A Beginner's Guide to Final Expense Insurance

A Beginner's Guide to Final Expense Insurance

Death can be difficult to think or talk about, but it’s also necessary. We cannot ignore our own mortality - doing so only makes life harder on the ones we love. One of the most compassionate things you can do for your loved ones is to make sure your final expenses are covered.

Grieving is hard on its own, but many mourners don’t even get the time to properly grieve thanks to funeral planning, dealing with costs, and other details. The any burden you can remove for your loved ones at the end of your life, the lighter their load will be. Here’s a look at how final expense insurance can help you give your loved ones one last gift:

Final Expense Vs. Life Insurance

First, we’d like to address the difference between final expense insurance and life insurance, as they’re easily confused, but not quite the same. Technically, final expense insurance is a type of life insurance. However, it has a smaller benefit payout - and smaller premiums - than a traditional life insurance policy.

Traditional life insurance policies can provide a significant amount of money when it comes to a death benefit. Final expense insurance policies, however, usually provide a smaller benefit, but those funds can be put toward funeral expenses and any other end-of-life costs.

How Does it Work?

You can get final expense insurance one of two ways: A standard policy, or a pre-need policy. If you go the standard route, the insurance will pay your policy out to your loved ones to cover the cost of your final arrangements. Your loved ones may also be able to use it to cover some of your debts, such as medical expenses or credit card statements, as well.

Pre-need insurance is paid directly to the funeral home, and is designed to allow you to plan your funeral in advance. The benefit of this form of insurance is that you can lock in the price of your funeral, allowing your loved ones to avoid inflation. It’s a great option if you’d like to do the bulk of the planning for your memorial yourself to spare your loved ones the work.

What to Consider When Buying

There are many pros and cons to think about before diving into final expense insurance. Since it’s easy to qualify, nearly anyone can get a policy. However, since there are often no health requirements, there are also no health discounts. You also have to think carefully about the size of the policy you take out: Since the money can only be used for your funeral expenses and some debts, you really want to ensure you’re taking out the absolute minimum you need.

Take some time to research the cost of funerals in your area. Speak with local funeral homes to get a sense of what kind of expenses your loved ones will face. If there’s a wide range of casket design options, for example, it might be useful to choose these and any other details yourself and include the information in your final documents.

How to Start

Many final expense policies are in effect as soon as you make the first payment. You don’t typically need a medical exam for these, but you do have to answer some basic health questions. Any discrepancies can cause your claim to be denied, so double-check your information to be sure you haven’t made any mistakes.

Just as auto insurance protects your finances after a car accident, final expense keeps your family’s costs manageable after your death. The policy you take out today could make all the difference down the road. Look into the options, and find out whether it’s the right call for you.

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