Understanding Final Expense Life Insurance

Final expense insurance is a type of life insurance that is designed to cover funeral costs and other end-of-life expenses, though the death benefit technically can be used for any purpose. Death benefits are usually smaller than traditional life insurance policies.

Deciding if Final Expense Insurance Right for You

If you're older and are interested in obtaining only enough life insurance to cover the cost of your funeral and other similar expenses, a final expense policy may be a good option.

If you are looking for a life insurance policy that will help replace your loss of income when you die or help your beneficiaries cover mortgage payments and day-to-day expenses, a traditional permanent or term life insurance policy may be more beneficial to you.

However, if you're an older adult and your reason for purchasing a life insurance policy is to ensure your loved ones are not left with funeral costs, a final expense policy may be the right fit for you.

Some final expense policies are guaranteed issue,* meaning they do not require you to take a medical exam or answer any health questions. However, they are usually restricted to older adults (between ages 50 and 85, for example). These plans may have a graded death benefit for an initial period of time. This means if you die within the first year or two of the policy (for example), you won't receive the full death benefit. You may only receive a refund of premiums (and interest, in some cases).