At one point in life, you would become too old or sick to qualify for typical life insurance. However, that doesn't mean all hope is lost. You still have final expense insurance. It won't require any medical exam and heartily welcomes people in their golden years. So, what does final expense insurance cover?

A final expense insurance mainly covers your burial costs. It will pay a Death Benefit to your beneficiary when you pass away. Your beneficiary can then use the amount to pay for embalming, cremation, casket, obituary, burial plot, headstone, and other funeral-associated expenses.

Considering the average American funeral costs $7000-$12000, a $2000-$50,000 payout can lighten the financial burden significantly for your loved ones. They can also use the remaining (or the whole amount) to pay off any debts you might've left behind.

Let's have a more detailed breakdown of the items the final expense insurance can cover. This can help you decide on the amount of the death benefit and make the insurance overall more affordable.

7 Things Final Expense Insurance Covers

The payout from the insurance can be as low as $2000 or as high as $50,000. Remember, lower benefit means lower premiums. So, why choose an unnecessarily high benefit?

Instead, it would be much easier if you decide beforehand what specific parts of the funeral expense you want the insurance to cover. Here are some of the considerations-

Embalming

Do you have a large family scattered around the country or the world? And you want them all to have one last look at you before burial? In that case, you will need embalming which costs around $800 on average.

The embalming process requires expert labor and high-quality chemicals. Plus, they do some cosmetic restorations to make you look good for the big day. All these add up to some significant payments which the final expense insurance can easily take care of.

Cremation Costs

Some people might not care for an elaborate memorial service or burial. They might simply want to be cremated and put in a nice urn. This is also known as direct cremation and costs around $2000. It includes crematory fees, transportation, urn price, etc.

You can choose the lowest Death Benefit if you want the final expense insurance to only cover the cost of direct cremation.

Casket

The average price range of caskets is $2000-$5000. However, high-quality material and craftsmanship can make a casket even more expensive. For instance, a mahogany casket with rounded edges, decorative handles, and artful designs costs more than average.

Considering all the other costs of a funeral service, your family might want to go for a rather humble casket to manage finances. So, if a fancy casket is important to you, get a final expense insurance for this specific item.

Burial Plot and Headstone

The grave and headstone are your last trace on earth after passing away. Even those who don't care for other aspects of the burial ceremony might still want to be buried in a nice spot completed with a headstone

However, these are also some of the most expensive parts of the burial process. The average cost of a burial plot in the USA is around $3,581. Meanwhile, headstones cost $1000-$2000.

So, choose your death benefit to cover these specific expenses and ensure your final resting place is just where you want it to be.

Obituary

A long, well-lived life means you have made a lot of friends and acquaintances. The most effective way to let them all know about your passing away is an obituary. It also ensures more people can keep you in their prayers.

On average an obituary costs $200-$500. The expenses are higher when they publish it in a highly circulated newspaper. A full-length obituary in such a publication can even cost thousands of dollars.

Although social media has made things easier, an obituary still holds value and shows class. So, it is something you can consider the final expense insurance to cover.

Payoff Debts

According to a survey by Credit.com around 73% of dead Americans leave behind an average debt of $61,554. This mostly comprises credit card bills, unpaid mortgages, car loans, nursing, and medical bills, etc.

There are various ethical and religious perspectives on dying with debt. In some belief systems, the dead don't find heavenly peace until their debts are paid off. Your beneficiaries can use the Death Benefit to resolve this matter.

Emergency Cash During Lifetime

The Death Benefit is the main goal of taking out a final expense insurance. However, you can enjoy some financial benefits during your lifetime too. In that case, you must confirm with the insurance company about the cash value from the beginning.

Unlike traditional life insurance, most final expense policies don't accumulate any cash value. However, some of them do when the policy is two years old. You can then request the company for a cash withdrawal.

You won't have much difficulty getting approved if it's for a legitimate purpose like paying emergency medical or legal fees. However, this amount will be deducted from the final Death Benefit.

How Do You Get Final Expense Insurance?

Final expense insurance is probably the easiest to qualify for and get. Anyone between the ages of 45-85 can apply. Since there's no medical exam, it's as simple as choosing a company, picking a policy, filling up the form, and getting approved.

