2020 Guide to Final Expense Insurance
What is Final Expense Insurance?
Final expense insurance is a life insurance policy for seniors. It’s meant to help families cover end-of-life costs, including a funeral, settling debts, and getting death certificates. Final expense insurance provides guaranteed coverage (meaning no medical exam) at a typically moderate cost. Most final expense policies are available in sizes from $2,000 to $25,000
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Final expense insurance fast facts
- Final expense insurance is a type of life insurance policy
- It usually provides a “death benefit” (payout) between $2,000 and $25,000
- It’s intended to pay for funeral costs and small financial settlements, but won’t provide ongoing financial support for families
- The death benefit payout is guaranteed except in a few select cases
- Seniors can qualify for life insurance coverage with very few hurdles
- Final expense insurance is available even if you have health issues
Pros and cons of final expense life insurance
Here’s a brief overview of the pros and cons of final expense insurance. We’ll cover each of these points and more in detail below.
In this article
- Final expense life insurance for seniors
- Is final expense insurance worth it?
- Breakdown of final expenses
- How final expense insurance works
- What to expect on your application
- Cost and quotes
- Top final expense insurance companies
- Final expense insurance vs whole life insurance
- Alternatives to final expense insurance
- FAQ
- Compare quotes
| Note on insurance terminology: Final expense insurance is sometimes called “burial insurance or “funeral insurance.” We use the term “final expense insurance” in this article. But if you see the terms “burial insurance” or “funeral insurance” elsewhere, know that they’re referring to the same type of policy. |
Final expense life insurance for seniors
For the right person, final expense insurance can be a great financial plan. It offers specific coverage for funeral costs and final expenses. And it doesn’t stretch far beyond that need.
For seniors with limited cash on hand, minor coverage needs, or health concerns that might block them from other life insurance policies, final expense insurance may be ideal.
“The biggest benefit of final expense insurance is that it’s a simple, quick way to make sure you have available funds to pay final expenses. It’s a very direct way to cover that one single need.” –Tony Steuer, CLU, LA, CPFFE, Author and financial preparedness advocate
It’s relatively easy to qualify, and choosing a small policy size can mean low monthly payments. Plus, no medical exam means a quicker, low-hassle application.
But as with any insurance product, it’s important to carefully weigh the cost versus benefit before signing on.
Potential drawbacks of final expense life insurance
Final expense insurance is a good financial planning tool for some — but it won’t work for everyone.
Because final expense insurance doesn’t require a medical exam, premiums are higher than they would be for a “fully-underwritten” plan with the same coverage.
Also, policyholders typically continue paying the monthly premium until they pass away.
So if someone purchases a final expense policy and pays premiums for ten to twenty years, they could easily contribute much more than the policy would ultimately pay out.
Chris Acker, a certified life insurance underwriter and chartered financial planner, adds that “the death benefits rarely exceed $25,000-$50,000 depending on age. And, final expenses can exceed these amounts on the policy.”
Is it worth it?
Given the pros and cons, is final expense life insurance worth it for you or your loved one? The answer to that question varies from person to person.
- Final expense insurance might be worth it for: People with limited life insurance needs or limited cash on hand who need final expenses covered
- Final expense insurance is likely not best for: People who need many years worth of protection, and/or life insurance that would support their family for years to come
If final expense life insurance sounds like the right product for you, check out a few different companies. You can compare rates below to see which insurer offers the coverage you need at an affordable rate.
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What are “final expenses”?
Final expense insurance is designed to ease the financial burden of a loved one’s passing. It does that by providing a “death benefit” (a one-time, lump sum insurance payout) that the family or beneficiary can use to pay for final expenses.
But what exactly do “final expenses” entail? A funeral is probably the first thing that comes to mind. But that’s just one of many arrangements that need to be taken care of after someone passes away.
Final expenses will vary from person to person. But the biggest costs that typically arise after a death include:
- Funeral costs — Average funeral costs range form $6,000 to $11,000. Costs vary depending on location, type of funeral (cremation or burial), funeral home, and other products and services selected. See our complete guide to funeral costs
- Settling debts — A few months’ worth of mortgage, insurance, utility, and other recurring debts might need to be paid. Some other large debts, like credit card bills, will not have to be paid
- Closing accounts — Many accounts will need to be cancelled including bank accounts, credit cards, investments, cell phone and internet, mail, subscriptions, and more. Fees may apply
- Death certificates — Death certificates are required to close accounts, make funeral arrangements, access life insurance, and more. Death certificates can cost about $10-$20 each
Perhaps a better name for final expenses, as Steuer says, is “transition expenses.”
