There are many products on the market claiming to be the financial vehicle that is best for final expenses. Along with these claims, each product is named something different, and it is easy to get confused.
Fortunately, one product is simple to understand and has permanent benefits, which are final expense and burial insurance policies.
What Is Final Expense And Burial Insurance?
Final-expense and burial insurance are identical types of whole life insurance. These plans include features like permanent coverage and a guarantee that your monthly premium will never change. For a simple and affordable monthly payment, your final expenses can be taken care of, which allows your family to celebrate your life rather than taking on a financial burden.
Three Names, One Product
There are three names used to describe this type of plan.
- Final Expense Insurance
- Burial Insurance
- Funeral Insurance
These three names are used interchangeably by the carriers and have the same meaning.
Final Expense Policy Basics
Since final expense life insurance is a type of whole life plan, there are distinct benefits included. However, two features separate this product from a traditional whole life option.
No Medical Exam: This policy has simplified issue underwriting, which means there are no doctor visits, and the application can be completed from the comfort of your own home over the phone. All that is needed is a 30-minute phone call and the ability to answer a series of health questions. There are plans available that ask no health questions as well.
Affordable Coverage: The policy face amount is much lower than a traditional plan. Coverage goes from $2,000 – $40,000. This makes the burial insurance monthly premiums much more affordable but still has the great benefits of a permanent plan attached to it.
Three standard whole life benefits are also included in burial insurance.
Price Lock: The price never changes. For seniors on a fixed income, this is a key feature. Understanding your budget and monthly costs is pivotal, and this benefit by itself makes the product worth it.
Coverage Lock: The coverage amount will never decrease. When taking out a policy meant for end-of-life expenses, it is important that the policy is active when your health declines. This product is permanent with a locked-in death benefit amount and will be there for your family when they need it most.
Builds Cash Value: For every payment made, a portion will go towards the cash value. Over time this amount will grow, giving the policy owner has the ability to borrow from it if needed.
What Can the Payout be Used For?
There are no mandates or regulations on what the distribution must be used for. However, there is a list of items typically purchased with the lump-sum payment.
- Leaving an Inheritance
- Legal Expenses
- Medical Bills
- Credit Cards
- Remaining Balance on a Mortgage
- Charity Donations
- Post-Mortem Expenses
- Remaining Car Loan Balances
- Other Final-Expenses
After adding all these expenses up, the final bill can be well over $20,000.
Types of Final Expense Insurance
There are four different plan tiers an applicant can qualify for.
Level: This plan is reserved for the healthiest of seniors. If you can answer “no” to all health questions, you will receive immediate coverage and the lowest premium prices.
Graded: Offering a favorable progressive payout during the two-year waiting period and midpoint premiums, this policy is designed for those with past medical concerns that could cause an interest for a provider to insure.
Modified: This plan has a standard two-year waiting period. With higher pricing, if this is your only option for coverage, you could be better off using a guaranteed issue policy with high reviews.
Guaranteed Issue: Designed for seniors with chronic or terminal illnesses, this plan has a two-year waiting period. Applicants who do not want to answer any medical questions may find this product right for them as well. Depending on which carrier you use, this product can be an affordable option.
Burial Insurance Price Details
The average price for coverage is $50 – $90 per month. This can fluctuate greatly depending on different factors.
Four Price Factors
Four things will affect the monthly price you pay.
Health: The health of the senior applicant carries the most weight when looking at the monthly price. This is due to the plan tier that you can qualify for. The more perceived risk to insure someone, the higher the price will be to mitigate the provider’s risk.
Age: As mentioned, the price will not change the older you get. However, the longer you wait to lock in coverage, the higher the monthly price will be.
Gender: Women pay less for coverage than men do. This is mainly due to the fact that, on average, females live four years longer than males in the United States.
Policy Amount: The more coverage a person takes out, the higher the monthly premiums will be.
Final Expense Premiums & Quotes
The chart below shows the range someone can expect to pay for coverage from the best burial whole life insurance companies.
The healthier the applicant is, the lower the monthly premium. The more complicated the medical history someone has, the higher the premium will be.
Monthly Premium Range
|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|
Monthly Premium Range
|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|
Final Expense Insurance Vs. Life Insurance
There are other financial products that you can use to prepare your family for burial costs, but each comes with features to be aware of and potential drawbacks.
