How to shop for final expense insurance

When you shop for final expense insurance – or any life insurance for that matter – you should compare quotes from a number of different carriers. This will not only ensure you get the best rates but also help you find the type of policy and death benefit that best suits your needs.

Final expense rates are based mainly on your age and gender and how much insurance you’re looking to purchase. Make sure you take into account all final expenses so you buy enough coverage, then compare rates for that coverage amount.

Learn how to shop for final expense insurance to cover any end-of-life needs, not just your funeral. 

What is final expense insurance? 

Final expense insurance, also known as burial insurance, is a term used to describe a type of whole life insurance policy with a modest death benefit that’s intended to cover funeral and other final costs.

“Final expenses and burial insurance is a special form of whole life insurance limiting the death benefit payment to any final expenses, including some medical bills and funeral expenses when people die,” says Haibo (Stephen) Yao, assistant professor of Insurance & Risk Management at the University of Central Arkansas’ College of Business.

Because it offers a small death benefit, final expense insurance is usually easy to qualify for.

“It is relatively easy to qualify because of its lower coverage. By simply answering some health questions, applicants could be easily accepted. [In] most cases, you do not need to take medical exams,” Yao says.

Although it’s called final expense insurance, your beneficiary can use the payout for anything; they’re not required to use it for final expenses.

There are two types of final expense insurance: simplified issue and guaranteed issue, neither of which require a medical exam.

It’s typically geared toward people older than 40 or seniors who haven’t yet prepared for their end-of-life costs.

How to shop for final expense insurance 

To find the best final expense policy for your needs, first, estimate your end-of-life expenses so you know how much coverage you need. You’ll want to purchase enough insurance so your loved ones can pay for remaining medical bills, legal expenses, funeral costs and burial or cremation. Not everyone needs final expense insurance, as there are other ways to pay for a funeral without life insurance. Make sure to review your financial situation to see if the cost is really necessary.

“If you already had a savings plan for your funeral and already took care of your final expenses, you do not need to spend extra money buying those policies. Life insurance policies not only help you achieve your lifetime goals but also help relieve the financial burden for your family members,” Yao says. “If you don’t anticipate a financial burden after your death, you might not need insurance.”

Final expense insurance is an option for those who are worried about the costs they’re leaving behind. Sometimes your bank account or other assets get tied up in probate, so final expense insurance is a good way to get money to your beneficiaries more quickly, even if you do have the savings.

Understanding final expense insurance

You buy a final expense policy just like any other life insurance policy and designate a beneficiary who does as they see fit with the proceeds. It’s important to choose someone you trust to carry out your wishes.

However, you can also purchase a “pre-need” policy, where the proceeds go directly to the funeral home of your choice to pay for pre-selected services.

Make sure you understand the type of policy you are buying and how the proceeds will be paid out. 

Assess your needs 

Do you or your family want a big funeral? Cremation services? Do you anticipate unpaid medical bills after your death? Are there outstanding debts you want to cover? Will your other assets be tied up in probate? All these factors should play into the amount of final expense insurance you purchase.

Research different insurers 

Shopping around is key, not just for the best prices but also for the best policy. Some insurers offer quicker approval and instant coverage if that’s what you need. Others offer better rates for seniors. Some have policies that build up greater cash value if that’s of interest to you. Some companies bundle rates with your existing policies. It’s beneficial to look at many options.

Most independent life insurance agents can help with final expense insurance. If you’re making arrangements at a funeral home, they often have companies they deal with on a regular basis and can provide a recommendation.

Types of final expense insurance policies 

Most final expense insurance doesn’t require a medical exam and falls into three sub-categories:

• Simplified issue life: A few medical questions, coverage generally up to $35,000, for people in relatively good health.
• Guaranteed issue life: No health questions, guaranteed policies up to about $25,000, designed for people with health challenges.
• Pre-need: pays the funeral home directly, no payment to your family, only covers the funeral options you choose.

The death benefit options will vary depending on the insurance company. Because the policy is issued with very little information about your health, rates are generally higher than a traditional, fully underwritten policy.

Get multiple quotes 

Get more than one quote, and see what premiums are for different face amounts. Different carriers have different rates, which are based on your age and gender, as well as any health information they have gathered about you.

Compare the quotes carefully before you choose to make sure you’re getting the best deal.

Read policy documents carefully 

Always read the fine print and know exactly what you’re buying. Don’t be afraid to ask questions. 

Most final expense policies have a waiting period of two years before coverage kicks in; if you die during that time, your beneficiaries may only get back the premiums you have paid. Make sure you know what the fine print says.

Consider riders and options 

You can add riders to enhance your existing policy. A couple of examples:

• Accelerated death benefit: pays out a portion of your death benefit while you are still alive and have been diagnosed with a terminal illness
• Accidental death rider: pays an additional benefit if your death was due to an accident.

Riders on final expense policies may be more limited than those available on traditional policies.

Check for underwriting requirements

Make sure you know what the insurance company will ask about your health and medical history. While there are some policies that are guaranteed issue, others may decline you based on health conditions or something in your medical history. 

Final expense policies usually have minimal underwriting requirements because of the low death benefit, but there are still things to be aware of, so here are a few tips.

Seek professional advice

When in doubt, always ask a licensed insurance agent. If you already have a financial planner, they can help calculate what amount of insurance to purchase based on your overall financial picture. Funeral homes are a great resource for helping families plan for end-of-life expenses.

Customer reviews and recommendations

Read multiple reviews or start with the recommendation of someone you know. Look at carriers’ AM Best rating, and read over Insure’s best life insurance company ratings as well. Make sure you can trust the company you choose to pay your death benefit.

Review policy change and cancellation terms 

Review your policy on a regular basis to make sure you have enough coverage. Also note that most of these policies can’t be canceled unless you stop paying the premium, and you won’t get the money back. You can sometimes decrease the death benefit if you are finding it hard to keep up with premiums.

Finalize your decision 

Once you look at your whole financial picture and decide what dollar amount is sufficient to cover your end-of-life expenses, choose the policy that best suits your needs. 

What does final expense insurance cover?

Final expense insurance has a typical payout of $10,000 to $50,000. It’s designed to cover end-of-life expenses, such as:

• Transport to the funeral home
• Cremation or burial
• Funeral services
• Other funeral costs, such as catering
• Remaining medical bills or debt
• Legal fees related to your estate
• A headstone

The average cost of a funeral in the U.S. is a whopping $7,898, according to the National Funeral Directors Association, and not everyone has money set aside for their services. 

Final expense insurance, sometimes called burial insurance, can cover these costs so your loved ones aren’t left footing the bill. However, your beneficiaries can actually use the payout for anything they would like – there are no rules.

Pros and cons of final expense insurance

As with any life insurance, there are both benefits and disadvantages to final expense policies.

Pros:

• No medical exams
• Easy to qualify for and buy
• Can be used for any expenses after your death
• Includes a cash value account you can access while still alive

Cons:

• Low death benefit payout
• There is usually a waiting period for coverage
• Generally more expensive than traditional insurance

Buying final expense insurance: The bottom line 

After estimating how much you may need to cover your end-of-life expenses, shop around for a policy that will protect your family from out-of-pocket funeral costs and lingering medical bills after your death. Armed with a few quotes from a variety of carriers, find a policy that best suits your needs.

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