What is Final Expense Insurance?

If you’re considering purchasing life insurance, you may have stumbled across the term “final expense insurance.” If not, it’s possible you’ve actually heard of it under different names. If you’re uncertain about leaving surviving family members with financial burden once you’re gone but you can’t afford high premiums and don’t need a huge death benefit, final expense insurance could be a solution.

Final expense insurance is also commonly called:

  • Funeral insurance
  • Burial insurance
  • Simplified issue whole life insurance
  • Modified whole life insurance

Final expense life insurance is one of several types of term life insurance. Final expense insurance is whole life insurance; the typical life insurance company offers it to give clients and their families peace of mind.  Many people are interested in learning more about it once they hear that it could benefit their loved ones after they’re gone.

We’ve outlined the basics of final expense insurance to help paint a picture of what the average policy offers. You can find out more about how final expense insurance works and the benefits and drawbacks of a policy below.

What Is a Final Expense Insurance Policy?

Final expense insurance is a type of life insurance. This type of policy helps account for end-of-life expenses. You can buy one of these policies from an insurance company. 

It is easier to get approved for a final expense insurance policy than other life insurance policies. Final expense insurance involves a small death benefit intended to offer some help to surviving family; it’s not a huge policy meant to cover every expense and issue once you’re gone.

  • Final expense insurance policies are small whole life policies
  • The face value (or the death benefit) of final expense insurance policies ranges from $2,000 to $50,000

The Difference Between Final Expense Life Insurance and A Normal Life Insurance Policy 

Think of final expense life insurance policies as small whole life policies. Most normal life insurance policies have tighter barriers to entry. Final expense policies have smaller face values to ensure affordability. You can ask the majority of insurance companies you’d work with for help with a final expense life insurance policy. 

There is no other difference between “normal life insurance” and final expense insurance. The only determining factor between them is price– insurers like to sell smaller policies (final expense life insurance policies) to make them more affordable and drive profit. 

Family looking at laptop researching final expense insurance

Final Expense Insurance Plans Help With End-of-Life Expenses

Final expense coverage helps cover bills after the death of a policyholder like funeral home costs, hospital bills, etc.

What end-of-life expenses will final expense insurance help with?

  • Final medical bills
  • Funeral expenses; funeral plans, funeral services, etc. 
  • Costs associated with a memorial service
  • Burial costs
  • Funeral home expenses
  • Cremation expenses
  • Embalming expenses
  • Caskets, urns, etc. 

Pros of Final Expense Insurance Plans

There are indisputable benefits to a final expense insurance plan. Depending on your circumstances, it may be one of your primary options for life insurance. 

Your life insurance company makes policies available to applicants with poor health

Lots of people are barred from certain insurance policies due to their health. Applicants with poor health are at perfect liberty to pursue final expense insurance; and you won’t be denied for a final expense insurance policy just because of poor health or preexisting health conditions. 

Applying for final expense insurance does not require a medical exam. You only need to fill out a questionnaire and offer your prescription history. 

You can buy a policy with a lower death benefit ($50,000 or less)

There are plenty of people who can’t afford life insurance policies over $50,000. That doesn’t mean that those people shouldn’t get life insurance– it means that they can look to final expense insurance as a potential benefit. Even smaller policies can help offset the cost of a funeral and other types of financial burden.

You can buy a final expense life insurance policy with a payout amount of $50,000 or less. That’s all many people can afford; and for plenty of people, it’s all they need. 

You provide peace of mind to your loved ones

Your loved ones will be granted some peace of mind if they can leverage final expense insurance for some costs after you’re gone. Plus, an insurer can’t decrease your policy’s death benefit without serious reason (see below), so your family members can rest easy knowing they’ll receive certain financial help.

  • Final expense insurance death benefits may decrease if you borrow against your policy’s cash value or if you request accelerated death benefit

With a final expense insurance policy, your heirs have the freedom to use your death benefit for any purpose (just like standard life insurance). The benefit is guaranteed, too, provided premiums are paid. 

8 Benefits of Final Expense Insurance

Protection from high end-of-life costs and expenses, such as medical bills and funeral arrangements. 

  1. Easier to obtain than other life insurance policies, since the death benefit is typically small enough to not require a physical exam or invasive questions.
  2. Provides financial security for your family; in the event of your death, they will not have to worry about funds for final expenses. 
  3. Not only can it offer peace of mind for those left behind, but it can also be used as an estate planning tool. 
  4. Flexible payment options, including premium payments that can be spread out over time with annual or semi-annual premiums. 
  5. Policies are generally much more affordable than traditional life insurance policies and may come with additional features like cash value accumulation.
  6. The death benefit is tax free and does not require a probate process in order to access the money upon death. 
  7. Coverage options are also available for people who may have been denied coverage by other life insurers due to pre-existing conditions or age restrictions.

Cons of Final Expense Insurance

Final expense insurance isn’t perfect for everyone. In some cases, insurers may promote final expense insurance policies in misleading ways. People who don’t benefit from this type of insurance have better options for their financial health. 

Some insurers provide incomplete information about final expense insurance policies

There are lots of ways that insurers can choose to hide or complicate information about final expense insurance. Sometimes marketers:

  • Use scare tactics about high average funeral costs, burdening family members, etc. to convince people to buy more expensive policies
  • Leave our information about policies on marketing materials
  • Share confusing or misleading information in marketing materials

Policies have low death benefits 

Final expense insurance policies have low death benefits. This is a good thing in many cases, since it opens the door to affordability, but it can cause problems. Some people lose money when they live longer than they anticipated and pay a lot into premiums for final expense insurance. In some cases, they may more in premium than their beneficiaries will receive as a death benefit. 

Some insurers try to steer consumers towards the wrong policies

Sometimes, insurers push people who want to purchase final expense insurance towards more restrictive and expensive policies. This is more common when a consumer doesn’t present major health problems.

It’s possible that you qualify for better coverage than an insurance agent will tell you. The best decision for you is the one that keeps your pocketbook and your health in mind. It’s important not to let an insurance agent push you into a policy that you don’t want or need. 

Is Final Expense Insurance Worth It

Knowing the pros and cons of final expense insurance, final expense insurance is definitely worth considering, especially if your family may struggle to cover your end-of-life costs.

By having this type of policy, your loved ones won’t have to worry about dealing with large medical bills or the cost of funeral services. It can also provide peace of mind knowing that those you care about will be cared for after you are gone.

Final expense insurance can also provide financial security for those who don’t have a large estate to leave behind. The small premiums associated with this type of policy make it achievable for almost anyone and can give families the comfort of knowing that their loved one’s final expenses are taken care of.

Ultimately, final expense insurance is worth it because it provides an affordable way to give financial protection to your family in the event that something unexpected happens.

Bogart Wealth: Top-Class Estate Planning Professionals Who Can Help You Explore Your Options

If a person decides it’s time to start considering estate planning, it’s best to talk to professionals about which steps to take next. Experts with industry experience can help you make the right decision to protect your finances and help your family. 

At Bogart Wealth, we’re a ream of top-class estate planning professionals. Our team is always prepared to help clients discuss the best financial options for their unique needs. We help our clients with health questions and concerns about funeral expenses, term life insurance, whole life insurance, burial insurance, and more. Questions about insurance products? Looking to learn more about types of life insurance? Reach out to us today to find out more about how we can help you determine whether final expense insurance is best for you.


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