What is Final Expense Insurance? – Pros and Cons

Written by Jeff Root

Final expense insurance is a form of permanent life insurance which is designed to cover all of your final expenses. Most life insurance policies are designed to cover any fiscal amount of expenses you might have.

Final Expense Insurance requires no medical exam to obtain coverage, and can also be offered in the form of guaranteed issue life insurance, which means that everyone is accepted, and there is no medical exam as well as no health-related questions.

With Final Expense Insurance, you get the guarantees that come with a permanent life insurance policy such that the death benefit is going to remain in effect until you pass away so long as you are paying the premium.

The key difference is that the coverage amount is going to be significantly lower, typically no more than $25,000, though on the rare occasion you can find companies that offer up to $50,000 in coverage.

Another key difference that differentiates final expense insurance from burial insurance and other types of life insurance is that funeral expense insurance is specifically planned out to be used to pay only your final expenses first. Beneficiaries must use the death benefit from final expense plans in order to plan for your funeral and services first. Whereas burial insurance and other life insurance policy death benefits can be used by beneficiaries as they please.

Before we dive into everything you need to know about final expense insurance, let’s take a quick moment to outline what we will cover in this article:

Table of Contents (click to go to section):

Frequently Asked Questions About Final Expense Insurance 

While the answers to these questions below will be addressed in further detail in this article, we wanted to take some time to answer a few questions we often receive about final expense insurance, which can quickly help you understand a bit more about what final expense insurance is, and what type of coverage it provides you with.

What type of life insurance is final expense insurance?

Final expense insurance is a whole life insurance policy which means it is guaranteed for the rest of your life. As long as you pay your premiums on time the death benefit cannot be revoked.

What does final expense insurance mean?

Final expense Insurance means a life insurance policy with just enough money to cover your final expenses. This is a permanent type of life insurance (meaning it lasts your whole life) with no health exam required to obtain coverage.

How much is final expense life insurance?

The cost of final expense life insurance is going to be whether you choose the level benefit or the graded benefit and how much coverage you take out. Generally speaking, final expense insurance is more expensive than traditional life insurance policies in terms of cost per thousand dollars of coverage.

What is a final expense benefit?

A final expense benefit is a death benefit paid out to your beneficiaries in an amount designed to cover your final expenses including a burial, embalming, death certificates, Funeral Service, headstone, and anything else relating to your final wishes.

What Funeral Costs Does a Final Expense Policy Cover?

Funeral costs cover many things including:

  • Funeral home services
  • Cremation expenses
  • Embalming
  • Death certificates
  • Transfer of the body
  • Travel
  • Flowers
  • Burial plots
  • Opening and closing fees
  • Headstone
  • Caskets
  • Luncheon or other gathering post-funeral
  • Auto loans
  • Credit cards balances

Final expense insurance coverage is only limited by the type of final expenses you plan on having when you pass.

It is a great solution for people who have a small need for life insurance, or for people who otherwise do not qualify for most traditional types of life insurance.

How Much Final Expense Insurance Do I Need?

A final expense insurance policy is nothing more than the cost of your final expenses, including the burial or cremation and any associated services that you have. The average cost of a funeral in the United States is between $7,000 and $10,000, depending on your location. This is just for the bare minimum in terms of caskets, flowers, and services. If you choose anything more substantial lead increases the cost.

Opting for cremation would theoretically save you a great deal of money but in reality, only save you about $2,000.  The amount of coverage you have available to you ranges between $2,000 and $25,000. A final expense policy differs from a burial policy and so far as your beneficiaries do you have the flexibility over where the money is disseminated.

You can opt to cover the cost of the funeral service, burial, and use whatever is left over for any purpose. Conversely, with a burial insurance policy, which also comes in the form of a level benefit or graded benefit, the money can only be spent on those services and products related to your burial.

The 2 Main Types of Final Expense Insurance Policies

There are two main types of final expense life insurance coverage that an individual can qualify for. The biggest advantage to final expense is the fact that you can opt for a short Health Interview rather than an invasive medical exam, or you can choose not to answer a question about your health or undergo any examination.

