Final Expense Insurance For Seniors – The Nuts and Bolts

Final Expense and Burial Picture

So what is Final Expense Insurance?  Is it the same as Burial Insurance?

In this article we are going to first enlighten you on what it is.  Second, how you can cost effectively insure and see your final needs, wants and wishes are met.

The benefits of final expense insurance just makes sense to a lot of folks.  It is quite affordable while offering inherent guarantees. 

Remember, leaving this world costs a lot of money.  It is important that we have a plan in place to cover any expenses that result due to our passing.  We don’t want to leave a financial crater for our loves ones in a time of extreme grief.

A Final Expense policy for seniors is affordable and can be used by your loved ones to cover the costs of your death and/or other needs.  Final expense policies are offered by several life insurance companies. Policies from $2,000 to even $50,000 with no medical exam are available. Use the instant “No Exam” quote tool on this page to see how much final expense whole life would be for you right now. 85% of seniors (50-85) qualify for “Excellent” under the “Health Classification.”

A permanent, whole life life insurance policy is most often recommended for any end of life planning.  Term life insurance is not a good solution and should be avoid if your planning needs absolute assurance of protection.

For many, personal debt, funeral and burial costs are a very large expense to overcome.  End of life can be very expensive for many people, especially those who live on a fixed and/or low income.

Your family is going to be saddled with final expenses without proper planning one way or another.  Either you have the financial reserves to easily handle your final expenses or you don’t. 

Most folks don’t want to leave behind a financial crater for their loved ones either.  Financial burdens on our loved ones is certainly very hard for the remaining family members.  They are already struggling in saying goodbye and moving on emotionally.  The impact can leave some families having to completely change their lifestyle or be financially ruined.

Leaving your family member(s) with a potential mountain of debt does not need to happen.  Final Expense Insurance can take some or even all the financial burden off them.  Only you can decide how devastating the financial impact will be.

We can certainly can help you with the considerations and explain your options for insuring your loved ones will be protected. 

With that said, adjust to your family financial needs accordingly. 

Keep in mind, that even if you have the money laid aside to cover funeral and burial costs, there are other expenses to consider especially if you have a someone who is quite dependent on you. 

Furthermore, could you have any outstanding debts?  Credit card bills, mortgage or final medical bills?  These are also expenses a final expense policy can be used to cover.

Final Expense Insurance With No Exam Required

A key feature of final expense insurance for seniors is that no medical exam is typically required. Policies like this are usually specifically designed for people 50-85 though there are restrictions depending on the insurer and the specific product they are offering.

Be sure to avoid Guaranteed Issue/Acceptance life insurance policies if at all possible. They will not cover you for natural death for at least 2 full years. Some insurance companies use a waiting period of 3 years.

The price of these policies is considerably higher. Companies like Colonial Penn are “popular” because of this oversold product.

With guaranteed issue whole life insurance, compound interest is paid on top of all paid premiums during the limited, waiting period if the insured should pass away due to natural causes.

After the waiting period has ended, full benefits for natural death will be paid without restriction.

Premiums however, will never go down. They are locked at the issued date.

Ask yourself a couple of reality questions…

What kind of changes will your passing and absence bring to your family?  Do you want to leave a legacy behind?  Will a loved one have to hire some help or return to work?

These are all things to think about and plan for while you can.

What Does It All Come Down To With Final Expense Insurance?

When you hear the terms Funeral, Burial or Final Expense Insurance for seniors, you are really talking about the same thing, just 3 different names.  A Funeral Insurance plan is typically more focused on just the funeral expenses and the policy owner my name the funeral home as beneficiary.

We do not recommend this course of action. Our advise is to name a close family member who can handle the responsibility. If funds from your life insurance policy will be used to pay for your funeral, your beneficiary can complete an “assignment form” at the funeral home which will allow the insurance company to pay the funeral home directly out of your policy’s proceeds. 

A final expense policy is a life insurance policy that encompasses full funeral, burial costs as well as outstanding debts. Some seniors attach a family legacy into their policy as well.

A burial policy can and does function the same.  The policy just needs to be adjusted accordingly to meet your goals beyond the funeral and burial costs.

You may have also heard of or considered a prepaid burial.  This is something you typically purchase at a funeral home versus having insurance.  Problem there is… you have to put all the money on the table, upfront.  If the cost is $10,000 then your out $10,000 for something which could be years down the road.

With final expense insurance, you are transferring your “risk” of death to a life insurance company in exchange for a preset, but permanent premium (typically) for life. 

At any time during your payment period if you or your insured loved one passes on, the beneficiary (set by policy owner) will receive the full amount of the policy, tax free.  Whether you have made one monthly payment or 72+, it does not matter.  The full coverage is paid out as your needs are insured as long as the policy remains paid up.

Since Final Expense coverage is also used to cover any outstanding debts that may remain upon the passing of the insured, a Final Expense/Burial Insurance policy helps further ease the financial burden placed on a family when a loved one passes away.  A prepaid burial will not do this.

Remember that these expenses may be stressful for the remaining family to pay for. Would they have the resources to pay out 15K for a funeral and burial or would a GoFundMe or church collection be required to help out?

The life insurance industry has numerous carriers who issue policies designed specifically for people age 50-85 (issue ages) that will cover you permanently.  Typically, these policies can insure you up to $50,000 with some exceptions.  Term insurance is sometimes used as an option as well, but will not be permanent and never the solution.  Being “old school” so to speak and working with a very large number of senior citizens since the late 90’s, I advise considering “simplified issue products” with limited health questions if you want easy and fast decision from the insurer.  They are still affordable and give you some savings just for answering some very basic health questions. 

