What You Need to Know About Final Expense Insurance
There are a few common reasons why people purchase a life insurance policy. Many want to financially provide for their family after they pass away, and the life insurance benefits may provide a means to do so.
For example, the death benefits from a life insurance policy may be used to supplement lost income from the deceased or to pay off debt and reduce the family’s overall monthly expenses. While these are common reasons why people purchase life insurance, many will also purchase additional coverage to pay for their final expenses.
The Basics of Final Expense Insurance
It’s never too late to invest in final expense insurance. You may not want to focus on the inevitable conclusion of your life, but it’s a fact that you cannot escape. While you may not need insurance to cover debts or provide for a family, it’s still smart to ensure that you won’t create extra bills with your passing. This insurance is designed to cover your funeral expenses and take that burden off your surviving family members.
The High Cost of Funerals
People choose final expenses insurance because funerals have become increasingly expensive over the years. In addition to buying the casket, there are also fees for the funeral director, flowers, the funeral home and other expenses. It can easily wind up costing more than $10,000, but you can spare your family this expense.
How Much Coverage Is Needed
While many people can calculate how much money they need to provide their loved ones to pay off debt, to supplement lost wages and more, many struggle to determine how much final expenses insurance is needed. Before you can start requesting final expenses life insurance quotes, it is necessary to determine what these expenses may actually be.
Final expense insurance generally may be used to pay for everything from the burial plot and the casket to the funeral service, limos, headstone and other related services. The average funeral in the U.S. may cost as much or even more than $10,000. This can be an incredible sum of money for your love ones to come up with when faced with a sudden and unexpected death, but final expense insurance is available to pay for it.
The Challenge of Paying for Final Expenses
With most final expenses, the amount due must be paid at or before the service. This means that the family often only has a few days to come up with the money to pay for the expenses. Some families may rely on credit cards or pull money out of savings. Some may sell stocks or other assets before they are ready to do so. While these are some options available, a better idea is to purchase a policy from final expense life insurance companies.
Two Main Types of Coverage Available
Final expense insurance is most commonly purchased by senior citizens, and its main purpose is to help their loved ones pay for their final credit card, medical and funeral expenses. As with life insurance, there are two main types of coverage available.
These include term and permanent, which may also be called whole life final expense insurance. A term final expense policy will expire and will not accumulate cash value.
If you purchase final expense whole life insurance, on the other hand, it may not expire, and cash value may build up in the policy on a tax-deferred basis.
In addition, the cash value in a whole life final expense policy may accumulate or grow over time, and the insured has the option to borrow against the funds or withdraw the funds as needed without question. This will, however, reduce the amount of the death benefits that are provided to the beneficiaries upon the insured’s death.
The Benefits From a Final Expenses Insurance Policy
The terms and benefits associated with a final expenses insurance policy can vary, and this is important to remember when you request different final expense life insurance quotes.
Generally, these policies range in value from between $10,000 and $50,000. These policies are intended solely to pay for final expenses, so additional life insurance may need to be purchased to pay for estate taxes and other similar things.
Keep in mind that most of these policies will remain in place for your lifetime, and there often are not strict underwriting requirements that need to be met as is the case with a typical life insurance policy.
However, some applicants may be asked basic medical or health questions even though a full health exam or physical is not required by most final expense companies.
Graded Benefits for Final Expenses Insurance
It is common for final expenses life policies to have graded benefits when the insured has severe medical conditions and needs a guaranteed issue policy.
When graded benefits are in effect, the beneficiaries may not receive the full amount of the death benefits within the first few years after the policy is purchased. The period of time that the policy is graded and partial benefits provided can vary by policy. Therefore, you should consider learning more about the graded benefits feature in the policy before you make a final decision about which policy to buy.
In the event that you pass away within the period of time when graded benefits are in effect, your beneficiaries may receive back the premium you have paid plus 10% interest. This varies by the policy purchased. As you get quotes from different final expense insurance companies, keep this important point in mind.
How to Plan For Final Expenses
Some will only seek out the best final expense insurance policy and consider that their efforts at paying for their final expenses are completed.
Others, however, may also work with a funeral home to make a pre-arranged plan. If this is the case, many will make the funeral home the beneficiary of the final expense policy. The funeral home will directly receive the funds and can provide the services that have been agreed upon in the plan. By doing so, the funeral expenses can be paid for without interfering with the estate assets, savings and inheritance funds.
Before You Make Your Purchase
You may be getting ready to contact final expense insurance companies to get quotes, but there are a few things to think about before you make a purchase.
First, think about whether you want to purchase term or whole life final expense coverage. This may relate to your need to have permanent coverage in place or to accrue cash value in your policy. After you have made this important decision, you will be able to select the death benefits that are right for your needs.
You can work with a funeral home about pre-planning your funeral service and selecting the burial plot and headstone. This will give you a better idea about how much insurance you need to purchase.
After you have figured out how much coverage you need to purchase, you will then need to learn more about the strength of the different insurance companies that you received quotes from. While finding a great rate is important, it is also important to find a reputable, established company to purchase your policy from.
A smart idea is to check the insurance company’s rating from A.M. Best or from Standard & Poor’s, and you can research these conveniently online.
Beyond the Funeral
The insurance policies can also be used to cover more than just the funeral. The proceeds can be used to pay off credit card debts and other final expenses. While most people will use the funds to pay for a nice funeral, the remaining balance can be used for anything your family sees fit.
Shopping for a Low Rate
When you are searching for a low rate on your final expenses insurance, you can follow a few important steps to ensure that you get a great deal from a reputable company.
First, contact us, we are licensed agents that represent numerous final expense insurance companies and can search for the lowest rate possible. Then, you will need to find the right plan for your budget.
Consider the payment options available, and remember that some plans will have a monthly payment while others have an annual payment. Many have multiple payment options for you to consider.
You may also consider reading reviews and researching ratings online. Then, consider planning your funeral service with a funeral home.
You can also consider your health when you are deciding which insurance to purchase. Remember that a plan that does not require you to get a physical exam may be more expensive, but it may be a better option if you do not think you will pass an exam.
Easy Applications and Acceptance
These insurance plans are relatively easy to get, and many don’t require a health exam. This allows customers to add the coverage to their portfolio without worrying about a high monthly premium or being denied coverage for a pre-existing condition.
This coverage is ideal for middle-aged adults who are getting their affairs in order. It’s your hope that your family won’t have to use the final expense whole life insurance anytime soon, but it will be ready for them when they need it. The policies are surprisingly affordable, and they’ll give you the peace of mind that you need.
Now is a great time to get started shopping for final expense insurance coverage.
You can learn more about the different options available and get your questions answered by contacting us at 1-888-773-1181, we are licensed agents in your state. You may request a quote through our web form, and we will call you to answer any questions and provide the quotes you are looking for.
Buying life insurance as well as final expense life coverage are important steps to take. Even though you may already have a life insurance policy, it may be advisable to get a final expense insurance policy to pay for all of your funeral expenses and related expenses.
Take time to learn more about the different benefits associated with getting this type of policy, and shop for your policy today. This is a great step to take that will help you to minimize the financial impact that your death may have on your loved ones.