Traditional Whole Life
This plan is a pillar in the life insurance industry and includes whole life benefits. This coverage would be best if you were looking for one or more of the following advantages.
Whole Life Benefits: This plan offers benefits including permanent coverage, the price will never change, and it builds cash value over time.
Larger Policy Amounts: The policy amounts typically start around $50,000 and rise well into the millions. This makes the monthly premium much more expensive than a more affordable burial insurance policy.
Used as a Tax Benefit: A financial advisor may counsel someone to use this product to shelter wealth or for tax purposes.
Term Life Insurance
Many individuals will have this product marketed to them through the mail or on television. There is cause for concern when using this product for your burial costs.
Coverage Terminates: Depending on the length of your policy, the cover will expire. For example, if you take out a 10-year term policy at the age of 70, your plan will cancel when you turn 80 years old. This is problematic and can leave your family in a vulnerable financial position if you outlive your plan.
Lower Premiums: Since the policy will terminate, the monthly premiums will be lower than a whole life product. It is important to note that some term plans like AARP actually raise their monthly price the older someone gets.
No Cash Value: There will be no cash value earned, which means you are essentially renting coverage every month. This is essentially making your monthly payment in exchange for temporary coverage.
Pre Need Insurance
When deciding to use this product, there are a few significant things to note.
Covers Burial Expenses: This product is designed to cover the final expenses meant to properly honor the deceased, including a casket, urn, etc.
The Beneficiary is the Mortuary: The lump-sum payout will be distributed directly to the funeral home, limiting the flexibility that loved ones have in using the money.
Working with One Business: Preplanning for your final arrangements is a good idea in theory, but there are a few concerning items to think about. What if the mortuary goes out of business, or you decide to be buried in a different geographical area. Using this policy type locks you into your decisions and location in an ever-evolving world.
Savings or Investment Account
There is merit when thinking about putting money away for these final expenses, but this comes with risk and unknown.
Passing Away Unexpectedly: No one knows when their health will decline, this may cause your saving efforts to come up short and leave family members in a compromised financial position.
Investment Volatility: The market can be a great place to grow your money. However, looking at past statistics, investment accounts can be unpredictable and not perform the way you may hope.
Inflation: The value of the dollar changes consistently. It is impossible to say if your saving efforts will outpace the inflation rate.
Commonly Asked Questions
Is there a Difference Between Life Insurance and Burial Insurance?
While life insurance is designed to replace income, burial insurance is protection against final expenses and leaving a financial burden on your loved ones. Burial Insurance can be obtained for an affordable monthly payment with permanent benefits, while life insurance will come in larger coverage amounts and differ in policy structure.
What is the Best Plan?
The best plan for you can be entirely different than the best option for your spouse. This is because each carrier has different underwriting standards. The way to find the best plan for you is working with an agent that has access to many companies. This will raise the likelihood of finding a great plan specific to your medical condition.
Can I Purchase a Policy for a Loved One?
You are allowed to buy a policy for a parent or grandparent, but there are a few guidelines to follow. Your loved one will need to be involved in the process. This includes agreeing to coverage, signing their name, and being in a healthy enough mental state to understand what they are consenting to. You cannot take out a policy on someone without their permission.
What are Considered Final Expenses?
Costs associated with the deceased burial or cremation are the most common final expenses, but many items can be considered final expenses. This includes medical bills, mortgages, and remaining credit card balances.
a. When asking what is final expense and burial insurance, it is important to note these products have different names but are the same type of coverage. These names are just used interchangeably to market the product type.
b. Burial Insurance is a type of whole life insurance specifically designed for seniors to offer an affordable price point and permanent coverage.
c. This policy will pay for anything the beneficiary deems necessary with no stipulations.
I’m the owner and founder of Willamette Life Insurance. Willamette Life specializes in Final Expense Insurance. We compare prices with different insurance carriers while finding the perfect match for your health and budget. This company was started to help educate the public on why Final Expense Insurance could be a great option for them and their family. We strive to be friendly, informative, and always have the client’s best interest as our top priority. Everything in this article is my own professional opinion and experiences I have had during my time in helping clients.