Final Expense Insurance Plans & Coverage

What is a Final Expense Life Insurance Plan?

Final Expense plans are permanent life policies which provide a smaller death benefit to cover the cost of final expenses such as caskets, funeral or memorial services, embalming, cremations, medical bills and debt pay-off, just to name a few.  While this is not the only purpose Final Expense plans serve, this is normally the main purpose. 

How Do Final Expense Insurance Plans Work?

Final Expense proceeds can be used for anything the beneficiary desires unless otherwise specified.  Final Expense plans are marketed towards older clients, such as those who may have retired, lost their group policy through their employer and want to ease the financial burden that will be placed upon their loved ones in the event of death. 

There are also options for those who have health issues and aren’t able to qualify for other life insurance.  Final Expense products are easily accessible and are fairly easy to qualify for if you meet the right requirements.  Some Final Expense plans are guaranteed issue which means, an individual is guaranteed acceptance for coverage despite health or finances.

A Final Expense Insurance plan is simply a whole life policy which offers smaller death benefit values and, in many cases, more affordable premiums.

They are often referred to as burial plans, funeral plans, modified whole life plans or even simplified issue whole life plans; Understand there are some differences.

Final Expense, Burial, and Funeral Plans

  • Normally marketed towards older individuals or those with health issues.
  • Based on age, gender, smoker/non-smoker, and health
  • Age normally ranges from 40-85 (varies based on company).
  • Provide Death Benefits between $2,000 – $50,000.
  • No Medical Exam required.
  • Death Benefit does not increase or decrease unless you borrow from the cash value
  • Builds cash value which you can borrow from.
  • Premium will not increase or decrease throughout the life of the policy.
  • Proceeds are not taxable.

Modified Whole Life Plans

Modified Whole Life Plans are Final Expense Policies, which are modified due to a person’s health.  These are also called graded benefit plans. 

Instead of declining a client a company will amend the terms of the policy and place a 2-3 year waiting period on that policy.  If the client were to die during the waiting period the Beneficiaries would receive the premiums paid into the policy plus interest.  If they die after the waiting period the full death benefits will be paid out to the beneficiary.

Simplified Issue Whole Life Insurance Policies

• Simplified Issue Whole Life Insurance Policies differ from Final Expense and Modified Whole Life policies in many ways. For starters:

  • Offers coverage to younger individuals in some cases starting at age 18.
  • Allows for higher death benefits, some companies may go as high as $400,000.
  • No medical exam required, however there are a list of medical questions, Rx checks and possibly a phone interview.
  • Build cash value; Allows loans.
  • Premium doesn’t increase or decrease.
  • Death benefit doesn’t increase or decrease thru out the life of the policy unless you borrow from cash value
  • Premium based on gender, age, smoker/nonsmoker.
  • Proceeds are not taxable.

How Much Does Final Expense Policies Cost?

The cost of Final Expense policies varies from company to company. For example, a 50-year-old female, non-smoker in Pennsylvania looking for a $10,000 death benefit can range from $24.67 to $32.50 per month. Whereas a 65-year-old, male, smoker in Pennsylvania looking for $10,000 death benefit can range from $95.63 to $105.63 per month.

Because there are so many variations of Life insurance products it’s best to consult with a licensed insurance agent because all plans aren’t created equal. What works for one may not work for another