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 can be used to cover the cost of your death and other related, financial matters.  It is offered by many life insurance companies.  Even on as little as a month by month premium basis.

A permanent, whole life or guaranteed universal life insurance policy is recommended.  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 the expense or you don’t. 

Most folks don’t want to leave behind a financial crater for their loved ones either.  Death is certainly very hard for the remaining family we leave behind.  They are already struggling in saying goodbye and moving on emotionally.  The financial 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 rather “popular” because of this oversold product.

Typically, compound interest is paid on top of all paid premiums during this period if the insured should pass away.

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

Premiums however, will never go down.

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, regardless from an agency or thru a funeral home utilizing a licensed life insurance agent, 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. Funeral homes can go out of business!! 

Anyway, a final expense policy is a more complete funding of the loss of your life and the complete costs associated with it.

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 $8000 then your out $8000.  These businesses can and do go out of business.  Either way, that money is now gone and unable to work for you any longer.

Final Expense Insurance is almost the opposite as 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 fully 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 ease the financial burden placed on a family when a loved one passes away. 

Remember that these expenses will also be stressful for the remaining family to pay for.

The life insurance/final expense industry has numerous competitive 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 traditional “simplified issue products” with limited health questions if you want to skip the medical exam requirement.  They are still affordable and give you some savings just for answering some very basic health questions.  Here is a list of the basic questions of common health history questions to qualify for this coverage. This is one company’s screening process.

Now, if maximum savings or higher policy amounts are needed, we can look at a full, medically underwritten traditional life insurance policy with a medical exam.  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, but we advise against them until last resort.  The premiums are more expensive than simplified issue plans and sometimes result in insuring less than your family’s needs.  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, term burial insurance is attached to Guaranteed Issue policies 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 two 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 the policy to offset the amount of additional risk.

Graded Life plans are for those with very elevated risk to the insurance companies who offer the policy.  It is generally a very high risk standard.  Controlled High Blood pressure is not a “high risk” issue.  Some things just develop with age and are not considered “high risk” persae in offering the optimal coverage and value for the policy holder.  The most aggressive “grading” is found in Guaranteed Issue life insurance (age range is 45-80) because they require no health questions. For someone with a serious health impairment this could be the only insurable way to go. The premiums will be higher but for someone who cannot get approved for any other type of policy this will make sure your family is take care of.

In order to qualify for a Level benefit plan, an applicant can have some typical  impairments and/or health issue that is controlled via medications or other.  There are many types of impairments out there and this is why we should speak prior to running quotes.

As people age, the cost of final expenses does increase prior to purchase.  This is independent of your overall health. 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 over level rates on their policies!

Can I Take Life Insurance Out on My Parents?

It has also become very common that children with elderly parents are 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). Insurance carriers will call the proposed insured and do a quick interview to make sure they understand what is taking place.

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.  Sometimes, we have to bundle two policies to get the job done.  Just depends on you needs.  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 that they would occur if something were to happen to you.  Whether is is a funeral, burial and the debts that remain after the passing of the insured, these plans just make a lot of sense and bring piece of mind that the family came move on.  Nothing will ever replace the life lost, but having finances in order relieves a tremendous amount of stress as they move on and adjust.

Final Expense and Burial  Insurance are plans are an 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.

For many years we have had many senior citizen clients purchase this type of coverage from us.  If you are at of nearing those years or 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 your health won’t prevent you from getting coverage.  Occasionally we have clients who wish to minimize their premiums and purchase tradition life insurance instead.  More time and red tape is downfall 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 a special, high risk, 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 or send an email.   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.