FINAL EXPENSES & FUNERAL TYPES
What is Burial or Funeral Insurance & How Does it Work?
Final expense insurance is a type of permanent life insurance that can help older adults ease the burden of end-of-life expenses on their loved ones. Final expense is typically a smaller life insurance policy meant to help older adults cover funeral costs and other end-of-life expenses.
Since coverage amounts are lower than most other types of life insurance such as term or permanent insurance, the premiums tend to be affordable. Coverage amounts usually range from a few thousand dollars up to $35,000.
Final expense insurance is much easier to qualify for - with no medical exam required. As long as you are within the age limits of 50 to 85 years old, you’ll often get an approval for a policy within days. Read below for explanations of the types of coverage.
Standard Funeral Insurance
These plans are offered by most life insurance companies in the form of a whole life policy. The benefits are paid directly to the beneficiary, or beneficiaries when your loved passes away in order to pay for final arrangements. Some of these are:
Funeral services / Funeral Home
Burial plot / Transportation
Caskets, Headstone, Grave Vault, Obituary, Etc.
Cremation / Urn
The beneficiary can also use some or all of the money to cover other expenses / debts left behind by the deceased, such as attorney fees, medical or hospital bills or personal debts, such as credit card, mortgage, auto loans and more.
Pre-Need Funeral Insurance
Pre-need insurance makes a funeral home the beneficiary of your policy - not your loved ones - and pays only for your service and burial arrangements, which are chosen in advance. Here are some of the key points of Pre-Need Funeral Insurance:
You decide your funeral arrangements in advance, & the death benefit covers only those costs
Pre-need insurance is typically non-refundable / non-transferable
Due to the lower benefit amounts and very little flexibility, it’s often better to choose term life or final expense insurance in most cases.
Final Expense / Funeral Insurance Premiums
Stepped Premiums - Calculated annually upon policy renewal. Premiums are based on sex, age & benefit size. The premiums increase as you get older
Level Premiums - Premiums are still based on sex, age & benefit size - however, the rate is locked in as long as premiums are paid, meaning they will not be increased.
Capped Premiums - There is a dollar amount or age limit. When the limit is reached, you keep your coverage and no more premiums are necessary
Payout Guarantee - This ensures that the beneficiary will be paid the higher of these two variables: Exact amount of premiums paid, or the original insured amount.