a cost that can be overwhelming without help from an insurance policy. In some cases, your final wishes may leave room for remaining funds, in which case, you can designate how a beneficiary is to use them.

Who is final expense insurance for?

While burial insurance is often targeted towards older people, it can be purchased for anyone. Final expense insurance is often considered for:

  • Children in the case of unexpected death
  • Older family members who do not have a life insurance policy
  • People who have difficulty getting a life insurance policy due to pre-existing conditions or other factors
  • Individuals with low or fixed incomes who cannot afford more costly life insurance policies
  • People who do not have heirs or surviving family, and who are not worried about providing life insurance funds for dependents
  • People looking to make funeral planning easier on family members by designating specific funds — outside of life insurance — that can be used
  • Individuals with specific, costly final wishes, such as returning their body to a foreign country, construction of a mausoleum or having family members and friends scatter ashes in a particular region 

Final expense insurance is also of use for people who have estate plans in place, but worry about the length of time it takes for money to be dispersed as their estate goes through probate. Burial insurance’s quick payout means that family members do not have to worry about the upfront cost of funeral arrangements while they wait.

Burial insurance also has other perks, even for people with life insurance.  Older individuals with term life policies may consider adding a final expense policy, especially as the term for their life insurance plan draws near. This ensures you have some kind of coverage even if your term life expires.

The cost of final expense insurance

Many kinds of burial insurance are budget-friend, especially for people on tight budgets or fixed incomes. Premiums often fall under $20 per month, but do vary based on pre-existing conditions (though many burial insurance providers do not consider this factor) and age. Many final expense insurance providers do not have medical underwriting rules, or relaxed rules, which allows you to get a policy much easier than life insurance plans.

If you are considering final expense insurance, it is important to shop around simply because there are so many options. Let a PolicyZip final expense insurance specialist help guide the way as you begin exploring your options — simply fill out the form below or call 844-627-7700.