FINAL EXPENSE INSURANCE: WHAT YOU NEED TO KNOW

As you get older, the ways in which you take care of your loved ones will change. You’ll look for solutions to eliminate placing a financial burden on them in your final days and beyond. You’ll need something easy to obtain, yet permanent, that offers flexibility for your family. That’s when you’ll realize Final Expense insurance is a viable choice. The following information guide can help you find the best Final Expense coverage to fit your circumstances.

Final expense insurance is a permanent whole life insurance policy designed to cover the cost of your funeral and other end-of-life expenses, such as, medical bills, legal fees, housing costs and any other remaining bills. Final Expense insurance is a permanent whole life policy that will be available until the insured dies or at policy maturity, provided that the premiums are paid in full.

Typical characteristics of final expense policies are:

• Face amounts between $1,000 to $50,000
• Simplified or guaranteed issue (more on this below)
• Coverage for the life of the insured (may be limited to 100 years old or more)
• Accumulates cash values (typically)
• Not linked to a prearranged funeral contract.

How do I apply for final expense insurance?

Applications for final expense policies fall into 2 basic categories. 

Simplified issue policies. Final expense insurance policies are usually issued on a “simplified” basis. “Simplified” means that medical exams are generally not required to obtain coverage, although the applicant will have to answer certain medical questions. Also, when reviewing applications, the insurance companies rely on Medical Information Bureau (MIB) reports, prescription checks (known as script searches), and interviews or any combination thereof. 

Guaranteed issue policies. A Guaranteed Issue policy will generally be issued without the need to answer any medical questions. They are usually restricted to a narrower range of ages such as 40 to 80 years old and often are capped at $25,000 of coverage. Many Guaranteed Issue policies do not distinguish between smokers and non-smokers whereas Simplified Issue policies usually do.

What questions will I be asked on an application?

Many companies start their applications with their disqualifying questions and gradually work up to the questions that will allow for the carriers' best level pricing if answered non-adversely. Applicants will be asked medical and non-medical questions on the application. The questions typically gather information about the following demographic and non-demographic items:

• Height
• Weight
• Date of Birth
• Gender
• Tobacco use
• Occupation
• Income
• Lifestyle
• A medical history and medication consumption for the conditions listed previously

How are death benefits paid?

The payment of death benefits depends on the type of policy.

Level Benefit Policies. A Level Benefit Policy will pay the full death benefit from Day One (the issue date of the policy), regardless if the death is due to natural causes or an accident. In this case, the death benefit is the face amount of the policy.                                                                                  

Modified Benefit Policies. There are various types of Modified Benefit Policies but what they have in common is that the death benefit is reduced for a period of time after issue, typically 24 to 36 months. This is known as the “restriction period."                                                                                                               

Return of Premium (ROP) Policies provide a simple return of the cumulative premiums paid to date plus some predetermined interest rate if the death occurs during the restricted period (e.g., in the first 2 or 3 years).  

Where do I buy final expense insurance?

Most insurance policies are purchased through licensed insurance agents. The type of agent you are dealing with will affect the insurance options that they present to you. The types of insurance agents that you may encounter include: 

Independent Agents – these agents sell the products of several insurance companies, therefore, they can present you with the most options. Independent agents represent their clients, so they can search the market on your behalf. They earn commissions on the policies they sell.           

Exclusive or Captive Agents – these agents represent only 1 insurance company. They earn commissions on the policies they sell.

We are here to help because you've devoted your entire life to your family — taking care of them, providing for them, being there when they need you, and always planning for the moments you share together. Planning for that moment when you will no longer be there is just as important, and might be easier than you think. By purchasing Final Expense Whole Life insurance, you can provide for your family even after you’re gone. While no amount of money will replace their loss, making this smart decision now will save them from a financial burden later during a difficult time. Finding the best Final Expense Insurance can be challenging, so we’re here to help you understand the best option for you. Contact us today for your life-care planning needs.