Final expense insurance is a smaller, more affordable type of life insurance policy. It helps people cover their end-of-life expenses and ease some of the financial burden from their loved ones’ shoulders. Understanding whether or not it’s right for you can be a little confusing. SLS is here to help. Read more below to understand whether final expense insurance is worth it.
What is Final Expense Insurance?
Final expense insurance, also called burial insurance, is a type of life insurance policy that is more inclusive and less expensive. The final expense policy is meant to cover costs like funerals, but it can be spent on anything the beneficiaries want. The policies range from $2,000 to $50,000. To purchase a final expense policy, you would find a reputable company, purchase the plan, pay the monthly premium every month until you pass, and then your beneficiaries can use the death benefit for whatever costs they need covered. This is very similar to life insurance, but standard life policies have a much larger death benefit and are meant to financially support the family — for a longer time — after the policyholder passes away.
Who Should Get It?
There are two specific groups of people who should get a final expense policy over a larger life insurance policy: 1) people who can’t afford a standard life insurance policy, and 2) those who can’t qualify for one. A final expense insurance policy is a relatively affordable option.
The monthly premiums cost anywhere from $15 to $400, on average — depending on a variety of factors discussed below. These policies are also less strict on the health qualifications. For example, some people cannot qualify for a standard life insurance policy because they have serious health conditions. In contrast, many final expense policies accept people despite serious health conditions.
Conversely, this means that the people who can afford and qualify for a life insurance policy don’t need final expense insurance. Life insurance policies are generally bigger and more substantial than final expense policies. If you can afford a higher monthly premium in exchange for the continued financial stability of your family, consider getting a standard life insurance policy. Additionally, people who have savings of $50,000 or more don’t need a final expense policy since their nest egg is the same amount as the maximum final expense policy death benefit.
How Much Does it Cost?
The cost of a final expense insurance policy depends on a number of factors. Typically, people who have a longer lifespan are likely to pay for more months and have a smaller monthly premium. This means that women, younger people, and nonsmokers are more likely to pay less per month. Of course, the monthly premium also depends on the size of the death benefit.
View this chart for some examples:
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