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Final Expense / Burial Insurance Plans

There's a difference between a final expense life insurance policy and what's called "insuring your life." Insuring your life entails leaving your loved ones with enough financial support after you pass away. Term and permanent life insurance policies are valued according to your current and future earning potential.

Funeral insurance values are proportionate to the cost of your desired funeral. It's rare for final expense insurance policies to exceed $25,000, even though other kinds of life insurance can surpass a million dollars.

Should I get final expense insurance?

Everyone's situation is different. What type of life insurance do you have? The policy may be able to help pay for your loved ones' final expenses if you have one. In contrast, if you outlive your term life insurance policy, you are not covered. Final expense coverage may be suitable in that case.

Alternatively, maybe your family will have plenty of assets to work with after your death. It is possible to use "self-insurance" in that scenario. "Self-insurance" is one of those terms that sounds more complicated than it actually is. Self-insurance is simply using your own money instead of a life insurance payout.

Does your family have the means to cover your final expenses? An average funeral will cost about $10,000. You should also think about whether you will want a catered party after the service. You may want to consider scattering your ashes abroad. You may end up leaving big bills behind. Considering final expense insurance in situations such as these would be a wise decision. Additionally, it's probably best not to rely on Social Security's lump sum death benefit to cover the shortfall. It's only $255 after all.

The purpose of final expense insurance is to cover the bills your loved ones will have to pay after your death. Funeral costs and medical bills are included. Burial insurance is also known as final expense insurance. Even bare-bones funerals can cost thousands of dollars. The ins and outs of insurance can be confusing. Here are some tips on final expense insurance.

The Cost of Final Expense Insurance 

Prices may vary according to your age. As you age, your premiums rise. Due to the fact that older people are statistically more likely to die, insurance companies take on more risk when they insure them. When you buy final expense insurance at 45, you'll pay less per month than when you wait until you're 75.

Can I Pre-pay for my Funeral? 

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. Plus, 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.

Each state has its own requirements for pre-payment of funerals. Using these guidelines will prevent you from paying unscrupulous individuals who will steal your money. It protects you or your family from overpaying on top of what you have already pre-paid. Be sure to check your state's guidelines regarding how the funds will be held until your death before you prepay.

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.

Pre-payment has the disadvantage that it is less flexible than burial insurance. It is possible that you and your family may not get that money back if your funeral plans change or if you move. The funeral home may go out of business and you may lose the money entirely. An insurance payout for final expenses can be spent anywhere by your surviving relatives. This means your family has more flexibility.

Bottom Line

You can always combine burial insurance with a document outlining your wishes, if you don't want to lock in the funeral home. The document would be kept with your will (you have a will, right?) and would cover issues such as burial versus cremation and open versus closed caskets. And so on.

You will be doing your loved ones a great favor by choosing funeral insurance that covers funeral expenses and more, a dedicated final expense policy, or paying for the funeral in advance. 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.



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