A death spurs a huge transition period. And one part of that process is making sure that arrangements and assets are handled properly and safely.
Purchasing final expense insurance for yourself or a relative can help ease that transition by removing financial strain from an already-difficult situation.
A note on death certificates
At $10-$20 apiece, death certificates can add up to $400 to the final expense total.
A “death certificate” is a government-issued document that states the cause, location, and time of death, along with personal information about the deceased. It’s the only official record verifying that someone has passed away.
The family member or estate executor organizing someone’s affairs will need to purchase multiple copies of this document.
“Get at least 10 certified copies of the death certificate,” says Steuer.
“You will need them for insurance claims, funeral, and other reasons (such as transferring accounts to a spouse’s name, etc.),” Steuer adds. “You will be surprised at how helpful it is to have multiple copies of this one document.”
Most people obtain copies of the death certificate through their state’s department of health or the funeral home they’re working with.
How final expense life insurance works
Final expense insurance works like other permanent life insurance plans. The policyholder (person who buys the insurance) pays a monthly premium based on their age, gender, and other factors. In return for regular payments, the insurance company promises to pay a large, one-time sum (the “death benefit”) when that person passes away.
- You purchase the final expense policy from a reputable insurance company (see list below)
- You pay premiums on a monthly basis throughout life
- When you pass away, the company pays out the total amount listed on your policy (usually between $2,000 and $25,000) to a family member or “beneficiary”
All that is pretty standard. But final expense insurance has some unique qualities, too.
Final expense insurance policy sizes
Final expense insurance lets people choose a much smaller death benefit than they could with most other kinds of life insurance. This is key to its affordability.
For traditional term or whole life insurance, it’s hard to find coverage below $50,000. And many companies set the bar at $100,000 or $250,000. But with a final expense insurance policy, you can purchase as little as $2,000 or $5,000 of coverage.
That’s important. With life insurance, the bigger the policy is, the more it will cost on a monthly basis.
The ability to choose a policy as small as $2,000 — purely to help offset the cost of a funeral — means premiums will be smaller than they would on a $100,000 policy.
Guaranteed coverage
Final expense life insurance offers guaranteed coverage. That means applicants cannot be denied, regardless of health. Final expense insurance is also “guaranteed” in the sense that it promises to pay a death benefit in almost every situation.
Final expense insurance policy limitations
There’s a caveat to the “guaranteed coverage” part of final expense life insurance. With final expense insurance, as with other policy types, there’s a two-year contestability clause built-in.
That means that if a death occurs within two years of purchasing the policy, the life insurance company has the right to investigate and potentially not payout.
There are only a few scenarios where that would happen. Life insurance policies, including final expense insurance, do not pay out in the first two years if the death is a suicide.
And if a company finds out that the policyholder wasn’t truthful on their application — for instance, if they didn’t disclose tobacco use or a serious disease — the death benefit can be affected.
Be upfront and 100% honest on your insurance application. Otherwise, your death benefit could be reduced, or might not be paid at all.
The company might pay out a smaller amount, or withhold the death benefit altogether and simply refund paid-in premiums.
As a rule of thumb, “be upfront and 100% honest,” says Steuer. “Because you want to make sure the claim is paid.”
“That’s especially true with life insurance because you won’t be around to clarify or change anything when the policy takes effect.”
What to expect on a final expense life insurance application
Because final expense policies are “guaranteed issue,” the person applying will not have to take a medical exam. However, they may be asked basic health questions. Final expense insurance applications typically ask for:
- Age
- Gender
- Critical illnesses
- History of alcohol or drug abuse
- Tobacco use
- Living situation (at home or in extended care)
- Desired coverage amount
- Other — this is a non-comprehensive list
With most companies, the final expense insurance application can be completed online. Since there’s no medical exam, and limited underwriting required, there are few hurdles to clear.
Final expense insurance cost and quotes
A smaller life insurance policy means smaller monthly premiums. Because final expense insurance offers plans as low as $2,000, it can be affordable for people that need minimal coverage.
But keep in mind that final expense rates are still proportionally higher than traditional rates.
“Prices are high compared to fully underwritten plans because underwriters know that the people who buy them don’t think they can pass a medical exam.” –Chris Acker, CLU, CFP
What we mean by that is: All other things being equal, it would cost more to get a final expense policy worth $25,000 than it would to get a term or whole life policy worth $25,000.
