If you are looking for reliable burial insurance, that means you already know that the Social Security Administration pays only $255 when a person passes away. However, the average funeral costs can go up to $9000, and loved ones or relatives are responsible for paying the remaining amount.
This is when you need burial insurance, a cost-effective option to pay for all your funeral services. It can help you pay any outstanding debts and other payments, so your loved ones don’t have to ask for donations to pay them. Although final expense insurance or burial insurance is the fastest-growing insurance segment in the USA, it does have criteria to obtain it.
Before getting into more details to help you make the most of this option, let’s understand the final expense policy basics.
Basics of Final Expense Policy
A final expense policy is a basic type of life insurance that you can easily qualify for if you’re above 50 years old. There is no need to go through a medical exam. Apart from a few exceptions, the final expense policy is available to all people. It is common and cost-effective, and you can obtain it without any hassle, unlike traditional policies.
Limitations to Obtain a Final Expense Policy
Most funeral expenses or life insurance policies have a two-year contestability period. Note that it is not a waiting period. A contestability period typically means that your insurer has a right to contest payment received from your death benefit if you pass away within your initial years of coverage.
If the insurance company finds any evidence that you have lied on your final expense policy form, it may decline payments or claims. For instance, if you fail to disclose a dangerous job or medical condition, your insurer has a right to refuse your due payment or claim.
Keep in mind that it is one of the basic features of most insurance policies. That means if everything is fine or turns okay, the insurer pays your family or loved one as agreed.
Your funeral expense policy accrues cash value over time. As a policyholder, you can leverage against a loan. But it is relatively a small coverage amount; the cash builds slowly and may not be the significant asset you are expecting.
Moreover, funeral insurance often limits the death benefit to $ 40,000 to 50,000 in many cases. Older applicants who are in their 70s or 80s may have to face more limitations. Buying coverage, which is more than $25,000, is not always possible.
All in all, the final expense policy is a basic life insurance policy that you can qualify for. It follows the criteria and pays premiums on time. It helps you pay for your funeral expenses. Thus, the given details highlight the limitation you must know before signing up for the policy.