WHAT IS FINAL EXPLENSE OR BURIAL INSURANCE?
A Burial insurance or Final Expense policy is a type of life insurance that pays out a death benefit to your loved ones to cover funeral or burial expenses. These policies do not require a medical exam or order medical records. Consumers purchase this type of life insurance to ease the financial burden of your family after you die.
Final Expense insurance policies pay your beneficiaries a lump sum death benefit. The insurance company issues a check to your loved ones when you pass away. You choose who you want the funds to go to which is called a beneficiary. Most choose a family member to be the beneficiary. The money can then be used for anything including funeral costs, medical costs, credit card bills, burial costs, and outstanding debts. You can name a Funeral Home as the owner and beneficiary but we don’t recommend it.
If you have any last wishes, your final expense life insurance policy can help make them happen. Consider buying a final expense life insurance policy to ensure your loved ones don’t have to worry about any financial problems after you die.
When you’re ready to start shopping for a burial insurance policy, it’s important to compare different companies and policies. All final expense policies do not provide the same benefits. You should use a licensed independent agent who will guide you to make the best choice. The National Funeral Directors Association (NFDA) conducted a study in 2021. NFDA found that the overall cost of a funeral had risen 6.6% to $7848 and the the average American family now spends over $7,000 to bury a loved one. For many, this is a significant expense they cannot afford to pay all at once. This is where final expense insurance comes in.
HOW DOES FINAL EXPENSE BURIAL INSURANCE WORK?
Final expense insurance should be a Whole Life policy. Don’t purchase a term policy as a burial policy. Whole Life will not expire as long as you continue to pay the premiums. Once you purchase the policy, it will never increase or decrease in value, regardless of how long you live or changes in your health.
Some Final Expense Burial policies also include a living benefit, which pays out a cash advance to the policy owner if they are diagnosed with a terminal illness or a chronic illness.
The cash advance is paid to the policy owner can be used for anything. Most use it to cover medical bills, make arrangements, and take care of any other final expenses. Once you pass away, the balance of the death benefit is sent directly to your beneficiary as a tax-free death benefit. There is no restriction on how the death benefit is spent, so your loved ones can use it for anything they need.
THE THREE BEST FINAL EXPENSE COMPANIES
1 ) MUTUAL OF OMAHA
In business since 1909, the Mutual of Omaha’s funeral expense insurance is called ‘’Living Promise’’. Since they hold an A+ A.M Best rating, you can rest assured that no problems will arise when it’s time to put in your claim.
United of Omaha is the subsidiary under the Mutual of Omaha umbrella that the Living Promise Final Expense falls under. Their Final Expense policy offers 2 levels of coverage; Immediate Level benefit and a return of premiums plus 10% interest during the first two years.
You will find that their funeral insurance quotes are competitively priced compared to their peers, and common health issues are generally accepted. There is no medical exam; you just have to answer a few simple health questions. There are two plans within the Living Promise program, depending on your budget and requirements.
If you’re approved, you’ll have no waiting period for full death benefits. Adults aged 80 and under can get up to $40,000 in life insurance. The premium stays the same forever and is available in all states except New York. While there is no guaranteed acceptance, they do have a modified/graded benefit that has less health questions. The application approval usually takes less than 3 days.
Founded in 1853, Aetna currently has an A rating with A.M Best. They are known for offering new coverage to seniors as old as 89, whereas most other insurers don’t provide it to those above 85. Their ‘Final Expense’ insurance plan approves applicants without a waiting period, even when serious health conditions are present.
They can cover up to $50,000 depending on the applicant’s age and health. There are no restrictions on height and weight. Don’t have to worry if you been declined or told you would not qualify in the past due to your build.
Aetna offers both Level and Modified plans depending on what your health conditions are. You can also build cash value with this insurance plan, and take loans above $1000 for any reason. Their competitive rates are one of the most popular insurance plans for many applicants.
Functioning since 1904, Transamerica has an A rating with A.M Best. Their ‘Immediate Solution’ insurance product has competitive prices, which makes it attractive for those on a budget. It is known for having no waiting period, even with high-risk conditions like Crohn’s Disease, heart conditions and Multiple Sclerosis. The application that the agent will go over with you on the phone may take a little more time, but it’s worth it. They have the most comprehensive application. By the time it’s completed (about 30 minutes) you’ll know if you’ll be approved. The agent can also tell you which level you qualified for.
Transamerica offers 2 immediate death benefit policies without a waiting period. They do this with Preferred rates for healthier applicants, and slightly higher Standard rates for someone with more health problems.
