Have you been wondering exactly what Final Expense Life Insurance is and if you may want it? These are two common questions that we hear from our clients, and we want to provide those answers here for you.
Final Expense Life Insurance is one of the many types of life insurance available and it is meant for a specific purpose. Our Final Expenses can be significant, and we want to be sure our loved ones don’t have to pay them from their pockets, especially at an unexpected time. Our final expenses are things like our funeral expenses (therefore Final Expense Insurance is also called Burial Insurance), final medical bills and other final bills like a credit card balance. Unfortunately, even a simple funeral can be quite expensive these days, but you likely already know this.
Another need that a Final Expense Insurance can meet is to leave behind an amount of money to benefit your loved ones after the final expenses have been covered.
Another need that a Final Expense Insurance can meet is to leave behind an amount of money to benefit your loved ones after the final expenses have been covered.
Like all life insurance, the death benefit is 100% tax free to the beneficiaries which is the wonderful tax advantage of life insurance.
These Final Expense policies are offered to people from age 50 to 80 (or sometime 85) and the death benefit available starts at $2,000 and can go as high as $30,000. If you want and need more than $30,000, there are other life insurance products that could meet that larger need. We’ll discuss that briefly later in this article.
There are two types of final expense insurance and they are based on your current health status. The healthier you are, the lower the premium will be, and the difference between the two types is discussed below.
Guaranteed-Issue Final Expense Life Insurance – when you are less healthy
Guaranteed-Issue Final Expense plans are available for those who are not as healthy and have poor health conditions. These plans allow those folks to still get the coverage they are hoping for without being denied due to a poor health condition. Therefore, there is no questions asked and no medical exam required.
Because these plans are guaranteed to be issued regardless of health, that is a big advantage, and where there is good there often has to be some disadvantages to make it work. In this case, one disadvantage is in the form of a limited death benefit in the first two years. What this means is that if you pass away in the first two years, other than from an accident, the death benefit will be reduced to only the premiums paid to date plus a fixed interest rate. Once you have reached the start of the third year, the full death benefit selected at purchase will be paid.
A second disadvantage to offset the big advantage with a Guaranteed-Issue Final Expense plan is that the premium is higher compared to other life insurance products that are not guaranteed-issue. This higher premium may be worth the big advantage of gaining otherwise unavailable life insurance coverage.
Simplified-Issue Final Expense Life Insurance – when you are health is better
Simplified-Issue Final Expense differs from guaranteed-issue in the fact that you will be required to be able to answer “no” to some simple questions on your health and lifestyle. There is also no medical exam with the Simplified-Issue Final Expense policies.
The benefits of being able to answer “no” to those questions will give you two benefits over a Guaranteed-Issue policy-
1) lower premium (but if you are a smoker, your premium will be higher than a non-smoker) and 2) immediate full death benefit from day one.
Some carriers may offer a higher death benefit with a Simplified-Issue policies when compared to a Guaranteed-Issue policy.
We can help you determine which of these two types fits your specific needs the best.
Like we mentioned above, if you are healthier and you are willing to take a
Medical Exam, another life insurance product can offer you a higher death benefit (possibly double the death benefit) for about the same premium cost as a Final Expense policy. This product is called Guaranteed Universal Life (GUL) policy and these policies may continue to age 120. The Medical Exam is used by the carrier to do underwriting to determine your premium and the healthier you are the lower your premium can be. We can help you determine if this type of life insurance policy is a better fit for you.
In conclusion, you have two Final Expense Life Insurance products that will allow you to make sure your loved ones have the funds needed to cover your final expenses, so they don’t have to unexpectantly pay those for you. This is true whether you are dealing with poor health conditions or if you are in pretty good health, and that is good news! Give us a call and we’ll walk you through the entire process.
Final Expense Life Insurance | Ellenton FL | Bradenton FL | Dawn Cook Parrish FL