Weighing the Pros and Cons of Final Expense Insurance

In general, having insurance gives us peace of mind and convenience. It helps us ease our burden when diagnosed with an illness or involved in an accident. Aside from financial security, it can also pay off medical bills and other expenses associated with burial and funeral. This is where final expense insurance comes in.

Final expense insurance is a type of whole life insurance that helps families after a death. This policy helps settle end-of-life arrangements, which will relieve the worries of your family members. In this blog, we’ve outlined the benefits and drawbacks of final expense insurance:

What Is Final Expense Insurance?

Since final expense insurance is designed to pay expenses related to your end-of-life costs, the death benefit is lower than usual. The death benefit or face amount of final expense insurance policies is below $50,000. 

Compared to other insurance policies, it’s easier to get approved for final expense insurance. It doesn’t require a medical exam, which means everyone can qualify regardless of age or health.

What Can a Final Expense Be Used For? 

Many end-of-life expenses can be covered with your final expense policy. The beneficiary can opt to use it for something else other than a funeral or memorial service costs. Here’s how the final expense death benefit can be utilized:

• Final Medical Bills
• Funeral Expenses
• Memorial Service
• Burial Costs
• Cremation and Embalming
• Caskets and Urns
• Outstanding Debts
• Credit Card Bills and Mortgages
• Legal and Probate Fees

Pros of Final Expense Insurance

Investing in final expense insurance can alleviate your family’s financial burden and bring financial stability during trying times. Let’s delve into the advantages of getting this policy:

Easy To Qualify

Some people get denied health insurance policies due to their health. Fortunately, applying for final expense insurance is a lot easier as it doesn’t require a medical exam. This is a benefit for people with poor health or pre-existing conditions. 

By removing the medical exam requirement, final expense insurance becomes accessible to more people. There are insurance providers who only require applicants to fill out a questionnaire about their medical history and lifestyle habits.

Affordable Policies

When compared to other insurance policies, final expense insurance is cheaper and easier to get. Even with a lower death benefit than $50,000 or less, your policy can help offset funeral and burial costs. The death benefit is guaranteed and non-taxable as long as you pay premiums. On that note, final expense insurance comes with fixed premiums. It means your premiums will be the same for life, regardless of age or inflation rate. 

Can Be Used for Any Purpose

During one’s passing, the surviving family will have immediate access to the funds from the policy. From outstanding medical bills to memorial service fees, they can leverage final expense insurance for maximum benefit. The heirs have the freedom to use the death benefit for any purpose they need. This way, they can process their grief instead of dealing with financial burdens.

Cons of Final Expense Insurance

Although final expense insurance has its strengths, this policy isn’t perfect for everyone. Here are some of its potential drawbacks you should be aware of:

Limited Coverage Amount

Final expense policies have low death benefits within the range of $5,000 to $50,000. Although the face amount is enough to pay off funeral costs, the limited coverage amount can be a potential drawback. You might not be able to use the death benefit as retirement funds or leave it as a sufficient inheritance.

Lack of Flexibility

Since final expense insurance is designed specifically for end-of-life costs, there’s little room for customization. Many final expense policies do not come with riders or optional add-ons. These extra features are more common in other insurance products. If you want a more flexible policy, consider getting term or whole life insurance to suit your needs.

The Bottom Line

With final expense insurance, you can protect your loved ones and ensure they aren’t financially burdened. Local Retirement Group is here to help you with financial planning for your family's future. Our experienced insurance agents can assess your financial goals and choose the most suitable policy. We aim to guide you in making the most informed decisions about your insurance coverage. 

Want to know more about life insurance and other products?  Call us today for a free quote!