Final Expense Life Insurance
Generally smaller face amount policies designed to help surviving loved ones pay for funeral costs, cremation costs, final remaining physician or hospital bills and other unpaid bills or debts. Can also be used to leave money to a spouse or other family member, help fund a grandchild’s education or even to support a local church or charity organization. Nearly all Final Expense policies are Whole Life policies, with a few Universal Life policies and even the occasional small face Term Life policy being purchased.
- Simplified Issue Whole Life: Generally level premiums with level face amounts. Most of these policies, though not all, guarantee that your premiums will not increase, nor your coverage decrease. Usually yes / no application without exams, depending on the company. Designed to be easier to qualify for than “fully underwritten” policies.
- Single Premium Life: Covered in the “Permanent Life” section, too. One premium, can be a simplified plan or fully underwritten, and your final expense coverage is paid for. Generally much less expensive than pre-paying a funeral!
- Guaranteed Issue: Think TV commercial .. no health questions … cannot be turned down! Most guaranteed issue policies are Modified Benefit plans. I have sold them for years and they are great plans IF that is the best you can qualify for.
- Modified Benefit: Simplified Issue or Guaranteed Issue plans with a “modified” payout in the first two or three years. Usually, death benefit for natural causes in the first 2 to 3 years is equal to premiums paid plus interest. Again, accidental death will generally pay full benefit from day one. Modified plans are typically more costly than Graded Plans, depending on the plan and the company.
- Graded Benefit Whole Life: Simplified Issue policy with premiums higher than a Full Benefit Simplified Issue plan. Usually, the payout of the death benefit is “graded” over the first two to three years in the event of death due to natural causes (i.e. 30% in year one, 70% in year two and 100% after 24 full months). Death benefits are generally paid in full from day one for death resulting from an accident. Usually offered for a proposed insured with more significant health concerns.