What Is Final Expense Life Insurance?

Final Expense is a simplified issue permanent Whole Life Insurance policy, that has no medical exam involved in the application process, and is a simple issue policy. Final Expense comes in Level, Modified or Graded, and Guaranteed Issue. Final Expense is sometimes referred to as Burial Insurance, or Estate Insurance. It is designed to take care of your funeral expenses, and any lingering debt that the insured may have. The coverage amounts are usually lower than standard Whole Life. They generally range from $2,500 on the low end to $40,000 on the high end, and the age range is typically 45 to 85 both depending on the carrier.

What is simplified issue?

It is a simplified method of underwriting, designed to streamline the application process. There is no medical exam required, and there are 2 sets of medical questions that are presented to the applicant. The first set, typically 5 to 7 questions are considered knockout questions. What that means is any yes answer, and the applicant is disqualified for coverage, and will have to be submitted to a guaranteed issue carrier. The second set of questions are to determine if the applicant is eligible for level or modified coverage, so any yes answer will put the applicant into a modified policy. There is also a pharmaceutical check done by the carrier, and with some carriers, it’s an instant decision on coverage.

The different coverage types explained

Level issue is the best, and has the lowest premiums. They can be with preferred or standard classification. Modified or Graded issue have higher premiums, and a 2-year waiting period before the full covered amount is available to the insured. In the first 2 years, the beneficiary of the insured, will receive a return of premium, plus 10%. Year 3 and beyond, the full amount is paid. This is triggered by any yes answer to the second set of health questions in the application. The highest premiums will be the guaranteed issue policies. This stands to reason since the Insurance Carrier is taking all the risk. An applicant can have cancer, and will still get coverage. The death benefit will also be like the modified coverage. A return of premium plus 10% for the first 2 years.

Who needs Final Expense Life Insurance?

The answer is simple, anyone in the appropriate age range, that currently has no coverage at all, and their loved one will be presented with a huge funeral bill when they die. At the time I’m writing this article, I personally know of someone who passed with no coverage in place. His widow had no money, and one of his daughters had to fork over the money. They were also forced to open a GoFundMe account, and lean on total strangers to give money.

The high cost of dying

The average Funeral costs between $7,000 to $15,000 depending on the location. Some of the typical costs involved that don’t come to mind during the initial funeral planning phase are listed below.

Funeral with Burial:

Metal Casket: $2,400

Basic Services Fee: $2,100

Vault: $1,395

Embalming: $725

Facilities/Staff for Ceremony: $500

Facilities/Staff for Viewing: $425

Hearse: $325

Removal or Transfer of Remains: $325

Miscellaneous Preparation: $250

Printing for Memorial: $160

Service Vehicle(s): $150

Funeral with Cremation:

In 2015, the NFDA projected that cremations would eventually become more common than traditional burials. Some families opt to hold memorial services and viewing prior to cremation. Other families, however, choose to hold their remembrances after cremation, letting the urn symbolize their loved one. The median price of funerals with cremations is $6,260. As with the above estimate of services with burial, this number does not include cash advance fees or cemetery monument or marker costs.

Basic Services Fee: $2,100

Cremation Casket: $1,000

Embalming: $725

Facilities/Staff for Ceremony: $500

Facilities/Staff for Viewing: $425

Third-Party Cremation Fee: $350

Removal or Transfer of Remains: $325

Urn: $275

Miscellaneous Preparation: $250

Printing for Memorial: $160

Service Vehicle(s): $150

The Decision is clear

The most common response to getting Final Expense is, “I can’t afford it”, or “I will get it later”. The truth is, you can’t afford not to get it, and none of us are guaranteed tomorrow. The answer to who needs Final Expense Life Insurance, is everyone who does not want to leave a burden of footing the bill for their funeral to their loved ones.