Final Expense Insurance for Seniors: Straightforward & Clear

Final Expense Insurance for Seniors
Final Expense Insurance for Seniors: Straightforward & Clear

The average service or celebration of life can cost between $8,000 – $12,000. This is a major financial burden to ask your family members to take on. However, some insurance plans provide your loved ones with the financial resources needed in this time of grief.

When looking into life insurance policies designed to cover the final expense of life, there are many options, and it is easy to get overwhelmed.

Fortunately, there is a plan designed specifically for seniors.

Final Expense Insurance For Seniors

Final expense coverage has unique benefits while also offering the permanent features of a traditional whole life plan. These policies are an excellent option for seniors looking for an affordable and straightforward way to plan for their end-of-life expenses.

Final Expense Benefits

This senior final expense program refers to a type of whole life insurance coverage. Two items make final expense insurance unique and separate it from other whole life plan options.

No Medical Exams: Seniors will never be asked to get a medical exam. All that the insurance companies require is for the applicant to answer a series of health questions over the phone which can be done from the comfort of their own home.

Affordable Coverage: The coverage amounts are typically $2,000 – $40,000. This allows the monthly premium to be much more affordable than a much larger traditional whole life plan.

Whole Life Features

Final expense coverage is designed for seniors to make a simple and low monthly payment to receive three permanent benefits.

Price Never Increases: The monthly premium will always be locked in. This means the price you pay on day one will be the same price in year 30.

Coverage Never Decreases: The coverage amount is locked in and will never decrease or terminate. This gives the policyholder the ultimate peace of mind knowing their family will be taken care of.

Builds a Cash Value: For every payment made, a portion will go towards the cash value. This amount will grow over time and provide the opportunity for the policyholder to access it in the form of a loan.

What Can the Money be Spent On?

There are no rules or regulations on what the payout must be used for. However, there are common expenses beneficiaries use the payout for.

  • Final Costs
  • Casket
  • Cremation
  • Legal Expenses
  • Remaining Balance on a Mortgage
  • Post-Mortem Expenses
  • Medical Bills
  • Leaving an Inheritance
  • Charity Donations
  • Credit Cards
  • Remaining Car Loan Balances

Plan Tiers

There are four plan tiers when it comes to this product. Every applicant will qualify for at least one of these products.

Level: This plan is reserved for individuals who are in good health. It includes the lowest premiums and immediate coverage. Level coverage is the only final expense coverage with no waiting period.

Graded: Offering more lenient underwriting standards, the graded plan is best suited for someone with a past medical history that could raise concerns for an insurer. The more favorable underwriting brings in a two-year waiting period. This policy pays out a percentage of the death benefit if the insured passes during the waiting period.

Modified: A standard two-year waiting period comes with this plan. This can be classified as the middle ground between a graded and guaranteed issue plan. Seniors can usually find lower prices by using a highly rated guaranteed acceptance plan.

Guaranteed Issue: This plan asks no medical questions, and virtually every applicant is approved for coverage. Use this option if you have a chronic or terminal illness or if you do not want to answer any medical questions. Be careful in buying this product type through television ads as it will most certainly not be your best option.

calculator piggy bank

The Price For Senior Final Expense

The monthly cost can vary depending on several factors. Because of these varying factors, every senior citizen could pay a different price.

Cost Calculation

There are four key parts when determining the price.

Health: The medical history of the applicant will carrier the most weight. The healthier the person, the lower the risk is for the providers, and a lower risk means lower monthly premiums.

Age: Once the policy is in force, the price is locked in and will never rise, but the longer someone waits to take out coverage, the more the price will increase. Final expense for seniors over 80 will cost more than for someone in their 60’s.

Gender: Females live four years longer than males do on average. This matters because the shorter your expected life span, the more risk is taken on by the carrier. With more risk comes higher premiums, so men will pay more for coverage than women.

Policy Amount: The more coverage someone takes out, the higher they can expect their premiums to be.

Monthly Quote Estimates

The price chart listed below shows the ranges a senior can expect to pay for coverage.

If you have a simple and healthy medical history, you can expect to pay on the lower end of the price range.

If you have a complex health history, you will be required to pay towards the higher end.

