Final Expense Insurance
Get the Coverage You Need
Final expense insurance is a type of whole life insurance designed to cover the bills that your loved ones will face after your death. These costs will include medical bills and funeral expenses. Final expense insurance is also known as burial insurance.
Do I need final expense insurance?
The answer to that question will vary from person to person. Do you already have term or whole life insurance? If you do, that policy can help your loved ones pay for final expenses. However, if you have term life insurance and you outlive the policy term, you may want to consider final expense insurance.
Alternatively, maybe your family will have plenty of assets to work with when you die. In that case, you could simply “self-insure.” To self-insure is just to use your own money rather than use a life insurance payout.
It’s a good idea to assume around $10,000 - $15,000 for funeral expenses. But don’t forget to take into account whether you will want a catered party after the service or any additional services that will require more money. Maybe you’ll end up leaving big bills behind. If situations like these sound like your situation, you may want to consider buying final expense insurance.
Additionally, it’s probably best not to count on the lump sum death payment from Social Security to pick up the slack. It’s only $255.
The cost of final expense insurance
The exact cost of your final expense insurance will depend on your age. Unfortunately, the older you are, the larger the premiums. This is because insurance companies take on more risk when insuring older folks, given the fact that they’re statistically closer to death. If you buy final expense insurance when you’re 45, you’ll pay less each month than if you wait to purchase until you’re 75.
Can I pre-pay for my funeral?
You certainly can, and some people do. This approach does have its pros and cons.
When you pre-pay for your funeral, you get to personalize it. You can compare between different funeral directors until you find the one you like. You can pick out the perfect casket and plot in the cemetery.
States have varying guidelines on funeral pre-payment. These guidelines work to prevent you from paying unscrupulous folks who can take your money and run. It helps protect you or your family from overpaying on top of what you pre-pay. Before you pre-pay, check your state guidelines for how the money will be held until your death.
Make sure you know what you’re paying for and check whether you get to lock in the rate for your funeral. That way your family won’t be surprised by an increase in cost laster.
The disadvantage of pre-payment is that it’s less flexible than burial insurance. If your funeral plans change or you move, you and your family may not get that money back. Even worse, the funeral parlor could go out of business and you may lose that money entirely. Final expense insurance provides your surviving relatives with a payout they can spend anywhere.