Given that you are opting to provide limited information in exchange for a policy, life insurance companies will charge a higher premium (on a cost per thousand basis) for final expense policies but you will not be it denied coverage.

Level Benefit Final Expense Insurance

With level benefit final expense policies, your premiums remain level, meaning the cost of your premiums will be the same throughout the duration of the policy. You never have to worry about coverage going away and you never have to worry about the policy amount changing.  Level benefit final expense insurance policies require no medical exam, but do ask a few health-related questions in the application process.

Level benefit final expense policies are best for people who are willing to answer a short set of health-related questions and undergo a short interview with a life insurance agent. Those who qualify can receive slightly higher coverage at more affordable rates. A level benefit goes into effect immediately which means if you pass away the day after you have coverage, your beneficiaries receive the full death benefit.

Graded Benefit Final Expense Insurance

A graded benefit final expense policy is designed to cover anyone who applies. The graded death benefit is an option taken by life insurance policies to mitigate the risk that you likely pose.

Everybody who applies for this type of coverage will be accepted. You do not have to share any personal data pertaining to your health.

No health exam is required for this type of policy. No health-related questions will be asked about family history, current diseases, lifestyle, or occupation.  Due to the fact that you do not share any information, life insurance Companies will assume that you pose a higher risk.

In order to combat this risk, the graded death benefits stipulates that if you pass away within the first two years of the policy they do not have to pay out the death benefit. Instead, they simply return all the premiums you have paid to date with a small interest fees typically around 10%.

Each company has their own stipulations for the graded benefit period and how they pay out during that period. For the most part, the standard in the industry is a 2 year graded benefit policy. During these 2 years, most companies pay out a percentage of the death benefit. Typically this is 50% in the first year and 75% in the second year. Some companies do not pay out at all, others offer the premium returns discussed above.

To find the best graded benefit final expense policy, it is best to work with an independent life insurance agent who works with multiple companies in order to make sure you explore and understand all of your coverage options.

How Much Does Final Expense Insurance Cost?

The cost of final expense insurance is going to vary primarily based on whether you choose the level benefit or graded benefit. In some cases, you don’t have an option. Serious health risks like cancer might place you in a graded benefit policy or no policy at all.

Final Expense Rates for Preferred Health 

Below are samples for various circumstances for both level and graded, male and female, in the 50 year old age bracket, typically the youngest you can be for final expense coverage.

Males

Age $5,000 Male $7,500 Male $10,000 Male $15,000 Male $25,000 Male
50 $16 $21 $29 $43 $69
51 $16 $22 $30 $45 $73
52 $17 $22 $31 $45 $73
53 $17 $23 $32 $47 $76
54 $18 $24 $33 $49 $79
55 $18 $25 $34 $53 $85
56 $19 $26 $36 $53 $86
57 $20 $26 $37 $54 $89
58 $20 $27 $38 $56 $93
59 $21 $29 $40 $59 $97

Females

Age $5,000 Female $7,500 Female $10,000 Female $15,000 Female $25,000 Female
50 $14 $18 $26 $36 $57
51 $14 $19 $29 $38 $61
52 $15 $20 $28 $38 $61
53 $15 $20 $29 $40 $64
54 $16 $22 $31 $42 $66
55 $16 $23 $31 $44 $71
56 $17 $24 $33 $44 $72
57 $19 $24 $34 $45 $75
58 $18 $25 $35 $47 $79
59 $19 $27 $37 $49 $81

Final Expense Rates for Smokers

Males

Age $5,000 Male $7,500 Male $10,000 Male $15,000 Male $25,000 Male
50 $18 $25 $34 $51 $83
51 $18 $26 $35 $53 $87
52 $19 $26 $36 $53 $87
53 $19 $27 $37 $55 $90
54 $20 $29 $38 $57 $93
55 $20 $29 $39 $60 $99
56 $21 $31 $40 $60 $100
57 $22 $31 $41 $61 $103
58 $22 $32 $42 $64 $107
59 $23 $33 $44 $67 $111