There are two reasons for the relatively high price of final expense insurance.
Why final expense life insurance costs more
First, final expense insurance is a “permanent” policy. This is the same reason whole life insurance is cheaper than term life. When a company promises to pay out the death benefit, they will always charge higher premiums to make up for that loss.
Second, final expense insurance costs more because there are no health restrictions. Steuer explains, “companies have to offset the cost of guaranteed insurance because they’re taking on any risk.”
It’s uncomfortable to think about. But no medical exam effectively means insurers don’t know how long someone will be around to pay premiums. And they charge more to compensate for that risk.
But as a reminder, final expense insurance companies offer something other companies don’t. You can buy a truly small policy and pay for only what you need.
How to get final expense insurance quotes
Seniors should look for the best value on their final expense insurance. Rates are higher per dollar of coverage than on other life insurance plans. So it’s extra important to compare quotes from different companies and find the best deal. Small variations in rate quotes could add up to hundreds or thousands over the life of the policy.
It’s easy to shop around and compare final expense quotes online. Simply answer a few questions, and final expense companies will calculate your rate free of charge. You can compare rate quotes from top insurers using the [link/tool] below.
Average final expense life insurance costs
Average rates for final expense insurance vary widely, but many people pay between $30 and $200 per month. Age and gender are the biggest factors in setting those rates. The younger you buy, the more affordable monthly premiums will be. And rates are generally lower for women than for men.
These sample rates are for a $10,000 final expense life insurance policy for a 55-, 65-, and 75-year old. Rates shown are examples meant for general comparison only. Your own rate will be different.
Final expense life insurance companies
Out of the 25 biggest life insurance companies in the U.S. (according to NAIC market share data), seven offer final expense life insurance. Their final expense policies range from $2,000 to $50,000 in size, and generally accept customers age 50–85.
² Customer satisfaction survey data from J.D. Power 2019 U.S. Life Insurance Study
Here, we ranked the top final expense life insurance companies according to their J.D. Power customer satisfaction scores. The J.D. Power survey asks customers to rate their life insurance company based on policy options, price, service, application, and overall experience.
Remember: Prices vary widely by customer and company. To find the best service and price, you should compare final expense insurance quotes from at least three companies before buying.
This is not a comprehensive list of final expense insurance companies. However, as some of the most popular and highest-rated insurers out there, these are a good place to start looking.
Compare Final Expense Companies Now
Top final expense insurance companies
State Farm final expense insurance plans
State Farm farm has one final expense insurance plan, which offers $10,000 of coverage. By comparison, most other companies offer a range of policy sizes. But on the upside, State Farm has the best satisfaction scores of almost any life insurance company, according to customer surveys from J.D. Power.
Mutual of Omaha final expense insurance plans
Final expense insurance from Mutual of Omaha is called “Whole Life Guaranteed.” Policy sizes range from $2,000-$25,000, and customers can qualify starting at age 45. This is more flexible than most companies. In addition, Mutual of Omaha has an exceptionally high customer satisfaction score compared to some other final expense insurance companies.
AARP final expense insurance (provided by New York Life)
AARP members can purchase final expense insurance through New York Life. The AARP final expense policy is called “Easy Acceptance Life Insurance.” Final expense policies are available starting at age 50 for AARP members, and age 45 for eligible spouses. Coverage ranges from $2,500 to $25,000.
John Hancock final expense insurance plans
John Hancock’s final expense insurance starts at $2,000 of coverage, and goes up to $20,000. This is a slightly lower limit than many other providers offer. However, if your final expense insurance needs are truly minimal — a funeral and scant other costs — this might be fine.
Transamerica final expense insurance plans
Transamerica has pretty flexible final expense policies compared to other life insurance companies. Its coverage limits go up to $50,000, and it offers final expense insurance through age 85. Many other companies cap coverage at $25,000 and only offer final expense insurance through age 80.
AIG final expense insurance plans
AIG does offer final expense insurance, although it goes by the name “Guaranteed Issue Whole Life Insurance.” Policy sizes range from $5,000 to $25,000, and applications are accepted for customers age 50 to 85.
Globe Life final expense insurance plans
Globe Life has a final expense life insurance policy called “Funeral and Burial Insurance.” Policies are available with coverage ranging from $5,000 to $50,000, though Globe Life does not list age limits on its site. To find out whether you qualify for Globe Life final expense insurance, you’ll have to contact the company and request a quote.
