How Does Final Expense Insurance Work? 3 Detailed Steps

how does final expense insurance work
How Does Final Expense Insurance Work? 3 Detailed Steps

The average cost when someone passes away is $8,000 – $12,000 for a basic service.

Do you have the means to cover this, or will it fall to the family you leave behind?

Final Expense Life Insurance was designed specifically for seniors that might not have a nest egg to cover these end-of-life expenses.

This coverage is a type of whole life insurance that comes in smaller policy amounts, making the monthly payment lower than traditional products.

The payout is intended to cover these inevitable costs without leaving any financial burden on loved ones during this difficult time.

How Does Final Expense Insurance Work?

Take out a policy with the coverage needed, make the affordable monthly payments, then upon the insured’s passing, the beneficiary will receive a lump-sum payment to cover the final expenses. They can spend the money on whatever is deemed necessary. There are no restrictions on what it has to be used for.

How Final Expense Insurance Works

Final Expense Life Insurance Coverage Standards

Most large insurance companies offer this type of coverage. While each insurance company sets its own guidelines for coverage, there are some standards of what is available in the market.

  • Coverage never expires
  • Policy amounts: $2,000 – $40,000
  • Average premium: $50 – $70 per month
  • Age range: 50 – 80

Death benefits are available from $2,000 to $40,000, with the typical person paying around $50 – $70 a month. Of course, the amount of coverage you have will heavily impact the premium you pay. More coverage equals higher premiums. Age, health, and gender also play a role in determining the price.

The typical age range for taking out a policy is 50-80. However, some insurance companies do not have a minimum age for coverage, and some will accept applications for seniors up to 90.

These plans are very simple to understand and easy to obtain. There is no medical exam required like other types of similar products, and there are no waiting period options available, meaning senior citizens could get immediate coverage.

There are 4 different categories within this type of coverage; level, graded, modified, and guaranteed issue.

details of plan types chart

The 3 Detailed Steps

There are 3 basic steps when explaining how this product works. However, within each step are several noteworthy details.

Step 1: Take Out a Policy with the Coverage Needed

These policies are simple to understand and easy to obtain.

This product is a great option for seniors, with affordable rates since these policies come in smaller coverage amounts. Plans are flexible and can be built around your budget or around the coverage you need.

These policies are Simplified Issue Meaning that you Will Never be asked to get a Medical Exam.

However, there will be a series of medical questions to qualify for coverage with no waiting period.

Some plans do not ask any questions (known as guaranteed issue), but they have a waiting period before you are fully covered. It is always worth taking the health questionnaire in an attempt to qualify for lower premiums and immediate coverage.

You might be surprised at how accepting these plans are.

You will know if your application has been accepted within 1-3 business days with most companies.

Since there are so many options for this coverage, it can be hard to know where to start. Independent agents can shop around on your behalf between the different providers to qualify you for the best plan that fits your specific needs.

When it comes to the price, it is determined by 4 different items.

Age: Age is the starting point for price and eligibility. Generally speaking, the older you are, the more it is going to cost. These prices are locked in for life, so the younger you are when taking out a policy, the less you will be paying each month.

Health: Your health will determine which plan you can qualify for. If you have a medical concern, certain carriers may not accept you while others will. It truly depends on the condition. This product is very “nichey” when it comes to health.

Working with an independent agent who represents multiple companies will be your greatest resource. They should know which insurance company accepts what health condition and can place you with the policy that best suits you.

Gender: Men should expect to pay more than women for coverage. This is due mainly to the statistics that show women outlive men by a few years, thus women will be paying towards a policy for longer.

Policy amount: As stated above, the more coverage you have, the higher your monthly premium will be.

Step 2: Make Monthly Policy Paymentslight green shield with check mark

Payments are usually required to be on an autopay schedule which is great, so you do not have to worry about the policy lapsing if you forget to pay.

Once you apply and have the coverage you want and need, there are a few things that come with each policy.

Coverage Lock: The coverage never expires or changes in value. It is locked in for life. This is a standard feature in all whole life insurance policies.

Price Lock: The monthly price you pay will remain the same for your entire life. This is very important when determining your long-term budget.

Cash Value: All whole life policies build a cash value that you have the opportunity to borrow against if needed. With each payment, a portion goes into the cash-value account, which then accumulates over the years.

If you take out a loan from the cash value, you will be required to pay it back. If you cannot pay this money back before your passing, the company will deduct your outstanding loan balance from the total death benefit.

For example, if you have a $10,000 policy and take a loan out for $5,000 but only pay back $4,000 before you pass away, your beneficiary will receive $9,000.