However, there are some steps leading to this that ensure you get the best possible outcome. It starts with picking the right type of policy-

Step 1: Choose The Right Final Expense Insurance

There are primarily two types of final expense insurance. Among them, the simplified issue has the fastest approval rate. Although there's no medical exam, you might have to answer some health questions.

However, this policy might be difficult to obtain if you have some serious health condition. In that case, you would want to avoid the health questions and go for the Guaranteed Issue Final Expense Insurance.

This policy promises a Graded death benefit. So if the insured dies before activation of the full coverage, the company will refund the paid premiums (along with interest) to the beneficiaries.

Step 2: Picking A Beneficiary

It's up to your beneficiary to decide whether the death benefits will be spent according to your intentions.

Therefore, pick someone trustworthy and most likely to honor your wishes. It's also smart to pick someone much younger, well-educated, and willing to take the responsibility.

For many people, the beneficiary will be their children, grandchildren, other family members, or friends.

You can also choose a legal entity to be your beneficiary. Whoever you choose, ensure they are well aware of it and understand the workings of the policy.

At the same time, you can create an Authorization of Disposition. This notarized legal document can contain instructions on how to spend your death benefit. It will also designate an agent who ensures that the instructions are met.

Step 3: Research And Compare

There are hundreds of insurance companies out there. Everyone has a convincing sales pitch on why their product is the best. So, don't go for the first one you find and instead do thorough research.

For starters, gather quotes from the companies that look promising and compare between them. Premium rates, policy features, and coverage amounts are some of the most important parameters for comparison. Also, you must ensure that the seller is a legit and well-reputed company.

Many online insurance quote comparison tools can help you automate much of the task.

Step 4: Consultation and Understanding the Fine Print

Once you have narrowed down to a few policies, you can take the help of insurance advisors. Their personalized recommendations can make the decision-making easier and more effective for you.

Advisors can also explain some of the technical language in the policy. Thus, you will be fully aware of what you are getting into.

For instance, final expense premiums don't change once you have locked them. So, ensure the company abides by this. Other considerations include coverage limits, waiting periods, exclusions, etc.

5 Tips To Make Final Expense Insurance More Affordable

The cost of final expense insurance can vary considerably according to your situation. For instance, a healthy 50-year-old woman might have to pay only 25$ a month for a 10000$ policy. Meanwhile, an 80-year-old man might be paying $190/month for the same deal.

So, what can you do to make final expense insurance more affordable? Here's a few tips-

Apply Young

When you are young it's less risky for the insurers to approve you. As a result, you will get cheap monthly rates. It's also a wise decision since the costs will only get higher with your advancing age. Plus, there will be enough time for the insurance to accumulate the necessary cash value required to take out a loan.

Policy Riders

These are very effective to get the most out of your final expense insurance. Policy riders are features you can attach (add-ons) to the insurance so the final benefits are greater in amount than the standard coverage.

Take the Accidental Death Benefit add-on for example. It can add more money to the standard coverage in the event of the insured's accidental death. Meanwhile, terminal illness benefits will pay a portion of the Death Benefit to the insured if they are diagnosed with a terminal illness.

Group Membership

You can enjoy cheaper premiums with the same coverage by applying for the policy in a group.

This can be your office, trade union, club, nursing home community, or something else. Being in the group gives you collective bargaining power. You can use it to negotiate a group rate that is cheaper than the rate for individuals.

Choosing Payment Option

You will have various ways to pay the insurer- monthly, quarterly, or annually. Paying once a year can save you some money due to the lower number of transactions. Meanwhile, those living from paycheck to paycheck will be safer with the monthly arrangement.

Lead A Healthy Lifestyle

You might have to pay a higher premium if you are obese or seemingly unhealthy. The insurer's questionnaire will also ask about your tobacco and alcohol use. Those unhealthy habits would work against you getting a cheaper policy.

Conclusion

The day a family member passes away is a very tough one for their loved ones. They might be too emotionally vulnerable to plan and arrange finances for the burial service. The death benefit from your insurance will surely provide the help and guidance they need at that moment.

However, a final expense policy might be unnecessary if you already have proper life insurance. Those with adequate savings and funeral plans can also do without it.

Remember, your beneficiary can spend the Death Benefit as they see fit. This is both an advantage and disadvantage of final expense insurance. If you want the benefits to be strictly spent on your funeral and absolutely nothing else, go for a Pre-Need Plan instead.