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While death is most certainly guaranteed for all of us, the cost of dying isn’t necessarily cheap. Statistics from the National Funeral Directors Association (NFDA) show that families paid an average of $7,640 for a funeral with burial in 2019. However, that figure doesn’t include the cost of a vault, opening or closing of the ground or the cost of a headstone, which can easily tack thousands onto your bill.

And, if you hoped to escape these costs by opting for a cremation, that may not save you much. NFDA figures show that even the cost of a funeral with cremation worked out to $5,150 as of last count.

Because the bill for a person’s final expenses is unavoidable, many individuals choose to have a life insurance policy. While some opt for more robust policies with large death benefits, a certain type of life insurance — final expense insurance — can be ideal for someone who only needs a small death benefit to cover their final expenses when they pass.

What is final expense insurance?

Final expense insurance is life insurance that’s designed to cover the costs of your final disposition as well as any funeral or celebratory services that take place. These policies can also be referred to as burial insurance, and are typically offered in lower amounts than traditional life insurance policies.

Other interesting factors to note about final expense life insurance include:

  • You won’t need a medical exam, so everyone can qualify regardless of health.
  • Since coverage amounts tend to be low (i.e., $5,000 to $35,000 per policy), monthly premiums can be very affordable.
  • It may be possible to purchase this coverage until age 80.
  • You can usually pay your premiums once per year or once per month.
  • Your beneficiaries will receive a cash payout they can use to cover your final expenses.
  • Your policy could earn dividends depending on the issuer.
  • You’ll pay a fixed premium for the life of your policy.

Final expense life insurance for seniors

Final expense life insurance can be ideal for seniors who may not qualify for other types of life insurance.
Final expense life insurance can be ideal for seniors who may not qualify for other types of life insurance.

Because final expense life insurance is offered in low amounts and without a medical exam, this type of insurance coverage is geared to senior citizens who no longer need life insurance for income replacement.

Since final expense life insurance can stay in force up to the age of 100 or even beyond, this type of insurance can be a good option for older adults and provide some much-needed peace of mind for anyone who wants coverage their family can count on. However, you should make sure you shop around and compare offers from at least three providers before you decide on one.

Also, in some cases, waiting periods apply to final expense life insurance policies. When a policy has a waiting period, your coverage won’t be in force until you pay premiums for a specific amount of time, which could be as long as two years. So when you’re looking at options, ask about waiting periods and be sure to get a policy that fits your needs.

How much does final expense insurance cost?

According to Progressive, final expense life insurance starts at around $20 per month, although rates vary depending on your age and the death benefit your policy offers. If you want to get the most value in terms of final expense life insurance, your best bet is shopping around until you find a policy at a reputable company with the lowest possible monthly or annual cost.

To come up with examples to use as a basis for comparison, we took advantage of Fidelity Life’s final expense life insurance website to get online quotes for a typical retired 65-year-old woman in excellent health.

We found that a person who fits this description could get $10,000 in final expense insurance for around $55 per month. Meanwhile, a 75-year-old woman would pay a little over $86 per month, and a 55-year-old woman would pay just over $40 per month.

Because final expense life insurance doesn't require a medical exam, the costs are higher than policies that do require a health check.
Because final expense life insurance doesn't require a medical exam, the costs are higher than policies that do require a health check.

While final expense insurance is targeted to older individuals who can’t get approved for other types of life insurance coverage, our research demonstrated that a 30-year-old woman in excellent health could get $10,000 in final expense insurance for as little as $20 per month.

However, if you can pass a health exam, you should also shop around for term life insurance and compare the cost to your options for final expense life insurance. Both types of policies can help you leave money for your heirs to cover your final expenses, but term life insurance is often a less-expensive option for those who can medically qualify for it.

What does final expense insurance cover?

Like other types of life insurance, final expense insurance pays out a death benefit to your beneficiaries, which they receive as a lump sum. This means your beneficiaries have the option to use the proceeds of your policy however they want.

With that being said, final expense life insurance is intended to cover — you guessed it — your final expenses. This can include the cost of your funeral and burial or cremation, the cost of liquidating your possessions, living expenses incurred at the end of your life and more.

Families also use final expense insurance to cover expenses you may not even think of ahead of time — things like flowers, obituaries in the newspaper and even outstanding medical or credit card bills.

It’s even possible to assign a final expense life insurance policy directly to a funeral home, although your heirs can also pay in cash for services and wait for reimbursement from the final expense policy. If your heirs choose to use the life insurance policy to pay a funeral home directly, they should ask for an itemized bill for all the goods and services they’re requesting, which is their right under the Federal Trade Commission’s Funeral Rule.

Should you buy final expense life insurance?

Since final expense coverage can be expensive for what you get, you’ll first want to see if you can qualify for cheaper term life insurance coverage, which can provide a similar benefit. But if you can’t get term life insurance and are concerned about your heirs having enough cash to pay for your final expenses, then final expense life insurance can be a good choice, especially if you can get a policy without a waiting period.

Final expense life insurance isn’t right for everyone, but seniors who want to live the rest of their days knowing their final expenses will be covered and that their loved ones won’t have to struggle to pay for funeral expenses while they grieve should explore if final expense life insurance is appropriate for them.