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  • Writer's pictureMark Roberts

Is that your Final Answer?

Most people don’t like to think about death - and rightfully so; it’s not a happy topic to talk about by any means. Yet most people are shocked when they hear how much funerals cost. Last year the average traditional funeral service ran anywhere from $8,000 to $12,000. If you decide to go down the cremation route you might save a little bit of money, but it can still cost between $5,000 to $7,000.

What happens if you’re the sole breadwinner of your family and you unexpectedly pass away. Funeral expenses are a lot of money to drop onto your loved ones, who are already grieving and not in a position to deal with another burden. The purchase of burial or funeral life insurance is a practical way to feel more confident knowing you are not going to leave unfinished business when you die. You don’t want to leave bills that can become a burden on your loved ones.

Since you know that death is an eventual reality, it is natural to feel as though there is a need to protect your loved ones after you are no longer there to care for them. For example, as a parent you may worry that your children will have to delay their plans to attend college in the event of your unexpected death. Additionally, you may be concerned your family members will need time to decide if they would want to continue to live in their present home. Whatever it takes to assume financial responsibility does not end when your life ends. All of these things and more are common concerns that cause many people great worry.

There is a way to help put an end to unnecessary worry and concerns. Rather than create more stress, worry and lost sleep, you can do something to ease your mind. Find peace by making plans for whatever needs to be done in order to prepare your family. Purchasing funeral or burial life insurance can be just what you need to have peace of mind. Although you may not physically be there, you can still help them through a difficult time by securing their financial situation with money that can be used towards short-term essentials.

Your survivors will still have concerns about everyday living expenses as they continue to live without you. You cannot change that; however, you can help provide financial support with the purchase of a burial or funeral life insurance policy. While your family members are grieving, they can avoid making quick decisions like where they will live. They can use the proceeds from a burial or funeral life insurance policy to help make mortgage payments.

After purchasing a burial or funeral life insurance policy, make sure all your important documents are quickly accessible to those responsible. Having a solid plan in place to pay for final expenses can be very reassuring. Other interesting factors to note about final expense life insurance include:

  • You won’t need a medical exam, so most people can qualify regardless of health. The policies are considered either simplified issue (answer a few health questions) or guaranteed issue based on the product and carrier limitations.

  • Since coverage amounts tend to be low (i.e., $5,000 to $35,000 per policy), monthly premiums can be very affordable. Some companies offer up to $50,000.

  • It may be possible to purchase this coverage until age 80, although the average is typically age 75.

  • 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, which can be used for any needs including medical bills and more.

  • Your policy could earn dividends depending on the issuer.

  • You’ll pay a fixed premium for the life of your policy.

  • You may be able to borrow against the cash value that builds up over the time the policy is in force. However, if the loan is unpaid at the time of death, the amount of the payout is reduced by that amount.

This type of life insurance coverage is geared to senior citizens who no longer need life insurance for income replacement. The senior market is typically who purchases final expense policies. 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. There may be a graduated payout period that ramps up to the face amount purchased. For example, if you purchase a $25,000 policy, the insurance company may only pay 70% of that to the beneficiary if you pass away in the first year, and 80% in the second year of the policy.

It’s even possible to assign a final expense life insurance policy directly to a funeral home, or 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.

If you have enough money set aside to cover the expenses that must be met after you pass away, then you don't need it. However many people are unaware of the high (and growing) cost of funerals. Or that a hospital may present them with large, unexpected bills. If you don't have money for these and other associated expenses, or regular insurance that could cover help them, final expense insurance could be a real benefit to your family.

Some people prefer to buy term or regular whole life insurance instead. However, those policies have strict underwriting rules that may prevent someone getting approved, especially if they have health or medical issues. Most insurance carriers require a minimum face value of $50,000 to $100,000 on traditional whole life or term insurance. The higher face amounts will lead to higher premiums than some people can afford, even though the cost per $1,000 of coverage is less than that of a final expense policy.

Individuals who could easily qualify for a traditional whole or term policy choose final expense because they only want $20,000 or $50,000 of coverage. Additionally, claims on these policies are often paid faster than claims on larger policies. Insurance companies can pay beneficiaries typically within a short period of time upon submission of a death certificate. Make sure to have a folder with your policy available in an easily accessible location to provide this important information to your heirs.

As a licensed life insurance agent, I am appointed with multiple well known national companies that offer very affordable coverage. There is more general information on this website about life insurance. For quotes on final expense policy, contact me for a consultation about providing peace of mind to you and your family. When your final days approach, you'll want to have a final plan in place.

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