Whether or not you need final expense insurance depends on your financial and medical situation. A final expense insurance policy is a smaller type of life insurance policy meant to cover end-of-life expenses for lower monthly payments, but not everyone needs a final expense insurance policy.
What is a Final Expense Insurance Policy?
A final expense insurance policy is just like a regular life insurance policy. However, it offers a smaller amount of coverage, typically $2,000-$50,000. This reduction in coverage is in exchange for a lower monthly premium. Additionally, final expense insurance does not require a medical exam. While some plans have medical questions and take into account health status, they are generally easier to qualify for than traditional life insurance policies. Some final expense insurance plans accept everyone and do not ask any medical questions. These are called guaranteed acceptance plans. This means that guaranteed acceptance plans can cover people who would not normally qualify for traditional life insurance coverage.
How a Final Expense Insurance Policy Works
Like a regular life insurance policy, coverage and monthly payments are fixed for the remainder of your life. Usually, the policy does not expire at any age for any reason. Newer final expense plans have started adding expiration ages, so be sure to check your plan to avoid these complications. After your death, your beneficiaries can use the face amount coverage for any purchase. While they could use it for funeral and medical expenses, they can also use it for a personal vacation or put a downpayment on a house. The flexibility of these plans is one reason for their popularity.
Who Should Choose Final Expense Insurance?
Certain people benefit from final expense insurance. These include consumers with poor health that would not be accepted by traditional life insurance policies. These policies are also a good option for people who want a limited amount of coverage for their families or cannot afford high monthly premiums.
Who Does Not Need Final Expense Insurance?
Not everyone needs a final expense insurance policy. For example, people who have a pre-existing life insurance policy that does not expire do not need this coverage. Additionally, people who have a large nest egg up to $50,000 will not need to purchase a policy. The limit on final expense insurance is $50,000, so a financially capable person does not need to purchase this type of policy. Additionally, if you can afford a larger monthly premium, many experts recommend purchasing traditional life insurance with a minimum of $50,000-$100,000 in coverage.
While final expense insurance is great for someone, that does not mean it is right for everyone. People who benefit from final expense insurance do not have a financial cushion for their family, who cannot afford high monthly premiums or those who have serious health conditions that preclude them from purchasing traditional life insurance policies. People who do not need final expense insurance are those who already have a nest egg for their family, have traditional life insurance, or can afford to purchase traditional life insurance.