What are the pros and cons of final expense life insurance?

What are the pros of final expense insurance?

• Final expense insurance is relatively affordable if you’re on a tight budget. It typically doesn’t provide as much coverage as other insurance (more on that later).   However, if you only need enough of money to cover burial costs, rather than a money for long-term expenses, it could be enough for your needs.
• Final expense insurance is a type of whole life policy. Whole life insurance is often called “permanent life insurance” because the term of the policy isn’t limited to a specific time frame. For most traditional whole life policies, the death benefit and the insurance premium remain the same for the life of the policy.  Whole life policies last for the life of the policyholder and most accumulate cash value.
• It’s more affordable than many other insurance policies. Because it’s typically used to cover funeral costs, the coverage amount is usually much smaller than traditional policies. On average, people insure themselves for $10,000 – $20,000, making the premiums for a final expense policy more affordable than larger policies.
• Easy qualification. Because the coverage amount is lower than other types of life insurance, most final expense policies do not require a medical exam to qualify.  If an exam is required we will know that based on your answers to the heath questions prior to submitting the application.
• Most policies can be issued based on answers to the health questions on the life insurance application.  Depending on your answers to the health questions on the application the final expense insurance company will typically not require a medical exam.  The company may pull your prescription history and/or your doctor’s records.  The decision to issue the policy will be based on all the information the final expense insurance company gathers.
• Final expense insurance provides peace of mind regarding funeral expenses being covered. With a traditional insurance policy, your dependents are using that death benefit for all expense: mortgage, college, everyday living, and so on, in addition to funeral costs. With final expense insurance, you and your beneficiaries know what the money is supposed to be used for, taking much of the stress out of planning your burial.
• The final expense policy focuses on after-life preparedness. Most life insurance policies aren’t designed to specifically address the many costs family members pay when preparing for a funeral. Caskets alone can cost up to $10,000 depending on the style and material. This doesn’t include other typical funeral costs like transportation, preparation of the body, grave liners, flowers, or the headstone. A final expense policy can help with these costs and protect your family from experiencing a financial burden.

What are the cons for final expense insurance?

• There’s little coverage for a higher cost. One of the main drawbacks of final expense is that it’s face amount is much lower than other types of life insurance.   Compared to other types of policies, final expense insurance offers relatively low coverage – averaging $5,000 to $25,000 — for relatively high premiums.   And keep in mind the beneficiary can use the death benefit for anything – even if you took out the policy to help cover your funeral costs.
• The death benefit might not cover all your needs, depending on your premiums, you can adjust the insurance amount to fit your budget.  Please keep in mind that the average funeral cost is around $8,000; that’s just for the funeral, not including headstone, cemetery plot, end-of-life medical expenses, and anything else that might come up. The death benefit might not cover all of your funeral expenses.