Final Expense Insurance
Small whole life policies for funeral, burial and end-of-life bills, for residents of Texas, Colorado, South Carolina and Michigan.
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Final expense insurance is a small whole life policy bought to pay the bills that come due when someone dies. It is also sold as burial insurance or funeral insurance. The Insurance Information Institute describes burial insurance policies as whole life coverage with death benefits commonly between 5,000 and 25,000 dollars, bought after answering a few health questions and with no medical exam.
What Final Expense Insurance Pays For
The death benefit goes to your beneficiary as cash, and it can be used for any bill:
- Funeral home services, a casket or cremation, and the service itself
- A burial plot, opening and closing the grave, and a headstone or marker
- Medical and hospital bills left after health insurance or Medicare
- Probate, estate settlement and legal bills
- Credit cards, a car loan and other small debts
- Travel for family members coming to the service
Types of Final Expense Policies
Level benefit. Issued to applicants who answer the health questions favorably. The full death benefit is payable from the first day the policy is in force.
Graded or modified benefit. Issued when the health answers show certain conditions. Death from illness in the first years can pay less than the full face amount, as set out in the policy's benefit schedule.
No health questions. Accepts applicants within the age range without medical questions. These usually carry a waiting period before the full benefit applies, and they carry the highest premium for the face amount.
Because it is whole life, the premium stays the same for life and the coverage does not end at a certain age as long as premiums are paid.
Final Expense Insurance in Texas, Colorado, South Carolina and Michigan
Final expense coverage is available through Valor Life Benefits for residents of Texas, Colorado, South Carolina and Michigan. A final expense policy is different from a preneed contract sold by a funeral home. A preneed contract pays one funeral home for chosen goods and services. A life insurance policy pays your beneficiary, who can use the money at any funeral home and for any bill.
The Texas Department of Insurance life insurance consumer guide warns that some prepaid funeral policies will not pay the full funeral bill if death comes before a required amount has been paid in. Read the benefit schedule before you sign, and keep a copy of the policy where your family can find it.
Final Expense Insurance Questions
Does final expense insurance have cash value?
Yes. Final expense coverage is almost always a whole life policy, so it builds a small cash value over time, the same way larger whole life policies do. Because the face amounts are small, the cash value stays modest.
Does burial insurance have a waiting period?
Some policies do. Policies issued with no health questions, or to applicants with serious health conditions, often pay a reduced benefit for death from illness during an early period, as set out in the policy's benefit schedule. Policies that are fully approved on a health questionnaire usually pay the full benefit from the first day. The benefit schedule in the policy says which one you have.
Is final expense insurance the same as whole life?
It is a type of whole life insurance. The difference is size and underwriting: final expense policies have smaller death benefits and are usually issued on a short health questionnaire instead of a medical exam.
How much final expense insurance do I need?
Add up what your family would have to pay after your death: the funeral or cremation, the burial plot or headstone, medical bills not covered by health insurance, probate and estate bills, and small debts such as a credit card or car loan. The total of those bills is the face amount to aim for.
Can final expense insurance be used for anything?
Yes. The death benefit is paid to the beneficiary you name, and the beneficiary decides how to spend it. Most use it for the funeral and outstanding bills, but nothing in a standard policy restricts the money to funeral bills. That is a difference from a preneed contract with a funeral home.
Is burial insurance the same as life insurance?
Yes. Burial insurance is a nickname for a small whole life policy bought to pay for a funeral and burial. It carries the same contract features as any whole life policy.