If you've watched day time television, you've no doubt seen the host of a popular game show pitching final expense life insurance. But, what exactly is it? Who should consider it? How much does it cost? And, can you really obtain life insurance without an exam? Today, I'll answer the common questions surrounding final expense or burial life insurance.
What is Final Expense Life Insurance?
Final expense insurance is life insurance that provides a modest death benefit (usually up to $25,000) to help your family pay final expenses. Examples include: casket, cemetary plot, funeral services, flowers, and/or cremation; just to name a few. According to the National Funeral Director's Association, the median cost of a funeral increased to $7,640 in 2019.
Who Should Consider a Final Expense Policy?
These policies are generally marketed to inviduals age 50 and older who don't want to rely on friends and family members or don't have the savings to cover final expenses and funeral costs. In addition, these policies may be appropriate for individuals who have had difficulty qualying for life insurance due to pre-existing medical conditions.
Can You Really Get Final Expense Insurance Without An Exam?
Generally, final expense policies are available without a medical exam. However, you should be aware that some policies still require you to answer a few medical questions while others don't require you to answer medical questions at all.
The reason insurance companies can offer life insurance without an exam and, in some cases without requiring answers to medical questions, is because most of these policies limit the death benefit for the first 2 or 3 years (also known as a graded death benefit). For example, if you purchase a policy with a 2-year graded death benefit, and die from natural causes within the first 2 years, the insurance company would likely refund your premiums plus interest. The interest rate is usually specified in the policy and varies from company to company. However, in this example, if you died after the second year (regardless of the cause of death), the full death benefit would be payable.
How Much Does Final Expense Insurance Cost?
The cost mostly depends on three factors: your age, whether you are male or female, and the amount of the death benefit you are applying for. Generally, the older you are and the more insurance you wish to purchase, the higher the cost. Most people can obtain coverage for as little as $1-2 per day. Furthermore, because final expense policies are usually whole life, your premiums do not increase. Coverage lasts until you die or cancel the policy.
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