What Does Final Expense Insurance Cover?

Final expense insurance is a special type of life insurance policy. This type of policy is more affordable and easier to qualify for than traditional life insurance policies. Consumers can pick the face amount of coverage that is right for them and their families. Final expense insurance is also very flexible, allowing families to spend the money on whatever they need after their loved one’s passing. Learn more about what final expense insurance covers below.

How Final Expense Insurance Works

A final expense insurance policy is a regular life insurance policy that offers a smaller amount of coverage, which is easier to qualify for. This means that it does not require a medical exam and asks a few medical questions. When you purchase a final expense insurance policy, your monthly payments are fixed for the remainder of your life. Additionally, your coverage always remains fixed. Typically, the policy does not expire at any age for any reason. Certain policies sold by New York Life do have expiration dates in some states, but this is abnormal. You should be sure to verify that your policy does not have an expiration date. After you pass away, your beneficiaries will receive the face amount and use that money for whatever expenses they need to cover.

What Final Expense Insurance Covers

Like other types of life insurance, beneficiaries of final expense insurance policies can use the money for anything. Because the death benefit of a final expense policy is generally small, up to $50,000, many families typically use it to cover costs associated with end-of-life. This could include medical bills, outstanding mortgages, outstanding loans, funeral, burial, cremation costs, etc. However, nothing stops them from using the money for whatever purposes they see fit, including vacation or personal items. 

The Monthly Cost of Final Expense Insurance

The monthly cost of a final expense insurance policy depends on multiple factors. These include age, gender, health, and coverage amount. Older people, men, and people in poor health will generally pay more per month. This is because these groups have a lower life expectancy and therefore are expected to make fewer payments than the other groups. Of course, the more amount of coverage you want, the higher your monthly payments will be.

Special Considerations

One type of final expense insurance known as a guaranteed issue policy is meant to cover people with serious health issues. These policies do not ask medical questions, making it easier to qualify. However, they also have a 2-3 year waiting period before benefits are paid. If the policyholder dies during this period, beneficiaries do not receive the death benefit. Instead, they receive the sum of the premiums that the policyholder had already paid plus about 10% in annual interest. 

Final expense insurance is a highly flexible, targeted life insurance policy. While this policy was created to help families pay for costs associated with the end-of-life, in reality, the beneficiaries can use the coverage for what is best for them. The flexibility, relatively low monthly cost, and easy qualification makes final expense insurance a popular item for certain groups. 

We can help you estimate your monthly costs to figure out if final expense insurance is right for you.