Updated: Nov 21, 2024

End-of-life expenses can place a financial burden on loved ones, but final expense insurance, also called burial insurance, helps cover the costs associated with funeral and burial services, easing that burden for families. Dive into how this insurance works, where to find it, and real-world examples to help you choose the right policy.

What is Final Expense Insurance?

Final expense insurance is a type of life insurance specifically designed to cover costs related to a person’s funeral, burial, and other end-of-life expenses. These costs typically include:

• Funeral services, like viewings, embalming, and casket expenses
• Burial costs, including a plot, headstone, and graveside services
• Cremation costs, if preferred
• Other final arrangements, such as transportation for family members or debt settlement

The average funeral cost in the United States can range between $7,000 and $12,000, which can be a significant expense. Final expense insurance policies generally offer lower coverage amounts—typically between $5,000 and $25,000—designed to cover these end-of-life expenses without being overly expensive.

Unlike traditional life insurance policies that require a medical exam, final expense insurance is often easier to qualify for, making it accessible to seniors or those with pre-existing health conditions. Premiums are usually fixed, meaning they won’t increase over time, and the coverage remains in place as long as premiums are paid.

Types of Final Expense Insurance

There are two main types of final expense insurance:

1. Guaranteed Issue: This policy is designed for those who may have health issues that would typically disqualify them from other insurance types. Guaranteed issue policies require no medical exams or health questionnaires, meaning approval is nearly certain. However, they often come with higher premiums and a two-year “waiting period” clause. If the insured passes away within this initial period, beneficiaries typically only receive the paid premiums plus interest.

2. Simplified Issue: This type requires a brief health questionnaire, but no physical exam. It usually offers lower premiums than guaranteed issue policies and does not include a waiting period. If you’re in reasonably good health, a simplified issue policy can be a more affordable option with immediate full coverage.

Real-World Examples of Final Expense Insurance

Let’s look at examples of final expense insurance plans from well-known insurers to better understand typical costs, benefits, and features.

1. Mutual of Omaha: This well-established company offers a “Living Promise” final expense insurance policy. Living Promise is a simplified issue whole life policy that includes coverage amounts from $2,000 up to $40,000. Monthly premiums depend on age and health, with a 65-year-old female in good health paying around $40 monthly for $10,000 in coverage. Living Promise includes a terminal illness rider, allowing part of the death benefit to be used if diagnosed with a terminal illness, providing flexibility for unexpected healthcare costs.

2. Aetna Final Expense Whole Life Insurance: Aetna’s final expense policies offer guaranteed issue coverage with no health questions, making it a good option for individuals with health conditions. For example, a 70-year-old male might pay approximately $80 per month for $10,000 in coverage. The policy includes a waiting period, where full benefits are available after two years, but if death occurs within this time, beneficiaries receive 110% of the premiums paid.

3. Colonial Penn Guaranteed Acceptance: Known for its television ads, Colonial Penn offers guaranteed issue coverage with no health questions asked. The premiums depend on units of coverage; each unit is a set dollar amount, so the total coverage can vary based on age and gender. For instance, a 68-year-old female may pay around $29.95 per unit, which might equal about $1,000 in coverage. This policy has a two-year waiting period, but like others, it will refund premiums paid plus interest if the insured passes away during that time.

How to Get Final Expense Insurance

Final expense insurance policies are available from various sources, including traditional insurance companies, independent insurance agents, and online insurance marketplaces.

Here’s a step-by-step guide to getting final expense insurance:

1. Research and Compare Policies: Start by researching reputable insurance companies, such as Mutual of Omaha, Aetna, or Foresters Financial. Compare the costs, coverage amounts, and any additional benefits like terminal illness riders.

2. Determine Coverage Needs: Estimate the final expenses you want the policy to cover, including funeral costs, burial or cremation, and any additional end-of-life expenses. If your funeral is expected to cost $8,000, a $10,000 policy could give a little extra for incidentals or administrative expenses.

3. Choose the Right Policy Type: Decide between a guaranteed issue and simplified issue policy. If you’re in fair health, a simplified issue policy may be more affordable. If you have serious health conditions, a guaranteed issue policy ensures approval but may come with a waiting period.

4. Get Quotes: Request quotes from several companies to compare monthly premiums and coverage amounts. Many insurers have online calculators or agents who can provide estimates tailored to your age, gender, and desired coverage.

5. Consult with an Agent or Broker: Insurance agents can guide you through the process, help answer questions, and even find discounts. Independent agents can also provide quotes from multiple insurers, which is useful for getting the best price.

6. Apply for the Policy: Once you’ve chosen a policy, complete the application. For simplified issue plans, this may involve a brief health questionnaire. For guaranteed issue plans, approval is typically immediate.

Where to Get Final Expense Insurance

You can purchase final expense insurance from several types of providers:

• Traditional Insurance Companies: Large insurers like State Farm, Nationwide, and AIG offer final expense policies. You can contact these companies directly for quotes or visit their websites to learn more about the specifics of their plans.

• Independent Insurance Agents: Independent agents work with multiple insurance carriers, helping you find the best option based on price, coverage, and additional benefits. Agents can offer personalized advice on which policies might best fit your situation.

• Online Marketplaces: Websites like Policygenius, Senior Market Sales, and SelectQuote allow you to compare final expense insurance policies from multiple providers in one place. These marketplaces simplify the comparison process, providing online quotes and tools to match coverage with your budget and needs.

Additional Tips for Choosing a Final Expense Insurance Policy

Here are a few practical tips to consider when choosing your policy:

1. Review the Waiting Period: Many guaranteed issue policies come with a waiting period, typically two years. If health issues require this type of policy, make sure your family knows about this period, and consider alternative financial preparations if needed.

2. Look for Policies with Flexible Riders: Some final expense policies offer riders, such as an accelerated death benefit, which can provide funds if the policyholder is diagnosed with a terminal illness. This rider can help with healthcare or personal costs during challenging times.

3. Confirm Fixed Premiums: Check that the policy has fixed premiums that won’t increase over time. This feature is especially helpful for seniors on a fixed income, as it prevents unexpected costs later.

4. Make Arrangements for Beneficiaries: Decide on a beneficiary and ensure they understand the policy details, including how to access benefits. Final expense insurance benefits are typically paid directly to the beneficiary tax-free, allowing them to handle costs without delays.

5. Check Financial Ratings of Insurers: Ensure the insurer you choose is financially stable by checking its ratings through agencies like A.M. Best or Moody’s. This can give peace of mind that the company will honor your policy.

Real-Life Consideration: Is Final Expense Insurance Right for You?

Final expense insurance is particularly useful for individuals who may not qualify for traditional life insurance or who only need a small coverage amount to cover end-of-life expenses. Here’s a quick checklist to see if it might be right for you:

1. Do You Have Other Life Insurance? If you already have sufficient life insurance to cover funeral costs and debts, you may not need an additional policy.

2. Are You Primarily Looking to Cover Burial Costs? Final expense insurance is designed for these specific costs, so it’s more affordable than traditional life insurance policies with higher death benefits.

3. Do You Want to Spare Family from Financial Burden? If covering funeral and burial costs is a priority to prevent financial stress on your family, final expense insurance can ensure these needs are met.

By carefully considering these factors and the types of policies available, you can find a final expense insurance plan that provides peace of mind and financial security for your loved ones.