Does Final Expense Insurance Make Sense for Me?

Final expense insurance, also called burial insurance, is a great option for certain people. This flexible policy is an affordable option for people who cannot secure traditional life insurance, but it may not offer the best coverage for all. Understanding your own needs and your family’s needs is the best way to decide which type of insurance plan to purchase. Working with an agent will also help you understand which plan is right for you. Below is a guide with prompts to help you work through these decisions. 

The Definition of Final Expense Insurance

Final expense insurance is a type of life insurance policy. It is more limited than a traditional life insurance policy. It offers lower coverage, typically from $2,000 to $50,000 at the upper limit. In exchange for this lower face amount, consumers pay less for their monthly premiums. Because the death benefit is smaller than traditional life insurance policies, beneficiaries typically use final expense insurance to cover the costs associated with end-of-life.  

What Final Expense Insurance Covers

One of the best aspects of final expense insurance is its flexibility. While policyholders can leave their beneficiaries’ instructions as to how they would like the death benefit spent, they are ultimately in charge of managing the funds from the death benefit. Most people spend it on the policy holder’s outstanding bills, like mortgages, medical bills, and funeral costs. However, beneficiaries are also free to spend the money on whatever they want, like their own mortgages or vacations. There are generally no restrictions at all. 

Who Final Expense Insurance Benefits

Final expense insurance is a good option for many, but experts believe that people who can afford a larger policy should buy a larger life insurance policy. Final expense insurance should be reserved for people who cannot afford a larger policy. Additionally, final expense insurance is a good option for people who cannot qualify for a traditional life insurance policy due to their age or medical conditions. Life insurance companies often ask for a medical physical exam and medical questions. They then disqualify people who are deemed a substantial risk. Final expense insurance policies, in contrast, ask only a limited amount of medical questions. Certain final expense insurance options called guaranteed acceptance plans, accept everyone. 

The Cost of Final Expense Insurance

The cost of final expense insurance is highly dependent on a variety of factors. Specifically, it depends on your age, gender, health conditions, and tobacco use. Typically, expect to pay anywhere from $50-$400 per month. The charts provided below can help you better plan for your monthly payments. Find the chart closest to your age. Then, use your gender and tobacco status to stratify yourself into one of the groups. If you have severe medical conditions like HIV or End-Stage Renal Disease, you will most likely have to purchase a guaranteed acceptance plan. 

People Age 55

Gender & Rating$5,000$10,000$15,000$20,000
Female No Waiting Period$15.80$28.40$41.00$53.60
Female Tobacco & No Waiting Period$20.66$38.32$55.88$73.44
Female Guaranteed Acceptance$18.38$35.84$53.30$70.77
Male No Waiting Period$19.15$35.09$51.04$66.98
Male Tobacco No Waiting Period$25.24$47.27$69.30$91.33
Male Guaranteed Acceptance$23.51$46.11$68.70$91.30

People Age 65

Gender & Rating$5,000$10,000$15,000$20,000
Female No Waiting Period$22.11$41.01$59.91$78.82
Female Tobacco & No Waiting Period$29.60$56.00$82.40$108.79
Female Guaranteed Acceptance$28.19$54.51$80.76$107.02
Male No Waiting Period$29.48$55.76$82.04$108.31
Male Tobacco No Waiting Period$41.10$78.99$116.88$154.77
Male Guaranteed Acceptance$34.60$68.29$101.98$135.67

People Age 75

Gender & Rating$5,000$10,000$15,000$20,000
Female No Waiting Period$37.81$72.41$107.01$141.62
Female Tobacco & No Waiting Period$48.54$94.43$140.31$186.20
Female Guaranteed Acceptance$45.60$90.29$134.98$179.67
Male No Waiting Period$51.37$99.53$147.69$195.85
Male Tobacco No Waiting Period$67.57$132.49$197.42$262.34
Male Guaranteed Acceptance$62.79$124.49$185.74$246.98

People Age 85

Gender & Rating$5,000$10,000$15,000$20,000
Female No Waiting Period$69.55$135.90$202.25$268.60
Female Tobacco & No Waiting Period$96.45$180.70$282.95$376.20
Female Guaranteed Acceptance$103.10$204.20$305.31$406.41
Male No Waiting Period$93.18$183.15$273.13$363.10
Male Tobacco No Waiting Period$141.39$279.58$417.77$555.97
Male Guaranteed Acceptance$150.43$298.86$447.30$595.73

Questions to ask yourself

To understand whether you should buy life insurance or final expense insurance, you should ask yourself a few questions. These questions are:

1. What can I afford?

If you can afford a regular life insurance plan, experts recommend buying a traditional life insurance plan with more robust coverage than a typical final expense insurance plan. There are many unexpected costs associated with the end-of-life, so you should give your loved ones more financial freedom by purchasing a larger plan.

2. What kind of medical conditions do I have?

Your health will impact your ability to secure life insurance and different final expense insurance plans. If you have serious medical conditions, many life insurance companies will not accept you as a policyholder. Final expense insurance plans are more lenient. Generally, they accept people who have had strokes, heart attacks, and other serious medical conditions. If you have medical conditions that even general final expense insurance policies will not accept, there are special plans called guaranteed acceptance plans. While these plans are more expensive, they are often the only option for people with serious illnesses.

3. Do I already have life insurance?

If you already have life insurance, you do not need to buy final expense insurance. Instead, you need to understand what type of life insurance you have. If you have permanent life insurance, you will always be covered. If instead, you have a term policy, your term might expire before your death. This means that you will not be covered at the end of your life. You should consider getting a different type of policy in that event. 

Final expense insurance is a type of life insurance that offers more people more options for a smaller monthly premium. In exchange for the affordability, it offers less coverage than traditional life insurance. This policy is best for people who cannot afford life insurance or who do not qualify. Speak with an agent or financial advisor to understand which options are right for you.