Final Expense Insurance: What You Need to Know
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Written by
Chris Huntley
Founder of Huntley Wealth & Insurance Services
Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states.
After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health insu…
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Reviewed by
Rachael Brennan
Licensed Insurance Agent
UPDATED: Apr 1, 2022
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Here’s the Scoop
Final expense insurance is generally purchased by senior citizens and is designed to cover the costs of end-of-life expenses
The beneficiary can use the death benefit for any purpose and this can be a way of helping family members cope with financial distress following your death
There are several reputed final expense insurance carriers in the U.S. offering comprehensive coverage for seniors
In recent times life insurance companies have come up with a variety of insurance policies that help people prepare for the future and invest in safeguarding their families in case of their unexpected death. This has given people a lot of options to choose from. However, a very common catch in such life insurance policies is that they are primarily for young or middle-aged individuals and senior citizens often do not have access to them.
However, there is one type of insurance for senior citizens that can be considered a simpler version of regular life insurance, i.e. final expense insurance. There are several final expense insurance carriers in the United States that offer reliable and comprehensive coverage to help seniors pay off their final expenses.
What is final expense insurance?
Final expense insurance, also known as burial insurance or funeral insurance, is a kind of permanent life insurance policy. It is generally purchased by senior citizens and is designed to cover the costs of end-of-life expenses like medical bills, legal fees, housing costs, and funeral bills.
It is similar in nature to a small whole life insurance policy. The major difference between final expense insurance and standard life insurance is the fact that the insurers sell smaller policies to make it more affordable.
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Benefits of Final Expense Insurance
Final expense insurance, as a part of life insurance, can be extremely useful for putting your legal and financial affairs in order even after you have passed away. As the beneficiary can use the death benefit for any purpose, it can be your way of helping your family members cope with financial distress after your death. Here are some of the advantages of final expense insurance:
Does not require a medical exam. Unlike many insurance policies, final expense insurance does not bar people with poor health from securing insurance. To apply for final expense insurance, you do not need to get a medical exam. You only need to fill out a questionnaire and mention your prescription history.
Lower death benefit policies are available. It is becoming difficult for senior citizens to afford an insurance policy over $50,000. Final expense insurance offers the benefit of smaller and more affordable policies that can be used to clear off financial burdens. You can opt for policies depending on your budget and needs.
Life insurance for the long term. Final expense insurance policies do not have an expiration date. As long as the premiums are paid, the insurance benefits are available.
It can help alleviate standard funeral costs. The average funeral cost varies between $7,000-$12,000 in the U.S. While your loved ones may be able to manage the expense themselves, handling financial matters in a time of grief can be a difficult task. Having final expense insurance allows you to pay and plan for the services you want following your death. The final expense insurance carrier makes the arrangement to provide for your family as soon as required, which can ease their financial burden.
Provides peace of mind. Like standard life insurance, your heir will be able to use the death benefits of the final expense insurance if the premiums are duly paid. This ensures that your family and loved ones are cared for after you have passed on.
Best Final Expense Insurance Companies in the U.S.
AARP Life Insurance
The AARP Life Insurance Program is provided by the New York Life Insurance company, which also has a provision for final expense insurance. AARP offers three different life insurance policies — level benefit term life insurance, permanent life insurance, and guaranteed acceptance life insurance. Each policy pays out a cash-free tax benefit directly to the beneficiary to cover the final expenses.
Level Benefit Term Life Insurance
This policy is their flagship life insurance product. It is available across all 50 states in the U.S. It offers options ranging from $10,000-$100,000. The policy is available for people between the ages of 50-74, and their spouses between the ages of 45-74 can apply as well. AARP requires a monthly membership fee for their policy.
To qualify for the term life insurance policy, individuals have to pass three health questions, a prescription history check, and a Medical Information Bureau (MIB) check. If the MIB check or prescription history reveals any pre-existing conditions, the policy application is likely to be denied.
Permanent Life Insurance
This policy is only available on request, requires an AARP monthly membership fee, and is available across all states in the U.S. This policy offers options ranging from $5,000-$50,000. Applicants between the ages of 50-80, along with their spouses between the ages of 45-80, can apply for this policy.
To qualify for the policy, applicants need to answer a few medical questions along with a medication history and a MIB file check.
Benefits of the policy
The cost of monthly payments does not increase for any reason.
The death benefit is guaranteed to not decrease.
The coverage goes into full effect on the very first day of the policy if you qualify for it.
