As you get older, the options for life insurance may become more limited, and the price of some plans may be out of your budget. If you have any major health issues, that may add to the complication of purchasing a life insurance policy. A final expense life insurance policy is made just for this situation: for people over the age of 50 who may have some health complications.
These policies can help pay final expenses, such as funeral costs or medical bills. If you are older, have no or little life insurance, and have health issues that limit your options — it may be worth looking into final expense life insurance.
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What Is Final Expense Life Insurance?
Final Expense life insurance is a permanent life insurance policy designed specifically for people over a certain age — usually 50. Each insurance company may offer a different amount of coverage for their final expense policy, but most run between $5,000-$35,000.
You may also hear these policies referred to as burial or end-of-life policies. Eligibility requirements may vary from company to company, but most final expense policies have leniency regarding medical issues. There is usually no medical exam, and you may qualify if you do not have a life-threatening condition.
What Can You Use Final Expense Life Insurance For?
Final expense policies can be used to cover the following expenses:
- Funeral costs
- Cremation costs
- Outstanding medical bills
- Outstanding debts
- Any other outstanding expenses
The policy beneficiary can decide what expenses to pay and how to use the death benefit. Unless notated in a will, the payout money from a final expense policy has no limitations. The beneficiary can use the money in the manner they see best fit.
The Financial Impact of Final Expense Life Insurance
Older people often live on a fixed income. Unexpected costs from a spouse’s passing may burden them financially. On the flip side, when a senior passes away, they may leave behind expenses that a loved one may be unable to pay.
An average funeral can cost over $7,000, and the price of cremation with a viewing is not much cheaper. A final expense policy is an affordable way to cover these and other end-of-life expenses.
How to Secure the Right Final Expense Coverage
Most life insurance companies start offering final expense policies to customers over the age of 50. If you are of that age and want to look into securing a final expense policy, there are some easy steps to take.
- Research life insurance companies. Not all companies may offer this type of policy. Be sure that the company you choose is reputable.
- Get quotes. You may want to get quotes from several companies to ensure that you are getting the best policy within your budget. Be sure to compare costs, coverage, and any added benefits that the policy may offer.
- Choose a policy and submit an application. Once you have chosen your policy, you must submit an application. You will need to provide the company with some personal and health information and name a beneficiary for your policy. Make sure you speak with your beneficiary to voice your needs concerning the payout.
- Accept the policy. Once the policy is approved, you will receive a letter or call from the company. Be sure to review the policy for any price or coverage changes.
- Pay for the policy. You must ensure that you make timely payments to continue your policy.
The Benefits of Final Expense Life Insurance
Depending on your situation, a final expense policy may be the best fit. There are many benefits with this type of policy including:
- Affordability: These policies are usually considered affordable, costing around $50 a month on average.
- Offers a set death benefit: Your beneficiary is guaranteed to receive a certain amount if you keep up on premiums.
- No strict underwriting: People in poorer health can usually qualify for this coverage.
- Death payout can be used for any purpose: Your beneficiary can spend the payout as they see fit.
- Made for people who struggle to get life insurance: These policies are specifically targeted to mature adults with health issues.
- Works alongside other life insurance policies: You can have additional policies outside of final expense life insurance.
- Permanent policy: As long as you keep up on premiums, the policy will not expire.
Alternatives to Final Expense Life Insurance
While a final expense policy may be a good fit for some, other types of policies may be a better fit, depending on your situation. If you are younger, have no health issues, or are looking for a more considerable death benefit, you may consider one of the following types of policies:
- Whole life insurance: This is a permanent type of life insurance that offers a death benefit and a cash value. Whole life insurance may be a good alternative for a consumer who can afford a larger premium, wants a more significant death benefit, or would like the ease of accessing their cash value while alive. Whole life policies are subject to medical underwriting and may not be available to all individuals.
- Term life insurance: This type of life insurance is a temporary policy that lasts for a set number of years, such as 10, 20, or 30. Term life insurance is usually more affordable and offers a large death benefit. Once the policy term ends, the policy may lapse or become unaffordable. Like with whole life, term life is also subject to health underwriting.
- Universal life insurance: This type of policy offers a flexible death benefit and a flexible premium. In some cases, universal life insurance may build a cash value, but it is not guaranteed. The price of this type of policy can vary greatly depending on the type of policy and coverage, and it is also subject to medical underwriting.
All in All
Final expense life insurance is targeted at elderly individuals who may be on a set budget. Having a fixed price for their life insurance may help them work a life insurance premium into their budget. A final expense policy may be an excellent option for older individuals with no or little life insurance who do not want to leave end-of-life costs to their loved ones.
Most final expense policies allow for some health imperfections, making it a more straightforward policy to obtain than some. While this type of policy may not be the best fit for everyone, it is essential to explore all coverage options to find the policy that best meets your needs.