Things to Know About Final Expense Insurance

Updated on 02/13/2023

Things to Know About Final Expense Insurance

Preparing for the end of your life can be a difficult prospect. It is something many adults do not want to confront until much later in life. 

An important consideration is the steps you will take to make sure your family is taken care of after you pass. Another difficult period for many families is covering funeral expenses.

Funerals typically cost several thousand dollars, which must be paid in a short amount of time. This period of time is inevitably stressful for many family members, never mind having to worry about scrambling to pay funeral costs.

One of the ways you can provide coverage for your family is with final expense insurance.

 Final expense insurance covers the majority of costs relating to your end-of-life arrangements. Like with other insurance policies, the level of coverage varies depending on your insurance provider and how much you want to pay.

Keep reading to learn important information about final expense insurance.

What is Covered by Final Expense Insurance?

While most insurance providers focus on burial and funeral costs, final expense insurance covers other areas as well. 

There are insurance plans to cover additional funeral related costs, such as cremation, burial arrangements and memorials. You can also get a policy to cover the cost of obituaries and celebratory events, such as your wake.

Another important part of final expense insurance is coverage for any legal and medical expenses. 

Without final expense insurance, these costs usually default to your family. Depending on the events leading up to your passing, these expenses may otherwise cost your family thousands of dollars.

Final expense insurance also typically offers coverage for transportation costs. This covers both the costs to transport your body to the funeral home, as well as potential transport expenses to move your body from a hospital.

Final Expense Insurance Costs and Payments

How much your family receives from your final expense insurance varies based on several factors. The age at which you enroll in your insurance policy is one of the biggest deciding factors. 

The younger you are when you enroll, the greater the payout. Most insurance providers will start offering coverage when you are at least 30 years of age.

Unlike with other forms of insurance, your insurance provider can change how much you receive based on your health status when you enroll. If you are considered higher risk to pass due to a medical condition, your insurance plan will adjust accordingly. 

Additionally, some insurance providers will only offer coverage up to a certain age, typically 85. While other insurance policies are available, it may require setting up a new plan.

Another consideration is how much you pay in monthly premiums. Typically, the older you are when you enroll in insurance, the greater the monthly premiums.

For example, a younger, healthy adult might only pay around $20 to $30 per month, based on the insurance provider. In comparison, seniors might pay closer to $80 or $100. 

Differences Between Life Insurance Policies

Final expense insurance is sometimes mistaken for life insurance. 

Both types of insurance policies provide coverage for your family after you pass. However, life insurance offers more extensive coverage in comparison. 

Some life insurance policies include coverage for your burial and other funeral costs, but this is not always guaranteed. If you have both types of coverage, your family can use the life insurance benefits for other costs, while final expense insurance can be used for your end-of-life costs. 

Life insurance policies are usually more expensive than final expense coverage because it covers a variety of areas. If you do not already have a life insurance policy, it might be more affordable to buy a quality final expense plan.

Tips for Choosing the Right Plan

Purchasing final expense insurance is similar to buying other insurance policies. 

First, you do not want to buy the first policy you see. Always take the time to look over several policies from different providers to find the best rates. 

Final expense insurance costs may greatly vary from provider to provider because of the way costs are calculated. For example, some insurance providers place a greater emphasis on certain aspects of your medical history. 

Word of mouth can be a great way to find insurance providers. If you are not comfortable talking to your family and friends about their final expense insurance, speak with your current insurance providers to see if they have recommendations. 

No matter who recommends a provider, make sure you look at the reviews. Agencies like the Better Business Bureau can be an excellent source of information for insurance companies. 

Senior groups, such as the American Association of Retired Persons (AARP), may also be good sources to find final expense insurance.

Looking at plans online is another good way to get an overview of policies, but you are strongly encouraged to speak with a representative once you find a plan you want. Speaking with an insurance broker directly can clarify details and make sure you understand the exact level of coverage and all the stipulations regarding the policy. 

Always try to prioritize insurance policies with fixed premiums. This becomes especially important if you are getting final expense insurance when you are younger, since it locks you in for significantly smaller rates than if you apply for insurance later in life.

Budgeting for your Final Expenses

When you are looking for an insurance policy, it is important to know what level of coverage you need. 

For example, if you plan on getting cremated, you might not need as much funeral coverage. Cremation typically costs between $700 and $3,000, while burials are closer to $5,000 to $10,000. 

If you want your family to host a reception after the burial, you can pick a policy with post-funeral expenses.

Another option is to prepay for your funeral. More funeral homes are allowing seniors to plan their burial and funeral while they are still alive. 

This locks you into a price, so you know the exact level of coverage you need from your final expense insurance. It also eliminates some of the stress from your family, since they can follow out the plan you set in motion instead of rushing to finalize details after your passing.

By Admin