What Is Final Expense Insurance?

Final expense insurance is a type of coverage that kicks in at your death, so your loved ones have the means to pay for your end-of-life expenses. You may be curious why it is classified as final expense insurance.

The only time a funeral is held is when a person’s life ends. That is why, ultimately, insurance to cover funeral expenses is classified as final expense insurance.

Plan Alternatives That Cover End-Of-Life Expenses

It is common for insurance companies to offer a variety of price points for each final expense coverage. Your health determines which one you are eligible for.

Some of the most common charges include credit card debt, medical bills, mortgage debt, and burial costs.

Here are the three levels of plans that are commonly available.

Level Benefit

Answering “no” to all health-related questions indicates that a person has no health issues and is, therefore, a low-risk factor for a level benefit plan.

If you’re eligible for this plan, you’ll get the best price and full coverage from the start. To define their highest grade, some carriers choose to use the phrase “preferred” rather than “level.”

Graded Benefit

In most cases, a graded plan is a middle ground. In the first two years of the policy, most graded plans only cover a portion of a person’s medical expenses.

A typical graded plan pays 30% of the death benefit if you die during the plan’s first year. Seventy percent of the death benefit is paid out in the second year of the insurance.

The percentages vary from one company to the next. Payouts in the first year typically vary from 25% to 40%. The second year’s payouts usually range from 50% to 75%.

Modified Benefit

This is the riskiest option available. You can only get this plan if you’ve recently experienced many health problems (such as stroke, heart attack, or cancer).

Modified plans are all “return of premium” throughout the first two years. So, the insurance provider would only return your premiums paid plus interest if you die within the contract’s first two years.

Guaranteed Acceptance

A guaranteed issue or guaranteed acceptance policy does not ask about a person’s health or lifestyle. As long as you have the mental capacity to agree to a formal contract, your coverage is guaranteed.

These policies are highly recommended for people who have recently suffered from extremely serious health issues. They’re not cheap, and you have to wait two years before you’re covered by any of them.

Who Is A Guaranteed Acceptable Policy Suitable For?

It’s the greatest option for the elderly because it’s cost-effective, has no medical exam requirements, and helps organize some details of the final preparations (choosing flowers, a funeral home, music, etc.).

However, LIMRA’s annual Life Insurance Barometer Study finds that over half of Americans work two jobs. Moreover, 42% of homes would suffer financially within six months of the unfortunate event of the death of one income provider.

According to the National Funeral Directors Association, the average cost of a burial funeral is $7,848, while funeral service and cremation are $6,971.1. So, if the loss of a family member leaves your family financially vulnerable for the cost of your burial expenses, regardless of your age, this insurance may be appropriate for you.

Standard Features of Final Expense Insurance

These are the most common benefits of final expenditure plans:

• If premiums are paid, regardless of one’s age, there is no expiration of the whole life insurance plan.
• A policy loan may be available to the insured.
• The monthly premiums won’t ever increase as long as they are paid on time.
• In most cases, there is no need for a medical exam (also known as a life insurance exam).
• The approval process is quick and easy.
• Coverage might be granted within a few days.
• Low-cost prices
• The death benefit doesn’t ever change but increases in value over time.
• Individuals and organizations can have several beneficiaries if desired.
• In the event of your death, your insurance company issues your beneficiary a tax-free check(s).
• Once final expenses have been paid, any remaining funds are for your family to use as they deem appropriate.

How Much Does Final Expense Insurance Cost?

Final expenditure policies cost between $30 and $70 a month depending on your age, gender, health, and how much coverage you need. If you have a preexisting medical condition or older than 70, you’ll likely pay a higher monthly premium ranging from $70 to $120.

Younger applicants in good health may be eligible for rates between $20 and $50 per month. Remember that a lower premium usually entails a lower payout to surviving family members. Adding a few additional dollars a month to your family’s income could significantly impact when you’re gone.

Consider Final Expense Insurance From Matador Insurance

To learn more about how life insurance can help you in any unfortunate situation, contact the specialists at Matador Insurance. Regardless of your financial situation or objectives, our trained professionals will guide you through each step. Get in touch with Matador Insurance to schedule a consultation about our services or start the application process.