Female

Monthly Premium Range

Non-Smoking Rates

Age$10,000$15,000$20,000
45$23 – $34$32 – $49$42 – $64
50$24 – $39$35 – $57$45 – $80
55$28 – $47$40 – $69$52 – $103
60$33 – $54$48 – $80$63 – $119
65$41 – $66$60 – $99$79 – $146
70$53 – $80$78 – $120$103 – $177
75$72 – $116$107 – $173$142 – $254
80$98 – $190$146 – $283$194 – $411
85$136 – $220$202 – $328$269 – $436

Male

Monthly Premium Range

Non-Smoking Rates

Age$10,000$15,000$20,000
45$27 – $47$39 – $68$51 – $89
50$31 – $56$44 – $83$58 – $110
55$36 – $61$52 – $91$69 – $135
60$44 – $68$64 – $101$84 – $149
65$56 – $91$83 – $135$110 – $199
70$75 – $106$110 – $158$146 – $233
75$100 – $150$148 – $223$197 – $328
80$140 – $232$208 – $346$276 – $461
85$193 – $312$288 – $467$382 – $621

Additional Financial Options

There are always other options when looking into financial planning products. Every person’s situation is different and should be considered when choosing if final expense coverage is worth it.

Traditional Whole Life

This product is a staple in the life insurance industry. However, it can be an expensive option to pay for your end-of-life expenses.

Whole Life Benefits: The standard benefits of this plan type include a price lock, coverage lock, and builds cash value that the owner can borrow against.

Larger Policy Amounts: The policy amounts start around $50,000 and can go into the millions. This can be problematic for anyone on a fixed income due to the high monthly premiums that are required.

Tax Benefits: A tax advisor may recommend using this product to shelter wealth or to use it for tax advantages.

Term Life Insurance

This plan provides temporary coverage and is very useful in specific situations. However, using it as a senior for final expenses can be dangerous for your family’s financial well-being.

Coverage Terminates: Your coverage will expire at some point. For example, if you take out a 10-year policy at 70, your policy will terminate when you reach 80 years old.

Price Is Cheaper: Since coverage will eventually expire and terminate, the monthly premiums will be cheaper. Some insurance companies like AARP offer temporary coverage that actually increases in price the older you get.

Does Not Build Cash Value: There will be no cash value built with this product, which means you are essentially renting coverage each month with no additional or living benefits.

Pre Need Insurance

This plan is unique in the fact that the beneficiary of the plan is the mortuary.

Beneficiary Is The Mortuary: The mortuary you decide to work with will become the beneficiary of the plan. This will instantly limit what the money can be used for. There is always a final phone bill or an electrical bill that needs to be paid, which is not an option with pre-need plans.

Covers Specific Expenses: The only thing the money can be used for is items directly tied to the end-of-life process. This includes a casket, urn, viewing, memorial service, etc.

One Mortuary Only: What happens if this business is no longer operating in future years, or you decide you would like to change the location of your final resting place? These are real examples that can cause problems for your family as this protection is not mobile.

Savings or Investment Account

This may seem like the safest way to prepare for final costs associated with passing. However, there are still risks involved.

Passing Away Unexpectedly: No one knows when their health will decline, this can cause saving efforts to come up short and put families into a financial hole.

Investment Uncertainty: The stock market is another way to grow your money and use it for final expenses. However, the market is not a guarantee and has been known to be volatile.

Inflation: The United States has a history of inflation. It is hard to predict what the dollar will be worth in future years and if your saving efforts will outpace the rate of inflation.

FAQ Notebook

Senior’s Frequently Asked Questions

What is the Cost of a Traditional Service?

The average cost of a traditional service with viewing is $7,643 or $6,280 for cremation. Not included in these price estimates is the cost of a headstone or cemetery plot.

This cost estimate can differ depending on several variables. Location and the selections made throughout the process play the biggest role in the cost.

How do I Find the Best Coverage Option?

Final expense insurance for seniors is specific to the individual applying, but there are three main things to look for. This is because each insurance provider has its own underwriting standards and risk tolerance. Find an agent that represents several different carriers and will help you discover the best plan for you.

Cost: Make sure that the monthly premiums are affordable for your budget well into the future.

Coverage: Getting immediate coverage with no waiting period whenever possible is the best option. Seniors are often surprised with how accepting final expense programs are.

Company: Applying for coverage with an insurance company with a strong financial rating is important to make sure they can pay their financial commitments (your policy claim) when the time comes.

Can I Purchase for a Loved One? 

Yes, you can, but some guidelines need to be followed to ensure the contract is valid. Your loved ones will need to be part of the process. This means they will need to sign their name, agree to coverage and be in a healthy enough mental state to understand what they agree to.

If the applicant is in senior care, the contract will be valid, but they will still need to go through the proper steps.

Does Social Security Help with Final Expenses?

Social Security awards up to $255 death benefit to the living survivor of the deceased. This is nowhere close to what is needed to lay a loved one to rest properly. Do not count on this as your sole financial plan.

Man with brown hair thinking

Final Thoughts

a. Final expense insurance for seniors has great benefits, including affordability, a price that never increases, coverage that never decreases, and a cash value that builds over time.

b. Regardless of age or health, seniors can qualify for final expense coverage with no medical exam.

c. Other products on the market can help pay for final costs, but each comes with potential drawbacks.

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