What is final expense life insurance? What can we do for our families to help alleviate this financial burden? How can we make sure they don't have a stack of bills when we die?
Traditional life insurance policies, like term insurance, are intended to replace income lost after a loved ones death. These policies are particularly important for families who are still working and making payments on their cars.
Many of us have suffered the loss of a family member and recall how stressful it was trying to balance our grief, financial obligations, and funeral planning. It's unbearable to think of our spouses and children going through this same experience.
According to The National Funeral Directors Association, the median funeral price can run over $9,000. When there is no money to cover these expenses, the surviving family members often find themselves in a financial bind during intense grief.
Final expense insurance is intended to pay funeral costs. But the death benefit may also be used to pay medical bills, mortgage payments or credit card debt. It is up to the beneficiary of the insurance policy how the death benefit is spent.
Different policies offer final expense life insurance. A final expense policy is rarely more than $20,000, as it only covers one debt: funeral or cremation arrangements. (learn more: How does cremation work). ).
There are many final expense plans available. But which one is right for you? Which one will provide the greatest protection for your family? Which one will pay you the most quickly? Which one will assist your family in making funeral arrangements? These are important questions to ask before you choose a provider.
If you are 85 years old or older, in hospice, or currently in hospital, you might not be eligible. You might also be denied eligibility due to terminal illness, AIDS, or other health issues.
Add to that the cost of a grave marker (200-$400 for a first material), a published funeral obituary and any other costs associated with a memorial ceremony. This can quickly add up to $10,000.
Traditional life insurance policies, such as term insurance, are designed to replace income lost due to the death of a loved one. These policies are especially important for families in the early years of life, when they're still working, making mortgage payments and paying car bills, as well as raising their children.
Final expense insurance is a life insurance policy that has a lower death benefit, usually intended to cover final expenses and burial costs. Also known as burial insurance or funeral insurance, it's designed for older adults who are ready to make end-of-life plans, typically age 50 and older.
What is the average cost of final expense insurance? Final expense insurance premiums could cost around $20 or more per month, depending on your age and the policy you choose. However, everyone's premiums will vary based on personal conditions.
A final expense policy can offer peace of mind and ease the financial burden on your family while they're grieving. And since it usually doesn't require a medical exam, it's a good option if you have a pre-existing condition that prevents you from getting a traditional term or whole life policy.
Does Final Expense Have a Cash Value? Final expense insurance does allow for a cash value to build because it's a form of a whole life insurance policy. However, the savings must accrue, and there are some things to keep in mind when you want to borrow against the cash value.
Most families will use cash, check or credit card to pay for all or part of the funeral expenses. Most funeral homes today expect payment in full up-front. Sometimes you can pay a portion using an installment plan negotiated with the funeral home.
Final expense insurance can cover a number of costs. This allows loved ones to use the benefits for the expenses they need to pay, as opposed to just covering burial costs. This coverage includes common final costs, such as medical bills, probate or legal fees, and other expenses other policy types don't cover.