$10,000 coverage – $1,000 outstanding loan = $9,000

Mobility: Your policy will move with you should you relocate to another state. It is not tied to your current location or state.

Step 3: When the Insured Passes Away, the Beneficiary Gets a Lump-Sum Payment

Once the insured passes away, there will be bills that are quickly due. From medical and other personal backdated bills to the final resting place costs, the amount can add up fast, which is why the beneficiary needs to get the money quickly.

There are no stipulations as to what final expense life insurance can cover, so make sure that you trust your beneficiary.

After the claim has been filed, the lump-sum payment is given to the beneficiary within a week or less in most cases.

This is invaluable when dealing with the grief of losing a loved one and trying to plan your service/memorial simultaneously.

Not only is there a rapid payment made to your beneficiary, but it is tax-free!

senior woman sitting in living room

Final Expense Insurance vs. Life Insurance

As we have established, final expense coverage is a type of life insurance. It is important that we mention other types of life insurance for seniors, so you fully understand the available options.

Traditional Whole Life Insurance

Traditional whole life has higher death benefit amounts, thus making the monthly premium more costly. As mentioned, the reason that this product is so much more affordable is due to the smaller coverage amounts.


Term offers high death benefits while costing less per month, but these plans terminate. In fact, 99% of term policies are never paid out, according to in a study done by Penn State University.

These plans terminate after a predetermined period of time or when you reach a certain age. Also, term coverage is sometimes known to adjust the premiums by increasing over time.

A popular example is the AARP plan. One of the plans that they heavily advertise is their term plan that has continued increasing premiums and expires upon the 80th birthday of the insured.


This type of coverage is intended to pay for final expenses and is arranged directly with the mortuary, essentially listing them as the beneficiary.

This option allows you to have things all planned out so your loved ones do not have to do much. This might sound good, but it makes the assumptions that they will still be in business, that they will manage the money accordingly, that you will not change your wishes, and that you will not move.

Pre-need locks you into these decisions with limited flexibility.

Happy senior couple with family in background

How To Find The Best Coverage

The important thing to know is that the best company for you could be completely different than the best for your parents, your neighbor, or even your spouse!

This is because of the particular health conditions accepted by each insurance company during the underwriting process. There is no “one size fits all” plan.

Since qualifying for a plan depends on the applicant’s health history and everyone’s is different, it only makes sense that the best plan for you is different from the next person’s best plan.

So, how do you go about this? By reading a ton of reviews?

No, there is an easier way!

An experienced agent can help find the most optimized plan and assist throughout the application process.

Captive Agents vs. Independent Agents

You have the choice of working with either an independent agent or a captive agent.

Captive agents can only sell products from one company, while independent agents can represent multiple companies.

For example, Colonial Penn is only sold through its captive agents, while certain Mutual Of Omaha final expense plans are sold through licensed independent agents. These independent agents have the ability to represent multiple companies.

Working with an independent agent who can compare several different final expense insurance companies on your behalf is your best option. This will save you time and money.

Your Agent Can Work with Your Budget and Coverage Needs

It is wise to get an idea of how much your final expenses will be and your monthly budget. This will determine how much coverage you need and what you are willing to spend to get it.

To get a ballpark estimate, you can get instant quotes on this page by filling out the basic information.

Doing this will give you an idea of the cost compared to the death benefit amount.

You will then need to speak with an agent to determine which plan you will qualify for.

All of the agents at Willamette Life can pre-qualify you based on a series of questions.

If you decide that this is the right decision and wish to move forward, your agent will help you complete the application.

Now you can sit back and relax with your newfound peace of mind knowing your loved ones will be taken care of.

If you are looking for this product for parents, give us a call, and we can assist in providing quotes and answering any questions you might have. To get the most accurate quote, please have the following information ready:

  • Age
  • Height & weight
  • Health & Prescription history
  • Budget

How to Select an Independent Agency to Work With

There is certainly no lack of options when it comes to who to purchase from.

Look for an agent or agency that represents multiple carriers and specializes solely in this niche.

Of course, you will also want to find someone you feel comfortable with and WANT to work with.

At Willamette Life, we strive to be all of the above and welcome the opportunity to help qualify you for a great plan!

Call us at 844-576-0019

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Final Thoughts

a. How does final expense insurance work can be broken down into 3 easy steps. By taking out a policy and making the monthly payments, your beneficiary will receive money to pay for your end-of-life costs.

b. While there are many different options when it comes to deciding how to cover these costs, this product provides very affordable security.

c. An independent agent specializing in this coverage will help find the best policy regardless of your health and budget.

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