According to the National Funeral Directors Association, the average funeral costs almost $7000.00. Final Expenses insurance covers the cost of our final expenses. This could encompass casket fees, funeral services fees, gravesite markers etc. Final expense insurance is one of the only policies that cover expenses we incur after departing this life. If you don’t already have money set aside to cover these costs, you may want to seriously consider a final expense policy.
HOW DO I KNOW IF A FINAL EXPENSE POLICY FOR ME?
Final Expense insurance is a life insurance policy that is written specifically to cover funeral costs and other short term debts you may leave behind. Most policies have face amounts that range from a few thousand dollars up to $50,000-$75,000.
Final expense coverage is permanent coverage. It works differently than term insurance which only pays a death benefit if you die during the “term” of the policy. A whole life policy, which is what a final expense policy is, remains in effect as long as you continue to pay your premiums. The premiums and death benefit are guaranteed to remain the same as long you keep the policy in effect.
The application process for obtaining a final expense policy is very streamlined. The amount you pay monthly mostly depends on your age at the time of purchase. There is usually no medical exam or questionnaire. Most times there are just a few medical questions you need to answer. This is called simplified underwriting. Simplified underwriting is a great option for those who may be a little older and maybe not in the best of health. You qualify for this type of policy if you can answer “no” to a few simple health questions. Of course this policy costs more than what you would pay for a fully underwritten life insurance policy that requires a medical exam and more extensive questions are asked.
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IMMEDIATE FULL BENEFIT POLICY
This policy is usually offered to people who don’t have any immediate serious health concerns. The full value of these policies are available as a death benefit as soon the policy is issued.
GRADED BENEFIT POLICY
This policy is for people who have health challenges. They typically provide limited benefits during the first two or three years. This means if you were to die during that time frame, your beneficiaries would receive a percentage of the death benefit. If you live past those first 2 or 3 years, the policy would pay the full death benefit.
The amount of coverage you need depends on what kind of funeral you want as well as accounting for how much money you will need for other final expenses. The expenses can include but are not limited to, probate, mortgage balances, taxes, car loans and etc. A qualified insurance professional can talk with you and help you assess the amount of coverage that is right for you.