FINAL EXPENSE 101

FINAL EXPENSE 101

One of the most difficult topics to talk about with your family is, what happens after death and how can you ensure the financial security of your family? It’s painful enough both emotionally and mentally to lose a loved one, and in addition funeral expenses can also be a burden to your family. However, being prepared with Final Expense Insurance can make this moment in their lives less stressful. Final Expense Insurance can provide you with the financial security your family needs in order to cover funeral or burial costs, including outstanding medical bills, and property taxes. 

Final expense Insurance is a type of Life Insurance also known as whole life insurance. A whole life insurance policy will remain in force for your entire life as long as the premiums are paid. Final Expense requires no medical exams to obtain a certain type of policy and it is generally meant for seniors 55 and older with different medical conditions. Generally the death benefit will be provided to the person you name primary beneficiary, they will receive the death benefit in the form of cash, for them to distribute the funds as they see fit. 

PROTECTING YOUR LOVED ONES

Funerals, Burials, and Cremations are on the rise. Unfortunately the estimated $6,000 funeral cost averaged several years ago, does not take into consideration the rest of the expenses. According to Parting.com, when you factor in all the expenses, a funeral can cost the average family $8,000-$10,000. While it could be easier to turn a blind eye and ignore the reality, death is certain, but unexpected. Proactively arranging Final Expense Insurance will make it easier for your family to access the funds they need to cover these expenses. When your day comes, you may want to rest in peace knowing your family is covered. 

The initial step to protecting your family is checking what coverage you qualify for. Applying for Final Expense Life Insurance can be as simple as answering a few health questions. Depending on the Life Insurance company, each application can vary from 1-10 pages long. Applications can be either made over phone, online or in person with a licensed agent. 

The cost of Final Expense Life Insurance varies, as we age our health also declines and these are huge factors that will determine the cost of your policy. Final Expense Insurance can be affordable and your premiums will not increase over time. The death benefit is smaller than that of a traditional life insurance policy and may vary from $2,000 to $50,000 in coverage, but depending on the death benefit, your premiums will vary. You may also want to consider that Final Expense Insurance does not expire, nor can it be cancelled because of your age and health. It could however be cancelled only if you choose to have the policy cancelled yourself or you allow the policy to lapse, meaning you stop making payments. 

WHAT TYPE OF POLICIES ARE AVAILABLE?

It is also very important to understand what type of policies companies provide when it comes to Final Expense. There are three different types of Final Expense policies that will be covered below. Some companies provide Level, Graded/Modified, and Guaranteed Issued Policies. You will want to get the right plan with the right company at the right price. With this said, once you have arranged a Level death benefit policy, the coverage will go into effect as soon as the first premium payment is made. For example, if you purchased a $10,000 policy, and your first premium payment is May 18th, your death benefit begins on May 18th. If you happen to pass 

away for any reason on that day or after, your beneficiary is eligible to receive the full death benefit you purchased of $10,000. Level Death Benefit Policies are generally given to those applicants with average to great health. 

A Graded/Modified Policy is a type of final expense life insurance policy in which a percentage of the death benefit will be paid if you pass away within a year of acquiring the policy. If you pass away within the first 2-3 years a higher percentage will be paid. However, if you pass away after 3 or more years of acquiring the policy, generally one hundred percent of the death benefit will be paid to the beneficiary. A Graded/Modified Policy is generally given to applicants with more serious health conditions such as COPD or amputations due to diabetes. Typically premiums for Graded/Modified policies are higher than Level premiums but lower than Guaranteed Issued Final Expense Policies. 

The Guaranteed Issued Final Expense Policy is generally more expensive than Graded/Modified policies as there are no medical questions asked. Therefore, an applicant with more serious illnesses such as cancer, or terminal conditions will have a higher premium with guaranteed coverage. Guaranteed Issued Final Expense Insurance typically has a two year waiting period. For example, if the insured passes away after two years of the policy’s effective date, the full death benefit will be paid to the beneficiary. On the other hand if the insured passes away within the two year waiting period the policy will only pay out the premiums that were paid into it, plus some interest percentage. Keep in mind that the percentages and conditions all vary by carrier and plan. 

If you believe that your family will be unable to pay for your unexpected funeral costs, estate taxes, medical bills, or be financially hindered after your passing, then Final Expense Life Insurance is ideal for you. The death benefit you choose will depend on your health and what you are seeking to protect. Having this form of security for your family will ensure them with income to cover any or all funeral related expenses, and help them lessen the financial burden especially while they are grieving. This is a big decision to make, and at times difficult to even talk about, however you want to make sure that your policy fits your needs and those around you.