What is final expense insurance and how does it work?

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No one likes to think about their funeral or memorial service, but planning ahead is a wise decision that protects your family’s financial health when they are grieving a loss.

Funerals are expensive. In 2023, the national median funeral cost was $8,300, according to the most recent data provided by the National Funeral Directors Association.

You can protect your family from the financial strain of end-of-life expenses by buying life insurance. For people who only need a small amount of coverage to pay for their final expenses, a type of life insurance called burial insurance, or final expense insurance, is available. While burial insurance is more expensive than other types of life insurance, it offers coverage for people who don’t need high coverage amounts or aren’t eligible for traditional life insurance due to their age and health.

Key Takeaways

The death benefit from final expense insurance can be used to pay for end-of-life costs, such as final medical bills or funeral costs.
Burial insurance is best for seniors or people with serious health conditions that prohibit them from getting traditional life insurance coverage.
Traditional term life insurance is more affordable and offers higher coverage amounts than final expense insurance.

What is final expense insurance?

End-of-life costs can become very expensive. For example, funeral expenses alone can cost upwards of $10,000 or more. Final expense insurance, often referred to as burial insurance, is a type of life insurance designed to cover end-of-life expenses, such as funeral costs, medical bills, and other related expenses. This coverage ensures that your family won’t have to dip into their savings or take on debt to pay for funeral arrangements or outstanding bills.

Unlike standard life insurance policies, final expense insurance usually doesn’t require a medical exam, which makes it accessible to individuals who may have pre-existing health conditions. Instead, applicants typically answer a few health-related questions during the application process. The premiums remain level throughout the life of the policy, meaning they won’t increase as you age, providing peace of mind for seniors on a fixed income. The simplicity and predictability of final expense insurance make it an attractive option for people seeking financial protection for their families during an emotionally challenging time.

Typically, the death benefit with a final expense insurance policy ranges from $5,000 to $25,000, according to the Insurance Information Institute, though some insurers offer more coverage. While many life insurance companies offer these policies, in certain states, funeral homes may also sell them. However, purchasing coverage through a funeral home can be risky.

How much does a funeral cost?

Funeral costs vary widely, but the average funeral cost can cost thousands. In 2023, the national median funeral cost was $8,300, according to the most recent data from the National Funeral Directors Association. This is the most recent data available.

Funerals are not only costly, but their prices continue to rise each year. Since 2021, the cost of a funeral has gone up by 5.8%, with the national median funeral cost at $7,848 that year.

Who should get final expense insurance?

Anyone who wants to protect their family from the costs of their death is a good candidate for final expense insurance, says Majorie Ma, assistant vice president of life product management at USAA.

However, this type of insurance is especially beneficial for seniors who may not have a large life insurance policy or sufficient savings to cover funeral expenses, which can easily reach several thousand dollars. Those with pre-existing health conditions who may have difficulty qualifying for traditional life insurance can also benefit from final expense insurance. Since it often requires no medical exam, this policy is accessible to people who might otherwise struggle to obtain life insurance due to their health status.

For individuals in good health or those who qualify for traditional life insurance, opting for a traditional policy is a better choice, as it typically offers more coverage at a lower cost.

Final expense insurance calculator

STEP 1 OF 3

How much do you think your funeral will cost?

Funeral Cost:$12,000

$25,000

STEP 2 OF 3

Do you expect to have unpaid debts at the time of your death?

STEP 3 OF 3

What is the estimated amount of debts your family will need to pay?

Family Debt:$12,000

$25,000

Based on the information you provided, we recommend

Based on the information you provided, we recommend the

$24,000

or more in final expense life insurance coverage.

Traditional life insurance calculator

Now that you know what final expense insurance coverage you need, take the next step to protect your family's future:

Your coverage needs exceed the average final expense life insurance policy limits. Check out the traditional life insurance calculator to calculate your total life insurance needs.

Types of final expense insurance

There are two types of final expense insurance policies:

Simplified issue: You’re asked a handful of medical questions but don’t have to take a medical exam.
Guaranteed issue: Available to anyone regardless of health, this policy has no health questions or exams, but typically comes with higher premiums and a waiting period before full benefits are paid out.

