Final Expense Life Insurance
A final expense life insurance policy is used to cover the expenses that will typically arise at the end of your life. A prime example of this would be funeral costs. This type of insurance policy will generally have a fairly low cash value and the vast majority of the time it is extremely easy to be accepted. Many people may wonder whether there is a specific need for final expense life insurance, although it is something that you will definitely need to consider if you do not currently have enough money to cover your final expenses and don't expect have enough money in the future.
The expenses that will typically arise at the end of your life are ones that you can do nothing about afterwards. Therefore, it makes perfect sense that you plan to them in advance. Final expense life insurance is probably most used to cover funeral costs, and in some cases probate costs. If you have been the unfortunate victim of an accident or disease, this life insurance can cover your medical care. Nobody particularly wants to be included in this final group, although there is nothing wrong with specifically planning for it.
Funeral costs will vary, and this will very much depend on how lavish your arrangements are. You may wish to plan for a burial plot, a casket, transportation, the service, bouquets and catering. In general a funeral will cost in the region of $1000-$10,000. The vast majority of final expense life insurance policies will typically have a cash value of somewhere in between $5000 and $50,000.
Final expense life insurance is available to everyone, but the most common type of buyer is someone who expects to die in the near future. This will typically include those who are very ill or the aged. These two particular demographic groups may find it extremely difficult to be covered under an ordinary life insurance policy. Therefore, final expense life insurance may be the perfect alternative. This life insurance policy is generally issued without the need to answer any health questions or complete a medical exam. They are typically known as guaranteed issue or guaranteed acceptance insurance policies. You will usually find that a life insurance policy that requires no exam is likely to be more expensive than the norm, although as final expense life insurance will have a low cash value, it should still be affordable.
The beauty of final expense life insurance in comparison to a normal life insurance policy is that it will entail no underwriting whatsoever. The vast majority of insurance products will typically require minimal medical underwriting, which will involve answering questions about your health and physical condition. This is not the case with final expense life insurance and any other type of guaranteed acceptance insurance policy.
The only real alternative to final expense life insurance is to make prior plans with a funeral service agency. This will involve you paying in advance for the specific services that you desire at your funeral. The only other option that you have is to have a life insurance policy that names your funeral agency as the beneficiary. This will merely mean that all the proceeds from that life insurance policy will pass to the funeral agency upon your death.
Final expense life insurance is typically taken by those who are deemed as non-insurable or too high a risk by the majority of insurance companies. Often this is due to certain lifestyle habits or even ill-health. Final expense life insurance is not specifically meant to cover just funerals, and in the case where you have been ill for a prolonged period of time it can be used to settle outstanding medical bills. The coverage of this type of insurance policy is guaranteed for life, and this is irrespective of any future changes in your age, health or occupation. As long as you pay your premiums in full and on time, this insurance policy is guaranteed to pay out when you need it the most.
There are two specific types of final expense life insurance and these are term life and whole life. As the name suggests, term life insurance will cover you for a specific period of time or even until a set age. Once you have reached the set age, or the time period has elapsed, your coverage will expire. Whole life insurance, once again as the name implies, will cover you for the remainder of your life. Even though final expense life insurance is no different to traditional life insurance policy, you are able to identify the type of coverage you have from the wording in the policy. A final expense life insurance policy will specify that the proceeds are to be used for funeral, a burial, or medical costs. You should also remember that as a final expense life insurance policy is in fact a traditional life insurance policy, there is no need to specifically pay the proceeds towards funeral costs. You are able to name a beneficiary, such as a spouse or a family member, who can then use the proceeds to cover your funeral expenses, or any bills that need to be settled.