Final expense insurance, like other types of life insurance, is intended to assist your family in covering costs related to your death.
However, this level of coverage is not appropriate for everyone. Traditionally, insurance companies that sell final expense life insurance plans target those over 50 who watch daytime television.
(This is one of the reasons they frequently acquire a bad rap.) Their product is frequently supported by a celebrity from the past, who is also a future policy customer.
They can make this form of insurance sound quite enticing, but perspectives disagree on whether it is the best purchase for you. We answer the most frequently asked questions regarding last expense life insurance in this post to help you decide whether it makes sense for you to get it:
A sort of life insurance is final expense insurance, sometimes known as burial insurance. If you have a last expense life insurance policy and die, the person you name as your beneficiary will get the sum indicated in the policy. Last expense insurance is a marketing term used by life insurance firms in conjunction with advertising that some people believe exaggerates the cost of a funeral and the associated final expenses.
Few would argue with the premise that funeral expenditures in North America range between $7,000 and $10,000. Final expenditure insurance is typically a sort of whole life insurance.
Whole life insurance is a life insurance policy that will stay in force for the rest of your life as long as you pay the required premiums or until the policy matures (usually age 100). Other types of life insurance, such as term or universal life insurance, can be used to pay for final expenses; you do not need whole life insurance to pay for final expenses.
Insurance companies choose whole life insurance since it is statistically unlikely that you will outlive an entire life coverage. There are various advantages to using a whole life policy as your final expense insurance:
If you apply for a final expense coverage, the insurance provider will not require you to take a physical or allow access to your medical information. You will be required to answer questions regarding your medical history.
Most people who apply for a final expense coverage seek money to cover costs associated with the sort of burial or cremation they prefer, which can include:
While it’s convenient to have a check in hand to cover these costs, the policy’s beneficiary can spend the death benefit however they see suitable. They are allowed to spend it to pay off credit cards, make a charitable donation in the deceased’s name, or take a vacation – whatever they want.
Some people purchase final expense insurance without the intention of using it to cover their final expenses. They already had life insurance and had it set up for final expenses. Their primary motivation for purchasing final expense insurance is to give additional protection to their loved ones.
Life insurance prices climb as we age, and as we age, our health often deteriorates. When combined with the fact that no medical exam is required for final expense insurance, the cost for individuals who purchase it is significantly greater than for other types of life insurance. For example, a 60-year-old male can pay roughly $170 monthly for a $25,000 guaranteed issue whole life insurance policy.
For around $80 per month, that same male might purchase a 10-year level term insurance policy with a $250,000 face amount. He’d receive ten times the coverage for less than half the expense.
While that scenario makes term insurance appear enticing, keep in mind that it will expire when the insured reaches the age of 70. At that point, the cost of term insurance would be significantly higher, and the insured could have to provide evidence of insurability when applying for a new policy.
Is it worthwhile to purchase final expense life insurance? To answer this question, several others must first be asked:
If answering these questions made you feel anxious about the amount of life insurance you have and how much you’d leave to your heirs, you should think about buying last expense insurance. It may give you more peace of mind concerning the financial situation your loved ones will face if you die.
Suppose you already have enough life insurance in effect to pay off all of your debts, as well as enough to cover your final expenses and leave an amount of money for your beneficiary. In that case, you generally don’t need final expense insurance.
We purchase life insurance because we must, not because we choose to. Examine your requirements, and if you’re interested, several respectable life insurance firms will provide you with an estimate on a lesser face amount policy, $50,000 or less, that can supplement your existing life insurance or act as your primary coverage for final costs.
It will be worthwhile if it satisfies your needs and those of your beneficiary, and you can afford it.
