Final Expense Insurance
Protect your Family from Financial Hardships Even After your Demise
About Final Expense Insurance
Final expense insurance or burial insurance is a type of permanent life insurance, which is designed for elderly to cover their medical bills and funeral expenses that are usually face by their loved once after their death. In the United States, burial expense unfortunately can cost thousands of dollars, so seniors take this plan to financially help their family members during their burial or cremation. This policy is extremely popular with seniors who wish to financially help their family members after their death in funeral expenses like burial or cremation and items like urns, caskets and more. Final expense insurance unlike traditional life insurance policies doesn’t require policyholder to go through medical exam to decide the cost of their policy, as these policies don’t require such in-depth research and they are offered with this insurance only after asking few questions. The final expense insurance does not expire and remains active as long as insured continue to pay the premiums and is effective until they die and their beneficiaries receive the death benefit.
Final Expense Insurance Coverage
While the basic idea behind the life insurance policy is to provide a lasting financial help to policyholder’s family members, final expense insurance is designed to provide financial help to the family members, which they face immediately after the death of the policyholder. Final Expense insurance policy is not just about covering the expenses of the funeral alone but it may also include following:
- Burial costs
- Arrangement expense of the funeral
- Trip expense of scattering the ashes
- Unpaid medical bills incurred at the time of death
- Credit card balances
- Remaining Loans & Mortgage balance
- Other financial debts
Thus, seniors invest in final expense insurance so that the debt which they have accumulated over the course of their life does not become their family’s responsibility to pay off and the money accumulated through this policy can be used to pay of such debts.
Types of Final Expense Insurance Plans
Burial insurance, also referred to as funeral insurance or final expense insurance, is a specific type of life insurance that’s designed specifically for paying end of life expenses. Different types final expense policies include:
Following are the types of final expense insurance plans:
Following are the types of final expense insurance plans:
Guaranteed Issue Life – This type of life expense policy is more expensive compared to other and offers lower maximum coverage amounts. Seniors buying this plan just have to answer few knockout questions to ensure that they don’t have a terminal illness. However, this plan covers even high-risk individuals due to which its cost more. This is the most accommodating form of life insurance, as application of every senior gets approved. The seniors can pay a monthly or annual premiums to keep the policy active, and it will stay effective as long as the premiums are paid. After the death of the policy holders, the coverage amount or death benefit is paid to the beneficiary, which generally has a maximum limit of around $25,000.
Simplified Issue Life – Simplified life expense plan is designed for seniors who usually don’t qualify for completely underwritten life insurance policy and are considered for moderate risk plans only. The policyholders are required to answer a detailed medical questionnaire however, no medical exam is conducted. Seniors who qualify for a simplified final expense plan are able to secure a larger coverage amount up to about $50,000 for a lower monthly premium compared to guaranteed issue life insurance. This amount is paid to the beneficiaries after the death of the policyholders so that they can settle any of their debts. Policyholders are required to pay a monthly or annual premiums to keep the plan active and it will remain active as long as the premiums are paid.
Level or Immediate Benefit – It is the most basic and straightforward final expense policy, which is generally availed by seniors who are in good health or have minor health issues that can be controlled with medications. The day the application is approved of a senior, the complete amount of the policy become effective from that particular day. In case of the death of the insured person, the named beneficiary receives the full death benefit right away. This plan is the best option for the healthier people that provides them full coverage right from the first day and it also allows them to choose beneficiary.
Graded Benefit – This final expense policy is recommended to seniors who have health concern. Coverage in this plan varies depending upon the insurance company from which one has purchased the plan. Seniors who didn’t have any major illness in the last 24 months have good chance to qualify for a graded policy. Seniors having medically manageable disease will find graded policy best for them. This policy usually have a two-year waiting period before the entire death benefit is paid to a beneficiary. In case of non-accidental death that occurs before the two-year time frame, then only a certain percentage of the total death benefit is paid by the policy. After the two year period, the entire death benefit will be paid.
Modified Benefit – This is quite similar to graded policy with the only exception that it involves a serious illness like cancer rather than a more manageable illness. This final expense policy also have a two-year waiting period before the entire death benefit is paid off to a beneficiary. In case of non-accidental death that occurs before that two year time frame, then the policy will pay only a return of the paid premiums along with a small percentage of the total death benefit. After the second year the entire death benefit will be paid.
Guaranteed Acceptance – This type of final expense policy is a guaranteed issue plan with no health questions. The entire death benefit is paid to the beneficiary only after the two year waiting period. In the first and second year of the policy, the beneficiary will receive the amount paid by the policyholder along with the 10% of the benefit amount. In case of accidental death, the full death benefit amount is paid to the beneficiary even in the 1st and 2nd year.
Funeral or Prepaid Policy – The funeral final expense policy is directly purchased from a funeral home and the main idea behind this policy is to fund the cost of the burial arrangements which policyholder would like to make. The policy covers the cost of the funeral home services, cost of a casket, burial fees and memorial services. In this policy the beneficiary is the funeral home and this policy lets seniors pay for their funeral in advance.