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Final Expense
What You should Know
What Is Final Expense Insurance?
Final expense insurance is designed to cover the bills that your loved ones will face after your death. These costs will include medical bills and funeral expenses. Final expense insurance is also known as burial insurance. Unfortunately, even bare-bones funerals can cost thousands of dollars. The ins and outs of insurance policies can get tricky. Here’s what you need to know about final expense insurance.Want to protect your dependents in case something happens to you? We thought so. While buying life insurance may not be the world’s most exciting way to spend money, it’s one of the smartest financial moves you can make.
Final Expense Insurance: The Basics
A final expense life insurance policy isn’t the same as what’s known as “insuring your life.” Insuring your life concerns leaving your family and loved ones with enough support after you pass away. Term and permanent life insurance value your policy as proportionate to your earning power now and for the rest of your life.
These policies are designed to help cover the bills that your loved ones will face after your death. These costs will include but not limited to medical bills and funeral expenses. Final expense insurance also known as burial insurance allows you and you loved ones peace of mind knowing during their most difficult time, they will not need to worry about how to take care of your burial.
The Cost of Final Expense Insurance
The exact cost of your final expense insurance will depend on your age. Unfortunately, the older you are, the larger the premiums. This is because insurance companies take on more risk when insuring older folks, given the fact that they’re statistically closer to death. If you buy final expense insurance when you’re 45, you’ll pay less each month than if you wait to purchase until you’re 75.You certainly can, and some people do. This approach does have its pros and cons. When you pre-pay for your funeral, you get to personalize it. You can grill different funeral directors until you find one you love. You can pick out the perfect casket and the choicest plot in the cemetery.
Pre-paying will more likely prompt you to talk to your loved ones about your choices.This may give both parties more peace of mind. States have varying guidelines on funeral pre-payment. These guidelines work to prevent you from paying unscrupulous folks who can take your money and run. It helps protect you or your family from overpaying on top of what you pre-pay. Before you pre-pay, check your state guidelines for how the money will be held until your death.
Make sure you know what you’re paying for. Also check whether you get to lock in the rate for your funeral. That way your family won’t be surprised by an up-charge later. When pre-planning or making any pre-payments, be sure to keep documentation. That way you and your loved ones will have records of what you want and what you did.The disadvantage of pre-payment is that it’s less flexible than burial insurance. If your funeral plans change or you move, you and your family may not get that money back. Even worse, the funeral parlor could go out of business and you may lose that money entirely. Final expense insurance provides your surviving relatives with a payout they can spend anywhere. You have less control, but your family has more flexibility.
If you want to leave a clear indication of your wishes without necessarily locking in the funeral home, you could always combine burial insurance with a document stating your preferences. Kept wherever you keep your will (you have a will, right?), this document would cover issues like burial vs. cremation, open vs. closed casket. etc.Whether you choose a life insurance policy that covers funeral expenses and then some, a dedicated final expense insurance policy, or funeral pre-payment, you’ll be doing your loved ones a huge favor. Taking the time to consider and document your end-of-life wishes may be a little uncomfortable now, but it will make all the difference when the time comes.
If you’re having a hard time figuring it out on your own, consider turning to a financial advisor for risk management or estate planning help. If you don’t already have a financial advisor, a matching tool like SmartAsset’s SmartAdvisor can help you find a person to work with to meet your needs. First you’ll answer a series of questions about your situation and your goals. Then the program will narrow down your options to three fiduciaries who suit your needs. You can then read their profiles to learn more about them, interview them on the phone or in person and choose who to work with in the future. This allows you to find a good fit while the program does much of the hard work for you.
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- 85% 0f American consumers agree that they need insurance, yet 62% do not have any or not enough. We would like to bridge this gap.
- 83% of American consumers say they didn’t purchase life insurances because they thought it’s too expensive.
- 70% of US households with children under 18 would have trouble meeting living expenses after a sudden untimely death.
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