If you’re purchasing guaranteed issue life insurance and have a serious health condition, you may receive a policy with a graded death benefit. This means the coverage amount increases over time and your beneficiaries won’t receive the total face value if you die within the first few years of the policy.

How much does final expense insurance cost?

Like all types of life insurance, final expense insurance premiums tend to go up with age. The older you are when you buy a policy, the more you’ll have to pay over the lifetime of the policy.

The graph below showcases average annual premiums for males and females age 45 to 65. Because most people who buy final expense insurance do so because their age or health prohibits them from buying a traditional policy, we didn’t include rates for individuals below the age of 45.

Average annual premium for coverage $10,000 and $25,000

$10,000

Age	Female	Male
45	$295	$343
50	$332	$396
55	$386	$475
60	$453	$572
65	$557	$722

$25,000

Age	Female	Male
45	$673	$790
50	$763	$922
55	$900	$1,118
60	$1,066	$1,360
65	$1,326	$1,734

Advantages and disadvantages of final expense insurance

Final expense insurance comes with its own set of pros and cons that are important to weigh before purchasing a policy.

Pros of final expense insurance

Most people qualify for coverage
The death benefit isn’t taxable
Covers end-of-life expenses
Provides coverage options for people who are not otherwise eligible for life insurance

Cons of final expense insurance

Provides low coverage amounts
Premiums are much higher than traditional life insurance
Guaranteed issue policies may have a graded death benefit
No cash value for people who want to use life insurance as an investment vehicle

When determining whether or not you should buy final expense insurance, you’ll need to weigh whether factors such as cost and low premiums compensate for the wide eligibilty parameters.

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Alternatives to final expense insurance

If you don’t want to pay the high premiums for a burial insurance policy, there are a few alternatives:

Traditional term or whole life insurance policy: This is the best alternative to final expense insurance because it offers more coverage at an affordable price.
Pre-pay for your funeral expenses: You can prepay for your funeral through a funeral home, but if the funeral home goes out of business in the future, you’ll lose that money. We generally don’t recommend this option.
Set up a trust: You can put money into a trust that your beneficiaries would use for your end-of-life expenses.
Self-fund: If you have the savings, you can leave it behind to family members and designate how it should be used in your will.

Is final expense insurance worth it?

Final expense insurance offers “a way to cover last wishes and any other expenses you provide for your loved ones,” Ma says.

But for those who can get traditional coverage, a term or whole life insurance policy will provide much more coverage at an affordable price. Burial insurance is best for those who do not qualify for traditional policies because of its high cost. Even individuals who need very low face amounts, such as $5,000, should opt for traditional life insurance before buying final expense life insurance.

However, if you are not eligible for traditional life insurance, perhaps because of your age or health, then final expense insurance can provide you with the coverage you need to protect your family’s financial health.

Frequently asked questions

How much does final expense insurance cost?

How much you’ll pay for final expense insurance depends on a number of factors, such as how old you are and how much coverage you’re buying. In general, premiums go up with age, so you can expect to pay less now than you would if you bought coverage later. For example, a 45-year-old female purchasing $10,000 in coverage would pay $295 in average annual premiums, according to Insure.com data.

Do I need to take a medical exam to buy final expense insurance?

Final expense insurance policies don’t require a medical exam, though depending on the type of policy you buy, you may have to fill out a medical questionnaire.

Do I need final expense insurance?

Whether or not you should get final expense insurance depends on your individual needs. If you’re young and in relatively good health, then you should purchase traditional life insurance. Or, if you have a high net worth, then you’d benefit from self-funding your end-of-life expenses rather than paying the high premiums of final expense insurance.

However, if you don’t have robust enough savings to self-fund and you aren’t eligible for traditional life insurance, final expense insurance is the best way to ensure your family isn’t financially burdened by your end-of-life expenses when you die. Speak to an insurance agent or certified financial planner to determine the best course of action for your needs.

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