Final expense insurance vs. life insurance: Which is better?
Final expense insurance is a type of life insurance. But it works a little differently from term life or whole life, which might be considered “traditional” life insurance plans.
Compared to term and whole life insurance, final expense insurance has lower policy limits and easier qualification guidelines. It also has higher premiums per dollar of coverage.
Below we compare final expense insurance to whole life insurance. This is its closest relative. Both policies offer lifelong coverage, level-set-premiums, and a guaranteed death benefit.
Alternatives to final expense insurance
Whole life insurance is closely related to final expense insurance. But with larger policy sizes and higher premiums, it might not always be the best choice for seniors. Especially those with limited cash flow.
If final expense life insurance doesn’t seem like a good fit for you, here are some other options to make sure final expenses are covered:
- Term life insurance — Term life is generally cheapest of all the life insurance options. Most term policies last 10-20 years, and coverage generally starts around $100,000. Applicants are usually required to take a medical exam
- Guaranteed universal life insurance (GUL) — GUL is like a cross between term and whole life insurance. It offers a guaranteed death benefit payout, but typically has lower premiums than whole life insurance. Medical exams are required for GUL
- Prepaid funeral costs — Prepaid funeral costs are deposited with a specific funeral home and cover only those costs associated with a funeral. They cannot be used for other final expenses
Not sure what you need? Try talking with an independent financial planner. They can help point you toward the right financial solution — without the added pressure of an insurance agent trying to make a sale.
Find a financial advisor near you using this tool from the National Association of Personal Financial Advisors
Final expense insurance FAQ
What is final expense life insurance?
Final expense life insurance is a guaranteed, limited life insurance policy. It’s “guaranteed” because you can get insured without a medical exam, regardless of health issues. And it’s “limited” because coverage is restricted. You can generally only get up to $25,000 of coverage with final expense life insurance. Because it offers minimal coverage, final expense insurance is usually only recommended for seniors or those in reduced health.
What does final expense insurance cost?
Final expense insurance costs vary by customer. Generally, premiums are under $200 per month. But that’s a wide benchmark. The real cost of final expense insurance depends on your age and gender, as well as the company you purchase the policy from. To see how much final expense insurance would cost for you, check your rates here.
What is a final expense benefit?
Like other types of life insurance, final expense insurance has a “death benefit.” The final expense benefit is the same thing as your coverage. It’s the amount the final expense insurance company will pay out if the insured person passes away while covered. Remember, to qualify for the full final expense benefit, the insured needs to keep up with premium payments. And usually, the death must fall outside a two year waiting period.
Can I get final expense insurance without a waiting period?
There’s generally no waiting period to purchase final expense insurance. That’s because there’s no medical exam, and customers can apply online and get covered in a matter of hours or days. However, there is a waiting period for the final expense insurance payout. The waiting period, or “contestability period,” lasts two years. If the insured passes away during that time, the final expense insurance company will usually only return premiums that have been paid in. It will not pay the full value of the death benefit.
What’s the best final expense insurance company?
The best final expense insurance company depends on your needs. That’s because each company offers different policy terms and sizes. And, final expense insurance companies set prices according to their own formulas. That means one company is bound to be more competitively-priced for you than the others. To find the best final expense insurance company for you, compare plans and rates from a few different carriers here.
What are final expenses?
Final expenses are any costs that need to be covered when someone passes away. The biggest final expenses are usually a funeral and burial or cremation. These things alone can easily surpass $10,000. Thus, covering final expenses is a big consideration for the deceased’s family. Many people cover final expenses using assets from the deceased’s estate, life insurance, or a final expense insurance policy purchased later in life.
What is included in final expenses?
The biggest final expenses for most people include funeral services, burial or cremation, medical bills, and death certificates. If the deceased owned a home when they passed away, final expenses might also include a few mortgage and utility payments, and costs required to sell the house. Any accounting fees for estate management would also be included in final expenses.
Compare final expense insurance quotes today
To recap: Final expense insurance serves a unique purpose. It makes coverage available to seniors who might not qualify for life insurance otherwise. It’s also an option for people who might not be able to afford a bigger term or whole life insurance policy.
If you’re looking for life insurance coverage for yourself or a senior family member, final expense insurance might be a good choice. Use the [link/tool] below to see whether it fits your needs and budget.
