Direct Cremate

What is Final Expense Insurance?

What is final expense insurance? Learn all about what it covers, what it costs and if you really need to invest in final expense insurance.
Final Expense Insurance
Insurance agent talking to mid adult couple on a meeting in the office. recently released their 2022 Final Expense Insurance Global Market Report. The biggest finding was that a significant increase in direct cremation is boosting projections for final expense insurance. The report noted that one of the three market drivers was a “surge in demand for direct cremation over traditional funeral services.”

You may be wondering what final expense insurance is, how it’s different from standard life insurance and if you need it. Those are very good questions that we’re answering in this article.

What is Final Expense Insurance?

Final expense insurance is sometimes called funeral insurance because the policy is directed at covering the cost of disposition and funeral services. Some policies can also be used to pay for related expenses such as medical bills.

How is Final Expense Insurance Different Than Life Insurance?

Final expense insurance is actually a form of whole life insurance, just on a smaller scale and more specific in what it covers. Here are the key differences:

  • Final expense insurance is easier to apply for and get approval. 
  • The benefits are meant to pay for short-term and one-off funeral services. 
  • Conventional life insurance is used for covering long-term, daily expenses.
  • A final expense insurance policy typically has lower death benefit. 
  • Beneficiaries can receive benefits in one lump sum or in monthly installments. 
  • There’s no cash value with a final expense insurance policy.

Most final expense insurance policies have a death benefit somewhere between $2,000 and $35,000. The death benefit amount is going to impact the cost of coverage. Taking the time to research funeral service costs will help you determine what amount that will be enough to cover the expected expenses.

Do You Need Final Expense Insurance?

Like so many questions in life, the answer is it depends.

Many people forgo getting final expense insurance until they are older and some never get any type of life insurance policy at all. Forgoing life insurance coverage all together isn’t recommended unless you have disposable income to cover funeral expenses or have already paid for pre-arranged cremation services. If not, your family will be left to cover the expenses, which can easily surpass $10,000 with traditional burial and $6,500 for traditional cremation.

Anyone who is a senior may want to consider final expense insurance since it’s easier to qualify for compared to conventional life insurance. It will also likely have a much lower monthly premium. 

You may also want to consider getting final expense insurance if you have a medical condition. To get a conventional life insurance you will most likely have to have a medical exam. People with underlying medical conditions may be denied coverage or the policy may come at a very high premium cost. There’s no medical exam with final expense insurance. It’s actually a good alternative for anyone who can’t get a life insurance policy.

Do you have more questions related to direct cremation? Give us a call or text anytime, and we’ll provide expert answers.