While most of us don’t need a grand exit from this world complete with elaborate ceremony, golden trumpets, and celebrity delivered eulogies, pretty much all of us want at least a dignified farewell without creating a financial burden for those whom we leave behind.
This is where Final Expense Insurance, also known as Burial Insurance, comes in handy. Final Expense coverage is a small amount of life insurance that is purchased with the intention of covering the costs of funeral home services, florist services, burial or cremation, burial plots and tombstones, etc. Funerals in the U.S. typically range from $6,500 to $10,000.
Of course, you can use any life insurance to pay for a funeral, but there are a few things that make Final Expense coverage different.
First, the minimum coverage amount: While most term life policies coverage minimums are $100,000 and for Traditional Whole Life and Universal life it is $50,000 (a few carriers offer $25,000), for Final Expense Insurance, the coverage minimum can be as low as $3,000. Since lower coverage means lower premiums, the option to get a smaller amount of coverage can mean finding coverage to fit a tighter budget. This is especially true for someone who is already in their later years or has significant health issues, two factors which can make larger coverage amounts cost prohibitive.
Secondly, Final Expense policies usually do not require medical underwriting. This means that you only have to answer a few questions to get the coverage. With most Term, Universal and Traditional Whole Life policies underwriting requires doctor records, a motor vehicle report, and a physical exam including blood and urine samples. Not having to “jump through the hoops” of medical underwriting dramatically reduces time from application to approval. And let’s face it, no one likes getting pricked with a needle or providing urine samples.
Final Expense insurance may not require medical underwriter, but that does not mean everyone gets approved. A Final Expense Life Insurance application, will have a set of “knock out” questions, any of which answered Yes, will result in denial of coverage. While the knock out questions vary by insurance company, you would generally be denied coverage if have any of the following conditions:
- currently hospitalized, in a nursing home, hospice care, confined to a bed, or have a life expectancy of less than 12 months
- have a lung or respiratory condition which requires use of oxygen
- aneurysm that has not been surgically repaired
- condition requiring stem cell, organ, or bone marrow transplant
- kidney disease requiring dialysis
- Alzheimer’s, dementia, or mental incapacity
- Lou Gehrig’s Disease (ALS)
- AIDS, HIV, or AIDS Related Complex (ARC)
Finally, unlike other types of life insurance, Final Expense or Burial coverage is offered by only a small handful of highly rated life insurance carriers. Furthermore, many of the carriers who do offer the coverage only offer it in some states. As always, it is best to consult with an Independent Life Insurance Broker to determine which plan options are available to you and fit best with your profile.