Final expense insurance covers end-of-life costs. These include the costs one incurs for funeral and burial arrangements, nursing home expenses, as well as legal matters. People also call it burial insurance, funeral insurance, modified whole life insurance, or simplified issue whole life insurance. The plan is handy for those who do not have life insurance. Upon the policyholder’s passing, final expense insurance can help the family cover their funeral and burial-related expenses.

How does final expense insurance coverage work?
Generally, final expense policies are offered as whole life insurance. This means the coverage and cash value lasts one’s entire life. Of course, the insured must also pay lifelong premiums. Some insurance providers may offer final expense insurance in the form of term life insurance. These are effective only for a pre-decided coverage period and do not offer a cash value account.

All final expense life insurance plans include a fixed death benefit. This is the amount the beneficiaries receive after the insured’s passing. In most cases, people between 45 and 85 are eligible for these insurance policies. However, different providers will have different terms and conditions. Often, the coverage limit starts from $2,000 and goes up to $50,000. The exact figure depends on the insurance provider.

While final expense insurance aims to cover funeral and burial costs, it can also cover the expenses related to nursing home and hospital stays toward the end of a person’s life. In addition, a family can use the coverage to pay off a pending mortgage. Furthermore, individuals can buy several add-ons to expand the benefits of the final expense insurance policy. Some common add-ons offered by most insurance providers include the following:

Accidental death benefit
This add-on offers additional benefits if the insured person’s death occurs due to an accident within a certain period, as stated in the insurance policy.

Accelerated death benefit
Also called terminal illness benefit, this add-on provides a part or the entire death benefit to the insured person if they have been diagnosed with a qualifying terminal health disorder. Accordingly, the amount provided to the beneficiaries after the insured person’s death is reduced.

Children’s term insurance
It lets the insured add term life insurance for their children. The features and coverage limits vary based on the insurance provider.

How to apply for final expense insurance?
The process of applying for final expense insurance varies depending on the type of policy. Most providers offer two types of final expense insurance: guaranteed issue policy and simplified issue policy. Here’s the application process for each:

Guaranteed issue policy
For this, an applicant does not have to fill out a health questionnaire. Also, it is not mandatory to undergo a health exam. However, the coverage amount is lower and the premiums higher.

Simplified issue policy
If a person wishes to avail of a simplified issue policy of final expense insurance, they must fill out and complete a health-related questionnaire. The approval depends completely on the responses provided on the questionnaire. Compared to guaranteed issue policies, simplified issue policies have low premiums with higher coverage amounts.

How much does final expense insurance cost?
Making arrangements for funerals can be pretty expensive. A casket in itself can cost between $2,000 and $10,000. Furthermore, the deceased’s loved ones must pay funeral home service fees, embalming charges, and the cost of transporting the departed to the funeral home in a hearse. This is in addition to the costs for preparations like makeup and hair styling and providing facilities for viewing. According to a reputable funeral service association, the country’s average funeral cost is approximately $7,848. Meanwhile, the average cost of a funeral with a cremation service is around $6,971.

Considering these expenses, most insurance providers offer policies with coverages ranging between $10,000 and $25,000. Accordingly, the premiums can start from $50 per month and go over $130 per month, depending on the insurance provider.

Who should consider final expense insurance?
People in the following life situations may consider signing up:

A person whose family has grown
In their later years, a person’s family will not be as dependent on their income as in the early days. One may also not have high life insurance coverage as they did when raising a family or paying a mortgage. So, toward the end, once an individual’s family has grown and become financially independent, all they may require is readily available money for burial and funeral expenses. These immediate expenses can be paid off using a final expense life insurance.

A person with pre-existing health conditions
Most insurance providers do not require applicants to undergo health exams to issue final expense life insurance policies. Therefore, even if one has pre-existing health conditions, they can be eligible. The coverage will not be terminated even if a health disorder has progressed to its advanced stages as long as the premiums are paid on time.

A person looking for affordable coverage
Most final expense insurance policies are affordable compared to traditional life insurance policies. The rate of the premiums also stays the same over the long term. Therefore, these are good options for those looking for affordable coverage.