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Pros and Cons of Final Expense Insurance
The pros and cons of final expense insurance depend on what you need: is your main concern budget, death benefit amount, or ease of application and approval? Let’s go over these considerations and more so you can make a smart choice for you and your family.
What Is Final Expense Insurance?
Final expense coverage is a type of life insurance designed to pay for the expenses you leave behind when you pass away: burial and funeral costs, as well as any medical expenses. Even if you don’t leave behind those medical expenses, it costs more than you might think to pay for a burial and funeral.
According to the National Funeral Directors Association, the average cost of a funeral is $7,848. Your costs will be as much as $1,500 higher if prefer to be buried in a vault.
Even if you prefer cremation, you can still expect to pay about $1,600 for the cremation and urn alone, with no ceremony or interment location.
This is when you have you to ask an awkward question: do your loved ones have the cash ready to pay for those kinds of expenses? For many of our clients, the answer is no.
Final expense insurance is designed to solve that problem. This type of policy pays a small death benefit – usually $5,000 to $50,000 – to the loved ones you choose when you pass away.
Want to talk to a real person about the pros and cons of final expense insurance? Call us at (800) 521-7873 and ask one of our licensed agents all your questions. Or start your insurance research with a free term life quote by clicking the button below!
Pros: Final Expense Life Insurance
- Covers you for the rest of your life. A final expense policy doesn’t come with an expiration date, the way a term life policy does. As long as you stay current with your payments, you’re covered whether you live another 10, 20, 30, or 40 years. Your coverage will never expire, and you don’t have to worry about outliving your policy.
- Rates never go up. Once you buy your policy, that rate is locked in. You’ll never have to pay more, even if you develop serious health conditions after your purchase. Click here for more information on policies for high-risk health conditions.
- No medical exam. You won’t be asked to take a medical exam, like you would with some other types of coverage. You may have to answer a few health questions, but that’s it – and even that depends on the insurer and their requirements. Applying is fast and easy without the exam. Click here for more information on no exam policies.
- Fast claims payment. Life insurance companies are quick to pay final expense claims – often in less than 48 hours. Your loved ones won’t have to wait long for the money they need to help pay your final bills.
- The cash goes to your loved ones. You may see ads for funeral insurance, which is similar to final expense except for one key difference. With funeral insurance, the payout goes directly to a funeral home. This means your arrangements have to be made beforehand so the insurer knows where to send the money. Your loved ones don’t see a dime of it. With a life insurance policy, you choose who gets the money. You don’t have to make funeral plans ahead of time, which means you can move, change your mind, or let your loved ones make those decisions.
- Your loved ones can spend that cash on anything they choose. Life insurance death benefits have no rules or restrictions on how they can be used. Your loved ones can use it to throw you a luxurious funeral, or they can choose to have a private burial and use the cash to pay off any final bills. It’s helpful to give them that flexibility so that, when the time comes, the money can go where it’s needed most. With funeral insurance, on the other hand, all the cash goes to the funeral home and is used to pay for their services. Final expense coverage puts the control - and the cash – in the hands of your loved ones.
After you go through all these pros and cons of final expense insurance, give us a call. Just dial (800) 521-7873 and one of our licensed agents can get you a quote and answer all your questions. Or start your insurance research with a free term life quote by clicking the button below!
Cons: Final Expense Life Insurance
- It’s more expensive than term life coverage. Because there’s no expiration date, this type of coverage costs more than term life, which does come with an expiration date. It’s a judgment call you have to make. We can help talk you through it if you give us a call. All life insurance is priced individually, based on your age, gender, and health. The more we know about you, the better we can offer advice that’s tailored to your situation.
- Policy face values are small. If you’re looking to leave a legacy, this isn’t the best policy type to choose. Face values are limited, often capped at $25,000 or $50,000. While that’s enough to handle funeral and burial costs, it’s not enough to, say, leave money behind to put a child or grandchild through college, or help your family pay off the mortgage to stay in their home. If you’re looking to leave a bigger gift, we’d advise choosing a type of permanent coverage with higher face values, like whole life insurance.
- Benefits may be limited for the first two years. Some insurers will place limitations on the first to years of your policy. If you pass away within that time period, your loved ones may only receive a percentage of the death benefit. It depends on the insurer and the policy you choose. If you want to avoid this, tell your agent while you’re shopping. Once we know what you’re looking for, we’ll only quote you policies that meet your needs.
It might be easier to talk to a real person about the pros and cons of final expense insurance. Call us at (800) 521-7873 and ask one of our licensed agents all your questions. Or start your insurance research with a free term life quote by clicking the button below!
