Final expense insurance is typically a small whole life insurance policy where the proceeds are earmarked specially for funeral and other end of life expenses. Ultimately, the net result will be a tax-free cash payment to a beneficiary(s). Most insurance companies aim to pay claims within a few days since they know the funds are likely to be used for a funeral. Technically, the money can be used for anything. If for example, all the money is not used for funeral costs, the remaining amount is owned by the beneficiary(s) to use as they see fit.

Most life insurance companies make these plans available to seniors from the ages 50 to 85 and offer between $5,000 and $25,000 in coverage. The health requirements to qualify are very lenient too. Even if you have serious health issues, you can still get a policy. Some plans actually guarantee approval no matter what health issues you have. It is important to note that if you buy a plan that has guaranteed approval where there are no health questions, there will be a two to three year waiting period before benefits become active. To get a plan that covers you right away with no waiting period, you must at minimum answer health questions and be approved by the insurance company.

How much does it cost?

Final expense insurance premiums are typically low since the benefits are on the smaller side. Overall, the average cost of a final expense policy is between $50-$100 per month. Rates will vary depending on your age, gender, health, tobacco usage, coverage amount and the insurance company you purchase your policy from.

For example, a non-smoking 65-year-old woman in generally good health will pay roughly $40-$45 per month for a $10,000 policy. However, a man with the same profile would pay $56-$60 per month.

How do you buy a policy?

There are few different ways to purchase a policy. There are dozens of insurance companies that offer this type of plan, and they all have different application processes.

Ultimately, you must choose which method suits you best. Working with an agent gives you the advantage of having a professional who can answer your questions and make recommendations. However, if you value your privacy and prefer simplicity, then buy a plan online or through the mail. 

No matter how you apply, you can find an affordable life insurance policy for final expenses since there are so many companies to choose from.

Who are the best companies to consider?

The market for final expense insurance is vast. You will find a ton of insurance companies to choose from. Below are some highly rated companies to consider. This information is as of 9/23/20, visit the company websites for current policy information.

1) Mutual of Omaha

Mutual of Omaha is one of the oldest life insurance companies in the USA. They offer two different final expense plans to anyone between the ages of 45 and 85. The first plan is called “Living Promise” and is only sold through agents. You can purchase up to $40,000 in coverage on this plan. It does have underwriting, so your qualification depends on your health. If you are approved, this plan has no waiting period. The second plan they offer is guaranteed issue, so you cannot be denied. With their guaranteed acceptance plan, you can buy up to $25,000 in coverage. Since this plan has no health questions, you will be subject to a two-year waiting period before you are covered. 

2) AIG

AIG is another very old and stable life insurance company. They only offer one type plan to seniors between 50 and 80, which is a guaranteed acceptance policy. Because it has no health questions, there will be a two-year waiting period before your coverage begins. The premiums are affordable and applying can be done online or through an agent.

3) Aetna

Most people associate Aetna with health insurance, since that is the most common insurance they sell. However, they do offer final expense insurance too. What is most unique about Aetna is they will insure applicants as old as 89. Very few life insurance companies will go beyond 80 or 85. The amount of coverage you can buy from Aetna varies based on your age. It is important to note their plans have underwriting, so you must qualify for their coverage. That is the main downside with Aetna. They have no guaranteed acceptance option. Depending on your health, you may or may not qualify. 

Should you buy final expense coverage?

For some people, a final expense policy makes all the sense in the world, and for others it does not.

A final expense plan is typically suitable for any individual who presently has no means to pay for their funeral costs. For example, you have no savings or real property that can be sold to pay for burial costs. If you are in that situation and don’t want to leave a financial burden to your family, then a final expense policy is fantastic option you should pursue.

At the same time, if you currently have cash, a retirement account, or some other assets that can be quickly liquated to pay for your funeral, you probably do not need a policy. You may prefer one, but you do not necessarily need it. 

If you have the cash, it would probably be better to put it into a funeral trust, so it’s securely locked away for when that day comes.  

At the end of the day, preplanning is an act of love. No matter how you financially prepare for your funeral, your family will appreciate it more than words can express. 

What you do now ensures they aren’t forced to make tough decisions while riding an emotional rollercoaster.

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