What Is Final Expense Insurance?
This is a question I get every week. It sounds dreadful but accomplishes a much needed task. You might have watched many commercials on TV about these policies. More on that later.
To start, this is a type of life insurance, usually smaller policy amounts, and the benefits are earmarked for the expenses related to the funeral, cremation and/or burial. With perhaps some additional money left behind for family member(s) and/or other expenses.
These policies usually have face amounts of $2,000 up to $35,000 and generally cover people from 50 up to 80+ years of age.
As I mentioned, it is another form of life insurance, so the proceeds to survivors can cover any number of expenses related to the passing of the insured.
So why get a final expense plan? Here are the benefits of these policies.
Final expense life insurance benefits
Policy premiums are level and will not increase. No surprises.
Policy death benefits never decrease. Again, no surprises.
The policy can increase in value over time, which means as you make payments, a cash value develops over time.
You can select ANY beneficiary which allows you the flexibility to have your funds distributed according to your wishes.
No medical exams to qualify for the policy.
Many carrier options from our agency, (not just one company) to find a plan that fits your age, health and budget.
You can cover other expenses with the benefits outside of final expenses.
You can borrow against the tax-deferred value of your policy, which can cover unexpected expenses or to help pay for premiums if needed. (Policy loans reduce the death benefit).
If you want to avoid meeting in person with an agent, due to COVID-19, most policies can be issued over the phone.
Who doesn't need a final expense policy?
If I mention the positives, I always mention the negatives, because no single kind of policy is a "fit-all" for everyone.
Here are some instances when this coverage does not make sense:
You already have ENOUGH existing life insurance in place. This is going to vary from person to person, but if you have an existing life insurance policy in place, you may not need another policy. However, I recommend finding and READING your existing policy. Make sure it is not an ACCIDENTAL DEATH policy. Consider a policy review if it has been a while since you had your previous policy, to make sure you have enough coverage to meet your future needs.
You are on a very limited income and over 80. Even though you might need coverage at this time, it gets more difficult to find affordable options at 80+. They are available, but if you are on a very limited budget it may not makes sense unless you can find help to pay for the plan.
You are financially independent. With retirement savings in place, prior life insurance coverage and business or personal assets, a small final expense policy probably does not make sense. However, in this instance, buying a pre-need policy (different than a final expense policy) is a good option to lock in a price for future funeral arrangements. Please contact us for more details on this option.
What to watch out for
Some marketing and promotions done via mail and television, can cause confusion. Here are some things to look out for:
Very low premiums and extremely high coverage amounts. This is a red flag for a few reasons. First, it usually is misleading because the coverage might be ACCIDENTAL DEATH coverage only. Which means it pays out only if you die from an accident. Unfortunately, these policies almost NEVER pay out. Second, the coverage might be TERM. Which means the premiums could go higher, or the coverage could end altogether after a specific period of 5 to 20 years. Leaving you without coverage and a drained bank account.
Units of coverage. These plans on television or via mail entice customers with very low premiums for "units" of coverage. However, these "units" are usually very small dollar amounts of coverage.
To sum up
Final expense life insurance provides much needed coverage for a large number of seniors,
my agency helps people find plans that fit needs, health, age and budget.
To get a no pressure, no obligation quote, or to contact us for more information on your specific situation, visit out home page.
You can also call/text John directly at 480-536-1212. We help people throughout the East Valley Arizona, including Chandler, Gilbert, Mesa and Maricopa.