Unlike the term policy, this policy is guaranteed to never expire at any age.
This policy does not have any waiting period if you qualify for the policy.
Guaranteed Acceptance Life Insurance
This policy is a whole life insurance policy with up to $25,000 in coverage that has no health questions. Along with the AARP monthly membership fee, the policy offers options ranging from $2,500-$50,000. This policy is available across all states in the U. S. except Washington and New Jersey. Applicants between the ages of 50-80 with spouses between the ages of 45-80 can apply for this policy.
This policy does not require any medical and health questions to qualify. As long as you are an AARP member and fit within the age range, your application will be accepted. Because of the guaranteed acceptance, there is a two-year waiting period before the death benefit is paid out.
Benefits of the policy
The premiums are fixed for life.
The death benefit cannot decrease.
The policy does not expire at any age.
State Farm Final Expense Insurance
State Farm offers a whole life insurance policy that alleviates the cost of funeral and burial expenses. Their final expense insurance comes to approximately $10,000. They offer insurance across all states except Massachusetts and Rhode Island. Applicants between the ages of 50-80 are eligible to apply.
Their policy does not require any medical examination to qualify. The application requires answering some health questions and consenting to a prescription history and a MIB check to validate the health status of the applicant.
Benefits of the policy
The monthly payments will never increase.
Once the policy is issued, it will not expire at any age.
The coverage will never decrease.
There is no waiting period if you qualify for the policy.
Aetna Final Expense Whole Life Insurance
Aetna offers final expense insurance with coverage that never expires. It has three available plans with immediate coverage. The policy is available across almost all states within the U.S. Applicants as young as 45 years of age can qualify for this insurance.
This insurance policy does not require the applicant to undergo any medical health examinations and does not even go through your MIB files. Aetna accesses the applicant’s health profile by asking a few formal health questions and running a prescription history check.
Benefits of the policy
The coverage never expires.
Immediate coverage is available.
The monthly premium cannot increase.
The death benefit will not decrease.
The insurance company cannot cancel your policy for any reason.
It has virtually no minimum age.
It does not require a physical or medical exam.
Royal Neighbors Whole Life Insurance
There are two versions of this insurance, the Simplified Issue Whole Life insurance and the Graded Death Benefit Whole Life insurance. The applicant’s health regulates which version they qualify for. This insurance is available in all the states of the U.S. except Alaska, Alabama, Hawaii, Louisiana, Massachusetts, New Hampshire, and New York. The applicants should be between the ages of 50-85 to apply for this policy.
The company asks the applicant health-related questions, analyzes their prescription history, and checks the MIB records. This policy does not have a build chart. The eligible proceeds are equal to 75% of the certificate’s death benefit from the day the company receives an acceleration request, up to a maximum of $250,000.
Benefits of the policy
The coverage never expires.
Two plans are available with immediate coverage.
The monthly premiums are fixed for life.
The death benefits never decrease.
It does not have a build chart.
How to get the best final expense insurance quote?
To get the best final expense insurance policy option that suits you, it is essential to compare multiple policies from different insurance companies. When choosing a company, make sure that the company has a number of policy options to choose from. If a company has just one policy available, you should consider skipping that company altogether.
Final expense insurance companies generally do not sell their policies directly. They rely on licensed agencies to market their policies. Even if you do your online research thoroughly, the prices are just estimated quotes and can change according to your eligibility and health status. The best option is to work with a qualified and licensed independent final life expense insurance agency that can help you compare offers from different insurance companies to narrow down the one that is the best for you.
Consider a company that has a solid and reliable financial track record. Consider companies that have a B rating or higher. Look out for a plan that has no waiting period and give priority to policies with the cost on the lower end of the spectrum. Some companies have unnecessarily high prices. Check price rates from multiple companies and choose a fair policy that meets your requirements and is financially viable.
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Final Expense Insurance: (Not) The Last Word
Final expense insurance not only helps to pay for funeral expenses and the accumulated debt at the end of life, but also helps with after-life preparedness, allows you to think about what you want, and assists in making things smoother and easier for your loved ones.
These policies can be tailored to your budget and according to your needs and requirements. Trust and buy final expense insurance from experts who give you the best advice to help you get the protection you and your family deserve. View the best final expense insurance carriers in your area by comparing insurance rates.
References:
https://www.nylaarp.com/Learning-Center/Life-insurance-basics/How-Life-Insurance-Can-Help-with-Final-Expenses
