Purpose
Final expense insurance is a life insurance policy that covers your funeral, burial, or cremation expenses. Other expenses, like your medical debt, will be covered as well. This is a policy that covers you until you either pass away or reach 100 years of age.
The purpose of final expense insurance is to spare your surviving family members the financial burden of your funeral costs and leftover medical debt. Final expense insurance also ensures that your beneficiaries will receive money not subject to taxes, and they can spend that money however they please.
Death Benefit
What the death benefit is and what it entails:
- The death benefit is what your beneficiaries will receive after you’ve passed.
- It may be anywhere between $2,000 and $50,000 depending on the policy you purchase.
- Premiums are determined by the size of the death benefit. Premiums for a small death benefit will be cheaper than the ones you pay for a larger death benefit.
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Factors affecting the policy you qualify for
Final expense insurance does not require a medical exam, but it can require a medical questionnaire.
Final expense insurance providers also base qualifications on the following:
- Age
- Whether you’re male or female
- Tobacco use
- Health status
Your premiums will be higher the older you are. They will also be higher for men as men have a shorter average life expectancy than women. Tobacco users will pay more, which is expected because tobacco use can cause more health problems. Other high-risk health issues will also affect what you qualify for.
Final Expense Insurance
Final expense insurance is generally easier to qualify for than standard life insurance. However, you’re still left with options based on how you answer the health questions when you apply for it. Some insurance companies will have a minimum and maximum age to obtain a final expense insurance policy. Usually, the younger you are when you get it, the higher your death benefit will be.
Also, the premium you pay will always be the same. It will not increase during the time in which you have it.
Other forms
You may be concerned about securing final expense insurance. Whether your health condition is poor or you are joining very late into your lifetime, you will not be shut out from coverage.
Your first alternative is Guaranteed Issue. A Guaranteed Issue policy is a type of final expense insurance you can qualify for if you’re dealing with a severe health condition. While this policy is easier to get, the premiums are higher, and there is a waiting period before coverage begins. This waiting period is 2-3 years. If you have a Guaranteed Issue policy and you die before the waiting period ends, your beneficiaries will not receive a death benefit.
Another choice is Graded Benefit Final Expense Insurance. This is for those with less severe health conditions – examples include cancer that has been in remission for the past two years or being treated for drug or alcohol use within the past two years. Here, you buy a policy that has a specific death benefit. Then, however long you live determines the percentage of that death benefit your beneficiaries will get. If you die within the first year of acquiring a Graded Benefit policy, your beneficiaries receive 30-40% of the death benefit; 70-80% for death two years after joining; 100% after the third year.
For all inquiries about final expense insurance, call us today.