Now, if maximum savings or higher policy amounts are needed, we can look at a full, medically underwritten traditional life insurance policy. This may require you to have a medical exam provided by the insurance company.  This will likely produce the best offer for you, but will require a bit more work upfront to secure the coverage.  Most senior citizens tend to opt for simplicity, but the savings may make some sense to others who don’t mind the additional delay and red tape.  We recommend you consider all your options.

There are also many people with a health predicament with a poor outlook for the foreseeable future.  In that case, guaranteed issue final expense plans are available. However, we advise against them until last resort.  The premiums are more expensive than simplified issue plans and will have a 2 year limitation before full benefits of the policy are available.  If your health outlook is not insurable otherwise, you may have to accept the more expensive but guaranteed issue products that we do offer.  Sometimes Guaranteed Issue policies are necessary because it is often the only option other than a prepaid plan with a funeral home. There are no health questions to answer as part of guaranteed issue application.

Now, there are three basic benefit tiers available with Final Expense/Burial/Funeral Insurance plans:

  1. Level Benefits  which means the full face amount (full payout) of the policy will be in-force the day the application is approved.  Coverage is permanent as long as premiums are paid in full.
  2. Graded Benefits which has a typical 24-month waiting period before the full face amount of the policy is in force. Should death occur to the insured, the insurance companies will modify/grade the policy to offset the amount of additional risk. Typical the percentage increases during the 1st 2-3 years. More expensive to own than level benefit whole life insurance.
  3. Guaranteed Acceptance which means you cannot be turned down based on your health or other high risk factors. These policies have a 2 year minimum before full benefits and offer ROP (return of premium) plus an interest factor during this period for natural cause of death. Most expensive tier of whole life insurance.

Graded Life and guaranteed issue plans are for those with very elevated risk to the insurance company offering the policy.  It is generally a very high risk standard.  Controlled High Blood pressure is not a “high risk” issue.  However, complications from diabetes such as amputation could be considered high risk. For someone with a serious health impairments this could be the only insurable way to go. The premiums will be higher but if you cannot get approved for level benefits, this will put you in the best position.

In order to qualify for a Level benefit plan, an applicant can have some typical impairments and/or health issues that is controlled via medications or other.  Of course there are many types impairments out there and a good reason to talk with a life insurance expert.

A note to take, the cost of final expense insurance is locked once you purchase your policy. Your application age is used to set this premium when you apply.  In other words, the younger you are at application, the more the policy will be “on sale” so to speak.

Quick tip: Be aware of insurance companies that don’t offer level rates on their policies! Common carriers that have surprises: AARP/NYL term and Globe Life Term. These are not final expense policies, period. Term insurance is temporary coverage.

Can I Take Life Insurance Out on My Parents?

It has also become very common for children with elderly parents looking into a plan to offset the financial pain expected in the loss of their parent(s). Yes, you can be a policy owner and the beneficiary of a final expense/burial plan with your parent(s) as the insured as well. However, your mother and or father must sign the application (done electronically over the phone, email or thru voice signature). The insurance company will verify that your parent has “consented” to the coverage on their life. Your parents must be able to answer all questions on their own.

How Much Final Expense Insurance Can I Get?

Most insurance companies that offer policies will only cover a person up to $50,000.  There are a handful that will issue up to $100,000 in face amount.

What if I need More than $50,000 of Coverage?

Since most companies will only go up to $50k in face value, it is hard for some people to obtain coverage that meets all their needs.  Depending upon your age and health, sometimes, we have to bundle two policies to get the job done.  Another option we can consider is trying to obtain a guaranteed universal life insurance policy (GUL).  Coverage amounts will be much higher.

GUL policies are another form of permanent insurance, but not a subject to discuss in depth here.  These policies are ideal for those who will be carrying a large amount of debt or a person who’s estate is quite sizeable and may face some pretty hefty taxes after their death.

Who Needs a Final Expense Policy?

Final Expense insurance plans are an excellent way to give your family the money that they need to pay for any expenses and or you just want them to have, tax free.  Whether it is a funeral, burial, debts or financial legacy, these plans just make a lot of sense. They bring piece of mind that the family can move on.  Nothing will ever replace the life lost, but having financial affairs in order relieves a tremendous amount of stress as they move on and adjust.

Final Expense, whole life insurance a smaller, yet affordable type of coverage, but also may not be the best option for every family.  If you do need the protection, it is important that you’re getting the best coverage to meet your needs.

Over the years, we have had many senior citizen clients purchase this type of coverage from us.  If you are nearing those years or can say “I’m already there”, this is a very viable option for you.  The numbers often work in your favor.  Most of the time, no medical exam required, which means that their is no one poking you in the arm with a needle or taking your blood pressure.  Occasionally we have clients who wish to minimize their premiums and purchase large, traditional life insurance policies that meet their needs.  More time and red tape is part of this option.

If you are looking for simplicity and don’t need too much money for coverage, these products are a simple, straight forward solution.

In Conclusion…

As I close this article, I would certainly recommend you discuss these matters with an experienced, independent agent who can help you sort out the significance of your health and point you in the right direction.  Only an independent agent or broker will have access to a large portfolio of products from the top insurance companies.  You see, there is no best company or plan regardless of what has been purported on the internet, television or radio.  Every situation is unique especially as we all age.

Since these are high risk cases and are challenging to navigate by anyone other than a seasoned specialist, it seems prudent for me to make this suggestion whether “biased” or not.  Give us a call at 269-230-3464 or send an email if more convenient. Obtaining the coverage you need to protect your family while being affordable is a goal we are sure you have.  Let us help you and your family be prepared.