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Final Expense Insurance [Tips to Find the Best Policies]
This article was written as a resource to help those who are considering purchasing final expense insurance or burial life insurance (also referred to as funeral insurance). Check out our top 10 best final expense and burial insurance companies list for more information.
People often ask if there is a company that will shop for the best prices for burial insurance. The answer is, yes, we will do just that. Below is a list of final expense companies we work with. We shop all the companies to see which company will offer you the best policy and best price on final expense insurance based on your specific need.
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Who typically buys a final expense insurance policy?
This may sound like an easy question, but there are many people that own final expense life insurance or burial life insurance because they thought that was all that they could qualify for, not because it was the best insurance option for them!
So, let’s first discuss what a final expense life insurance or burial life insurance policy is designed to do, and then see if it’s a good option to consider for you.
Final expense life insurance policies are typically:
- Small cash value whole life final expense insurance policies ranging from $3,000 to $50,000.
- They’ll usually have an “easier” application process. Often these policies require no medical exam and many do not ask any health questions.
- These policies will typically go in force within 24 to 48 hours after the application has been received, which makes them attractive for those who want some coverage right away!
- They come in two flavors: level and graded death benefit. (Discussed below: It is important to know the difference between the two).
- Also referred to as funeral insurance.
Final Expense Insurance for Seniors
The ideal candidate is an older individual who is primarily concerned about covering final expenses and does not want to worry about “out living” term life insurance coverage. Typically, it is someone deciding between life insurance or prepaid funeral plans.
Some obvious cases where final expense insurance might be the best choice:
- Terminally ill cancer patients
- People on Dialysis
- People receiving Hospice Care
- People who want a small whole life policy
Why do people purchase final expense insurance policies?
For many, a final expense insurance policy will be a perfect fit. This also holds true for those seeking funeral insurance who want to make sure that the funeral bills are covered. It is better to have some coverage than none.
The best final expense insurance policies are typically cash value whole life insurance, which lasts your entire life. As a result, these types of policies will generally be priced higher than term life insurance
Another reason for a higher price tag is because final expense policies are designed for unhealthy older individuals that have a pre-existing health or lifestyle condition that precludes them from getting other types of life insurance coverage.
I was already told I couldn’t qualify for a term life insurance policy!
Each insurance carrier will use their own underwriting guidelines when it comes to determining who they will and won’t provide life insurance too.
Which means, you really should get a second opinion when it comes to determining if you can qualify for a term life insurance policy.
In seeking a second opinion, be sure that the agency you choose can work with dozens of different carriers.
Be aware that there are definitely times when whole life insurance is better than term life insurance.
Now, if you really can’t qualify for a term life insurance policy...
You may be part of a growing population of individuals who are utilizing final expense life insurance and burial life insurance policies to gain some actual “life Insurance coverage”, perhaps as funeral insurance. In days past, you would have had to settle for an accidental death policy. Now more companies are offering pre-need life insurance policies, making it easier to find good final expense insurance.
These candidates will typically have a pre-existing medical condition preventing them from qualifying for a fully underwritten term or whole life insurance policy.
Since most applications for final expense life insurance policies ask very few underwriting questions; so that clients who aren’t able to find coverage elsewhere will be able to obtain coverage.
The pros and cons of cash value final expense life insurance vary.
In general most clients seem to want:
- Guaranteed cash value growth
- The lowest premium
- A fixed premium
- A policy that won’t end
These are things that we at TermLife2Go look for when helping our clients find the right policy out there.
Disadvantages that you are likely to see when reviewing the different options available are:
- Smaller face amount options, and
- “graded death benefit” instead of a "level death benefit".
Final Expense Insurance Graded vs. Level death benefit
A level death benefit means the face amount of the policy is in force from day one. Level death benefit policies ask health questions. Some examples are: do you have AIDS, do you have cancer, do you have heart disease, and/or have you been diagnosed with a terminal illness. If you can answer no to these questions than a level death benefit final expense insurance policy may be the best fit for you.
A graded death benefit is offered on burial insurance with no health questions. Graded death benefit describes how a life insurance policy will not pay out if the applicants death occurs during the first two or three years from when the policy was initially placed in force.
A graded death benefit is used to protect the carrier when insuring severely ill applicants since these policies are typically life insurance with no medical exam and no health questions.
Each final expense insurance company will typically have their own definition of what their “graded death benefit” includes.
If you have recently purchased a final expense insurance policy and are not familiar with the term “graded death benefit”, we highly recommend that you contact your policy provider so they can help you determine exactly what you have.
Another disadvantage of final expense insurance is cost.
Final expense insurance policies can be pricey. That is because most of these policies are bought by unhealthy seniors who just need something to cover burial costs and final expenses. You’ll really want to make sure that you exhaust all other available options before you decide to buy this type of policy.
How to save money on final expense insurance
The best way to save money on these policies is to shop around.
Another great way to save money on final expense whole life insurance is to know exactly what the price of your burial or funeral will be. If you plan on being cremated, put that in your Will or Final Disposition Instructions as part of a Family Trust. Cremation is less expensive than a typical burial.
Finally, avoid policies that increase the premium on you every 5 years (see our reviews of Globe Life, Colonial Penn, AARP, or Veterans'Group Life Insurance). The final expense insurance for seniors sold by these companies typically have increasing premiums, which get more and more expensive the older you are.
Many companies offering final expense insurance or burial insurance offer teaser rates that are lower than competitors. However, read the fine print and you will see that the premium goes up every 5 years.
What started out as the best price now increases substantially over the life of the policy and you end up paying way too much or you cancel the policy and waste your money. If your budget permits, focus on buying a policy with a FIXED premium.