Final Expense
Health Insurance
What Is Final Expense Insurance?
Final expense insurance is a whole life insurance policy that has a small death benefit and is easy to get approved for. Final expense insurance is also called funeral insurance, burial insurance, simplified issue whole life insurance, or modified whole life insurance. All relate to small whole life policies with a face value (and death benefit) of $2,000 to $35,000
There is no difference between final expense insurance and life insurance, other than the fact that insurers sell the smaller final expense insurance policies to make it more affordable, says Richard P. Sabo, a financial planner and insurance fraud expert in Gibsonia, Pa.
Understanding Final Expense Insurance
Final expense insurance is a type of whole life insurance. Once you have your policy, the premiums cannot increase, and the death benefit cannot decrease. Unlike a term policy, a whole life policy does not expire when you reach a certain age.
A whole life policy also accumulates cash value that you can borrow against during your lifetime. Any loans that are unpaid when you die will reduce how much money your beneficiaries receive.
When you apply for final expense insurance, you will not have to deal with a medical exam or let the insurance company access your medical records. However, you will have to answer some health questions. Because of the health questions, not everyone will qualify for a policy with coverage that begins on day one.
As with any type of life insurance, the premiums for final expense insurance depend on your age and health; where allowed by state law, they may also depend on your gender.
How Final Expense Insurance Works
Let’s say you’re retired, no longer have life insurance through your employer, and don’t have an individual life insurance policy. Neither do you have a nest egg large enough to ease the financial burden on your spouse and/or kids when you die.
You're considering a new life insurance policy. So you contact a life insurance agent and start the application process. This includes answering a few basic questions about your health. The death benefit is what you're looking for, but the premiums are too expensive because of your age and health.
Unfortunately, the insurance company doesn't issue policies with a death benefit that’s small enough to make the insurance premiums fit your budget. At this point you might give up, assuming that you can’t afford life insurance.
