Insurance Types
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Final Expense Insurance
If you watch television at all, you had to notice the many ads for final expense insurance. They grace the airwaves every day and night. As the population ages, more advertisements like these will pop up. What is this coverage and why do you need it? Insurance companies designed these policies to cover the various expenses that come when someone dies. This can include funeral and burial costs as well as the variety of unexpected expenses that come up at the wrong time. Most policy purchasers want to make sure the burden doesn't fall to their children. Grief is bad enough to deal with without a financial hardship as well.
Why is final expense insurance different from other life policies? When a family is young, most financial types advise getting a solid term policy. These policies cover the family for a set number of years to protect against an untimely death. After someone gets older and the kids become independent, the family no longer needs this type of coverage. However, life happens. Many seniors find their children living with them well into adult hood. Sometimes the grandchildren move in as well. Expenses often lead to second mortgages or other unexpected expenses. The burial policies make sure someone covers the final expenses, no matter what life has thrown at the family.
Most final expense insurance has a small face value. The insurance industry sees anything less than $50,000 as small. Most funerals will cost $8,000 to $10,000 or even higher. However, most will not go above $20,000. The smaller face value means a smaller premium than a normal $50,000 policy. You can pay the premiums every year or every month at your choice.
Some final expense insurance policies will require that an applicant answer some basic health questions. They often cover whether you are in good health or are currently living in a nursing home. If you pass their questionnaire, you can qualify for a simplified issue policy. However, if the applicant is in bad health or in a nursing home, guaranteed issue policies may cover them. These polices do not ask questions about health or age. There may be a waiting period though before full death benefits are paid. Many waiting times are from two to three years. If the insured dies within the waiting period, reduced benefits are paid. If they hold out, the full face value of the policy goes into effect.