Final Expense Insurance

Fact-checked with HomeInsurance.com

4 min read
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If you were to die suddenly, would you want your friends and loved ones burdened with the costs of your funeral? Those costs average between $5,150 and $9,135, depending on whether you’d prefer cremation or burial.

Fortunately, there’s a type of insurance, called final expense, or burial, insurance, that is specifically designed to pay for your end-of-life costs. It’s a type of whole life policy that generally pays out between $5,000-25,000 as a death benefit.

What is final expense life insurance?

What is final expense insurance? Like all whole life insurance, it features policies that you pay into as long as you live.

When you die, a death benefit, which you determined when you signed up for the policy, goes to your beneficiaries. That death benefit will not change during the life of the policy, and you are locked into the premium rates that you start with — they won’t go up as the years pass.

Unlike most whole life policies, however, a final expenses policy does not require a medical exam. At most, you’ll fill out an application form that asks some questions about your health. But the underwriting process is short, and in some cases, you can have a policy in hand almost immediately.

How does final expense life insurance work? Let’s say John buys a policy when he’s 63 that pays a death benefit of $15,000. He pays his premiums faithfully until he’s 79, when he passes away. After his death, his daughter and beneficiary Susan contacts the insurance company with proof of death, and it sends her a check for $15,000 within days.

Susan isn’t required by law to use the check for burial expenses, but that’s the intention. Burial fees can add up quickly, with costs including:

  • Burial plot
  • Casket
  • Cremation
  • Embalming
  • Fees for officials or minister at the memorial service
  • Flowers
  • Funeral home expenses
  • Grave vault and/or grave liners
  • Headstone
  • Reception costs following the memorial
  • Workers to dig grave

Using that $15K, Susan can pay for the costs of a service and reception in John’s memory, as well as the charges to have him buried in the family’s grave plot. Because John had no other life insurance, Susan would have had to cover the costs herself if not for the final expense insurance.

How much does a final expense policy cost?

As is true for all insurance, there are a number of factors that go into the cost of a final expenses policy. These include:

  • Age: The older you are, the more your policy will cost.
  • Gender: Because women statistically live longer than men, their costs will be somewhat lower.
  • State: State regulations can impact insurance costs depending on laws enacted that cover insurance practices.
  • Health: Although there’s no health exam required for final expense insurance, it’s not intended for those who are terminally ill. In some cases, you may qualify for a guaranteed issue life insurance policy, which covers high-risk individuals with serious health issues but is also more expensive.
  • Smoking habits: If you are a smoker, it puts you into a higher risk pool, which will increase your premium rate.

Your quote will vary depending on these factors. Using the quote tool at final expense insurance company Choice Mutual, here are some sample quotes for $10,000 of coverage for a resident of New York State:

Immediate coverage policy Guaranteed issue policy (no health questions)
Male, age 61, non-smoker $47.01/month $68.57/month
Female, age 61, non-smoker $35.79 $54.08
Male, age 80, non-smoker $141.87 $247.32
Female, age 80, non-smoker $105.33 $176.37

Who should buy final expense insurance

Final expense insurance is one option for anyone who wants to ensure that their funeral costs are covered. It’s inexpensive and easily accessed after your death.

But there are other options, and they may offer benefits that you don’t find with final expense policies:

  • Term life insurance: Term life is insurance that you pay into for a period of years — usually 10, 20, or 30 — which pays a death benefit for as long as the policy is in force. The amount of the death benefit is usually much higher for term life, but it is not much more expensive than final expense insurance. The drawback to term is that once the policy is finished, the death benefit goes away.
  • Permanent life insurance: If you prefer a policy that stays in force throughout your lifetime, permanent life insurance, such as whole life, is an option to consider. This insurance is more expensive than either term or final expense insurance, but it’s with you as long as you live and pay your premiums and usually has a much higher death benefit.
  • Investments: Another simple solution is to set aside $10K or more in a relatively liquid investment allocated for funeral expenses. Make sure your heirs can access the account quickly after your death so they can plan your funeral and burial.
  • Pre-pay options: If you would like to maintain control over what happens after you die, it is also possible in some states to pre-pay for your funeral costs by working with a favored funeral home. This way, you can choose your casket and even plan your memorial service. The drawback is that you can’t know all the factors that will come into play before you die — such as the funeral home going out of business.

For some people, having a final expense policy is not a great idea. Those who have a terminal illness may find it difficult to purchase a policy at a reasonable rate because they are in a high-risk category.

High-net-worth individuals would also not benefit because there are other investment opportunities that can yield a higher rate for the money.

Frequently asked questions

Where can I find inexpensive final expenses insurance?

An insurance brokerage company that represents multiple insurers can help you find the cheapest option among several companies. It pays to get multiple quotes because each company’s quote will be unique.

How long does my final expense policy last?

In general, as long as you pay your premiums. Some policies cap the age at 100 or more, but you’ll need to ask your agent or read your policy documents to find out if it’s true for your policy.

Does being a smoker matter when I buy final expenses insurance?

Generally, yes. Smokers statistically have shorter life spans than non-smokers, making them riskier to insure. Although final expense insurance isn’t as stringent in its health requirements as other types of insurance, you will be asked if you’re a smoker when you request a quote.