What is final expense life insurance?

Final expense life insurance is permanent coverage designed to take the burden off of your loved ones during a difficult time. It’s primary aim is to cover medical bills and funeral expenses, which is why it’s often called burial insurance.

Typical characteristics of final expense life insurance:

  • Permanent protection
  • Level premium and level benefit
  • Builds cash value
  • Lump sum death benefit is generally income tax-free
  • Policy riders typically available
  • Simplified issue – no medical exam

Is final expense permanent coverage?

Yes, final expense (FE) life insurance is whole life, but with a lower death benefit than what you’d typically see with traditional WL. Coverage will remain in force as long as you make your premium payments. Additionally, like traditional whole life, FE builds cash value that you can borrow against.

Is acceptance guaranteed?

No, you can be turned down depending on your health. There is no medical exam, but you do have to answer medical questions. Answers to those questions are verified by the insurance company’s underwriting department. Also, depending on your health, your application may be accepted with graded benefits.

Graded benefits mean that the full death benefit is only payable to your beneficiaries after a certain period of time. That period is commonly 2 years with most policies (although..some can be longer). If you pass away of natural causes during that initial ‘graded’ period, your beneficiaries will still receive a benefit payout, but it won’t be the full face value. Depending on the policy, it will either be a percentage of the death benefit or the premiums you’ve paid to that point + interest. That being said, there’s an exception for accidental death, in which case the full death benefit is payable from day 1 on most policies.

Death by natural causes means anything from a heart attack, to kidney failure, to complications from diabetes, to a stroke, to cancer, etc. Basically, anything but death caused by accident.

Level benefit vs. Graded benefit

A final expense policy with level premiums & level benefits will pay out the full death benefit from the day the policy is placed in force.

A final expense policy with graded benefits will either offer return of premium + a percentage (typically 10%) – OR – a percentage of the death benefit.

Should you own final expense insurance for your parents?

How much final expense insurance can I buy?

Most FE policies are available with a death benefit (or face value) between $5,000-$30,000. However, a couple of companies offer more coverage, depending on your age and health. In fact, one of my preferred insurance companies offers an FE policy with a face value between $10k-$100k for applicants between the ages of 30-59. That same company offers up to $75k in coverage for those between 60-69 years of age and up to $50k for people between 70-80.

Are policy riders available with final expense policies?

Most insurance companies do offer the option to add riders to final expense policies. The most common are living benefits or accelerated death benefit riders, such as critical & terminal illness riders. These riders allow you to request access to a portion of the death benefit proceeds if you’re diagnosed with a qualifying condition. That money can be used as you see fit to help with medical expenses, or otherwise, while you are living. The death benefit is reduced accordingly if living benefits are exercised.

Another common rider is the accidental death benefit. How this rider works varies by policy, but it usually pays an additional lump sum if death occurs by accident. Some offer as much as an additional 100% of the lump sum death benefit of the policy, essentially doubling  the benefit due to your beneficiaries.

While most companies charge an additional premium for these riders, they’re included in some of my preferred policies. My free consultation process is designed to determine the best type of policy for your unique situation. I believe in taking a strategic approach to recommending which policy will best serve you, both in the short and long term. Reach out by clicking the Get Quotes button below or by sending me an email.

Will my medical and MIB records be requested?

Yes, insurance companies will look at your medical records, your medical information bureau record and prescription database during the underwriting process. Final expense policies are known as simplified issue. What that means is that the insurance companies don’t require a medical exam, but they will conduct their due diligence during the underwriting process. As with any insurance application, it’s important that you’re 100% honest when answering all questions. If you pass away and it’s later found out by the insurance company that you weren’t truthful in your application it could be grounds for your beneficiaries’ claim to be denied.

How is final expense different than a guaranteed issue policy?

The main differences between guaranteed issue (GI) and final expense policies (FE) are the underwriting requirements, cost and available face values. FE policies will cost significantly less than GI and are available with death benefits up to $100,000, for people under the age of 60. Not everyone will qualify for FE, however, as the underwriting process takes into account your health, your build, your driving record, etc. GI falls under the umbrella of final expense, but is intended for someone who cannot qualify for FE or other traditional policies due to health issues.

How do I get started?

You can either click the Request a Quote button below and complete a quick form or send me an email to start the conversation. During a free consult, I’ll gather information about your health and lifestyle. That allows me to pre-qualify you so that I can look at the right insurance policies and to determine if final expense is your best option. I will help you explore every option based on your budget and ultimate goal in looking into life insurance.

My ultimate goal as an independent life insurance broker is to help my clients obtain the right coverage. Not only at the best price available, but with the appropriate insurance company for their unique situation and level of risk. I will never suggest that you apply for the cheapest option if I believe that for one reason or another you will not qualify for that specific insurance policy.

Life insurance is by no means a one size fits all purchase. Reach out today and let’s discuss your options!

-Danny Gallant
Life Insurance Broker