Final Expense Life Insurance | 2024

Final expense life insurance, or burial insurance, is a permanent life insurance policy that pays a death benefit to beneficiaries. The benefit covers your end-of-life costs: funeral arrangements, credit card debts, medical bills, etc.

You may have to fill out a health questionnaire, but older adults — typically those between 50 and 85 years old — aren’t required to go through a health screening to qualify. That makes this type of policy an attractive option for many seniors.

Coverage

Final expense policies provide a lower amount of coverage compared to other life insurance policy types. Below are the coverages provided:

• Death benefit: A death benefit is a lump sum paid to beneficiaries when the policyholder dies. Where term life policies and other whole life policies often offer a death benefit of $100,000 to $500,000 or more, final expense insurance coverage amounts usually range from $2,000 to $50,000.

• Cash value: Final expense coverage policies may have a cash value component that you can borrow from before you die.

• Optional riders: Some insurance providers offer add-on riders, such as an accelerated death benefit that gives you an advance on your benefit payout if you get a terminal illness. Some riders also cover children.

The application process for final expense insurance differs based on whether the policy is a guaranteed issue policy or simplified issue policy. Here’s how they work:

• Guaranteed issue: With this, you’re guaranteed to get coverage without completing a health questionnaire or undergoing a medical exam. Coverage amounts for guaranteed issue policies are typically lower than amounts for simplified issue policies, and premiums are usually higher.

• Simplified issue: With this policy, you may need to fill out a health-related questionnaire, and insurance companies base their approval on your responses. Simplified issue policies typically cost less than guaranteed issue policies but usually come with a higher guaranteed death benefit.

As a permanent policy, final expense insurance stays in place as long as you pay your premiums. However, some policies may have a waiting period (usually one to three years) for coverage to begin. If you die before the waiting period is up, your beneficiaries will likely receive a refund of your premium payments instead of a full death benefit.

Whether you need final expense insurance comes down to what bills might be pending after you die and whether you have other life insurance policies in place. If you have a life insurance policy through your employer or a partner’s employer, that coverage may be enough to pay for a funeral, cremation or lingering credit card balance. You may also be able to convert an existing term life policy to a permanent life policy to gain long-term coverage.

For older adults who have no life insurance coverage, final expense insurance can serve as a way to take some financial burden off loved ones after you die. The lack of a required medical exam makes it possible to gain insurance coverage despite any health issues, and family members can use the cash to pay for your end-of-life arrangements.

Know that the Social Security Administration (SSA) also may pay a lump sum death benefit of $225 to surviving spouses or eligible surviving children. Surviving spouses who are of retirement age or who are caring for children younger than 16 or who have disabilities also may receive monthly benefits. Depending on your final expenses, SSA benefits, coupled with savings and other life insurance coverages, could be enough to settle your affairs. If so, you don’t need final expense insurance.

Final expense life insurance policy premiums can vary depending on your:

• Age: The older you are, the higher your premiums may be because you’re a higher risk to insure, and your premiums are higher to compensate for it.

• Gender: Men may pay a higher premium on life insurance than women.

• Health: Even if a medical exam isn’t required, an insurer may ask questions through a health questionnaire. The insurer may use your answers to set your premium.

• Coverage: The coverage amount you choose can increase or decrease the cost.

The best way to find real-world policy costs is to request quotes from a few insurers. But on average, premiums for final expense insurance range from $30 to $70 per month, according to Lincoln Heritage Funeral Advantage. That range increases to $70 to $120 per month for people over 70 years old who have preexisting health conditions. In comparison, the price of term life insurance and whole life insurance policies, both of which have higher payout amounts, can jump much higher as you grow older and face more health issues.

For example, a 10-year term life Aflac policy with $125,000 in coverage for a non-smoking 60-year-old costs about $175 per month for a man and $140 per month for a woman. When you turn 70, monthly premiums increase to about $403 for a man and $345 for a woman. Comparing policy costs can help you find the best life insurance, with coverage amounts and premiums that fit your budget.

Final expense life insurance may be worth purchasing if you’re an older adult in not-so-great health who wants to eliminate some financial burden for loved ones after you die. Beneficiaries have the freedom to use your lump sum death benefit for any expense they need to pay.

If you already pay for life insurance or other assets that will fall to your family, final expense insurance may not be worth it.

When adults reach middle age, end-of-life and legacy planning becomes a higher priority. Buying final expense life insurance is one way to provide family members with funds to pay for your sendoff and other end-of-life bills.

Another way to pay for those expenses is to set aside money ahead of time. Before committing to final expense insurance, think about what your final expenses might be, what insurance coverage you already have and what assets you will leave. With that information, you can determine whether getting final expense insurance to fill the gaps makes sense.