Final Expense Life Insurance

Planning for the inevitability of death is nothing to get excited about, but burdening your heirs with unnecessary burial expenses can be avoided. Here’s how final expense life insurance can leave your family with a bit less grief.


While it’s not the most exciting topic to think about, we must accept that the reality that death happens. Planning for your death might seem morbid and depressing, but thinking about it now saves your relatives the hassle of planning for it later. Funeral costs range between $5,000 and $12,000. It could be more depending on what type of funeral you want and could possibly be more if you live a long life. You can prepay your funeral expenses with a funeral home or purchase final expense insurance to cover the costs associated with the event.

Final expense insurance or burial insurance is a type of insurance that covers the cost of funeral-related expenses. The insurance is paid to a beneficiary upon your death and the beneficiary uses the money to pay for your funeral. It’s similar to life insurance, but has a lower face value than life insurance since the insurance benefit is meant to cover only the expense of your funeral and burial. Final expense insurance is typically paid immediately while there’s often a wait period for life insurance. The waiting period for life insurance means that someone has to pay for the funeral out of their pocket and then be reimbursed with life insurance.

The insurance can be purchased as a term or whole life insurance policy. A term life insurance policy will expire after you’ve reached a certain age, even if no benefit has been paid. After you reach that age, your policy would no longer be effective. If you outlive your policy, you’ll need to have another way to fund funeral expenses if you want to spare your survivors the expense of paying for the expenses another way. A whole life policy, on the other hand, lasts until death. Based on your state’s laws, some final expense insurance plans are guaranteed issue – meaning you can sign up regardless of your health, age, gender, or pre-existing conditions. Most policies won’t be cancelled as long as the term is in effect unless you fall behind on your payments.

Some plans require you to have a physical exam before the policy can be issued. Simplified issue plans are granted based only on your answers to simple health questions on the application. You don’t have to take a medical exam or test to get this type of insurance. You might prefer a simplified issue plan if you have some type of medical condition that would keep you from otherwise being approved for coverage. Simplified issue plans may have a higher rate than those plans that are based on a medical exam.

Burial insurance plans may have a low minimum face value, often $1,000, and maximum face value that’s lower than a traditional life insurance policy, e.g. $25,000. The benefit amount is intended to be just enough to cover final expenses. Some policies can only be used to pay for funeral expenses while other policies may allow a named beneficiary to keep whatever cash remains after funeral expenses have been paid. To decide how much insurance you need, price a funeral at today’s cost and then adjust that about upwards to account for inflation.

Some plans have a graded death benefit that pays a small percentage of the face value if the insured person dies within the first year of the policy. The percentage paid increases for a certain amount of years. After the second or third year, the full death benefit is paid. One of the good things about final expense insurance is that the premium and benefits remain the same throughout the policy. This stability gives you the peace of mind in knowing exactly how much you have to pay every month and what type of benefit your survivors will receive.