Applications can take about 3-7 business days to approve. This is relatively high compared to other competitors. It’s available in all states, and the coverage amount can go up to $50,000. Like many other policies, this one also builds cash value over time. You won’t have to worry about premiums increasing with age, and no medical exams are required to get this insurance plan for yourself or a loved one.
Depending on your health, any one of these insurance products will fulfill your needs. But, you will need to ascertain that the insurance plan you opt for is available in your state and covers what you’re looking for. It may be best to contact an agent to learn more about the insurance or and comprehensively explain the coverage and qualifications.
TYPES OF FINAL EXPENSE POLICIES
There are 3 general types of Final Expense plans available. The plan you qualify for is based on your health. Remember something is better than nothing, so if you can’t qualify for a “Level” death benefit, take what you can.
This is the best type of burial insurance/final expense whole life insurance available. It’s an immediate, 100% full death benefit without a waiting period from day one. Some companies offer this product at both Preferred or Standard rate depending on your health but most have just one price. The rates are higher if you used tobacco/nicotine user in the last 12 months.
Graded or Modified
These Final Expense policies pay a reduced amount of the death benefit. Insurance companies use the terms Graded and Modified to describe a waiting period. Some policies pay 25%-50% in the first year and more in the second year. Sometime they pay up to 50%. Other policies will return the premiums paid plus an average of 10% interest if you die in the first two or three years. These policies will pay 100% after you live through the two or three year period.
This should be the last resort. Use this type of plan if you don’t qualify for a Level death benefit. There are no Guaranteed Issue Burial plans that pay a percent of the death benefit during the waiting period. These types of policies are what you see on TV like Colonial Penn or offers that come through the mail. There are no health questions, and a few companies will allow a Power of Attorney to purchase this type of policy. If you die during the waiting period, your beneficiary gets a return of the premiums you paid plus 4%-10% interest. Your beneficiary gets the full death benefit after the waiting period ends.
How Can I Find Funeral Insurance With No Waiting Period?
Many insurance companies today provide funeral insurance without a 2 or 3 year waiting period, like Mutual of Omaha, Aetna, Transamerica and many more. You don’t need to be in good perfect health to avail qualify for these insurance products, and you can get immediate protection without any problem. However, you should know that not all final expense policies offer immediate death benefits.
Immediate and Level Death benefit policies are generally sold through agents. You normally can’t go direct through company themselves. Most of the advertisements you get in the mail and see on TV are direct to consumer products. Direct policies generally have a waiting period of at least 2 years. You should keep in mind misleading ads claiming to begin coverage by paying just a few dollars per month. It is usually not the whole story. Getting immediate coverage through your policy may be challenging if you suffer from a chronic health condition.
How Much Does Funeral Insurance Cost?
For example, a $15,000 level whole life policy for a 65 year old will likely cost between $50-$80 per month. The monthly premium you pay is based on several factors. These include your age, gender, health, tobacco usage, and the amount of coverage you choose.
Important Things To Consider Finding the Best Final Expense Burial Insurance Policy
When you are researching all options when it comes to your funeral insurance, you have to know what you’re looking for. It’s best to talk with an independent agent by calling (614) 402-5160 who will consider your own requirements before you begin the search to save time. You will pay the same premiums if you work through an agent or go it alone. Some questions you should be asking yourself are:
- How much can I pay monthly (premium price)?
- What kind of funeral am I planning for…Burial or Cremation?
- Do I need anything specific like a headstone, burial plot or casket
- Do I have any chronic health conditions that may effect my insurability?
- Who do I want my beneficiary to be?
- How much coverage will I need to cover all my final expenses?
How you answer these questions can make the search for your funeral insurance simpler.
States like Maine and New York have a limited number of companies compared to the rest of the country. You need to make sure the company is offered in your state.
The National Funeral Directors Association data reports that the national median cost of a funeral in 2021 was approximately $7,800, whereas, for a funeral with cremation, it was $6,900. You must think carefully about what kind of funeral you’re planning when looking for an insurance plan to cover it.
- The primary difference between different the Best Final Expense burial policies are:
- The Death Benefit in the first few years- Immediate level death benefit or a Graded/Modified with a waiting period
- Amount of the death benefit
- The monthly premiums
You must look at these factors carefully to ensure that you make the right choice.
It is best to compare various insurance providers to ensure you choose the best option. Trying to find the right insurance product for your requirements can be quite challenging. We recommend that you speak with a qualified agent after doing some basic research. When you know what questions to ask and what you’re looking for, our agents can give you viable options in no time.