Females

Age $5,000 Female $7,500 Female $10,000 Female $15,000 Female $25,000 Female
50 $16 $22 $30 $45 $72
51 $16 $23 $31 $47 $76
52 $17 $24 $33 $47 $76
53 $17 $24 $33 $49 $79
54 $18 $26 $35 $51 $81
55 $18 $27 $35 $53 $86
56 $19 $28 $37 $53 $87
57 $21 $28 $38 $54 $90
58 $20 $29 $39 $56 $94
59 $21 $31 $41 $58 $96

Final Expense Rates for Diabetics 

Males

Age $5,000 Male $7,500 Male $10,000 Male $15,000 Male $25,000 Male
50 $24 $32 $45 $66 $182
51 $24 $33 $46 $68 $186
52 $25 $33 $47 $68 $186
53 $25 $34 $48 $70 $189
54 $26 $36 $49 $72 $192
55 $26 $36 $50 $75 $198
56 $27 $38 $51 $75 $200
57 $28 $38 $52 $76 $201
58 $28 $40 $53 $79 $206
59 $29 $21 $54 $82 $210

Females

Age $5,000 Female $7,500 Female $10,000 Female $15,000 Female $25,000 Female
50 $20 $27 $37 $54 $151
51 $20 $28 $38 $56 $155
52 $21 $29 $40 $56 $155
53 $21 $29 $40 $58 $158
54 $22 $31 $42 $60 $160
55 $22 $31 $42 $62 $165
56 $23 $33 $44 $62 $166
57 $23 $33 $45 $63 $169
58 $24 $34 $46 $65 $173
59 $25 $36 $48 $67 $175

The Pros & Cons of Final Expense Insurance 

The benefits of final expense insurance

The benefits associated with a final expense policy primarily include simply having money aside for your unexpected passing so that your family is not left with the financial burden during their time of grief. This is particularly beneficial for individuals who might not otherwise qualify for any other policy because of preexisting conditions or age.

The disadvantages of final expense insurance

The disadvantages associated with a final expense policy include the limited death benefit primarily. Beyond that, the graded benefit associated with most policies can leave your family greatly in debt if you pass away within the first two years because they will not be able to access any of the money.

This somewhat defeats the purpose of taking out the policy in the first place. If you opted for a burial policy, in particular, your beneficiaries are restricted in terms of how they spend the money.

Finally, the limited coverage amount means that you cannot use the money for any other purpose such as replacing lost income for the spouse or children you leave behind.

The Best Final Expense Life Insurance Companies 

The companies below are the ones we have considered to offer some of the best final expense life insurance policies on the market. We have chosen these companies based on a number of factors including:

  • Financial Ratings
  • Customer Satisfaction Ratings
  • Financial History
  • Claims Paid Out
  • Coverage Available
  • Death Benefit Options
  • Life Insurance Rates

While these companies may not always be the best option for your specific final expense insurance needs, they are generally considered to be some of the best final expense insurance companies on the market based on the criteria above.

Company A.M. Best Rating Issue Age Face Amount Graded Benefit Policy
AIG $10,000 50-85 $5,000 – $25,000 2 Year Graded Death Benefit
Americo $10,000 50-85 $2,000 – $30,000 3 Year Graded Death Benefit
Foresters $10,000 50-85 $2,000 – $35,000 2 Year Graded Death Benefit
Mutual of Omaha $10,000 45-85 $2,000 – $40,000 2 Year Graded Death Benefit
Assurity $10,000 40-80 $5,000 – $50,000 4 Year Graded Death Benefit

Finding the Best Final Expense Insurance for Your Needs

While these companies listed above are certainly some of the best final expense insurance companies on the market, it is always recommended that you work with an independent life insurance agent when comparing final expense insurance options.

Because life insurance rates and policy options can vary on a multitude of factors, the company that has the best final expense coverage for someone else may not be the best for you.

Our independent agents work with dozens of the best final expense life insurance companies on the market in order to help you find the best rates and policies for you and your family.

Give us a call today to work with a professional, or get started comparing final expense life insurance rates and policies online using our final expense insurance quote tool.

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About Burial Insurance Coverage
About Burial Insurance Coverage

We work with individuals across the nation to secure the best life insurance rates.

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