Final Expense 

Final expense insurance is designed to cover the bills that your loved ones will face after your death. These costs will include medical bills and funeral expenses. Final expense insurance is also known as burial insurance. Unfortunately, even bare-bones funerals can cost thousands of dollars. The ins and outs of insurance policies can get tricky. Here’s what you need to know about final expense insurance.

Final Expense Insurance: The Basics

A final expense life insurance policy isn’t the same as what’s known as “insuring your life.” Insuring your life concerns leaving your family and loved ones with enough support after you pass away. Term and permanent life insurance value your policy as proportionate to your earning power now and for the rest of your life.

With funeral insurance, the value of your policy is proportionate to the expense of your desired funeral. While other forms of life insurance can top a million dollars, it’s rare for final expense insurance policies to get above $20,000.

The Cost of Final Expense Insurance 

The exact cost of your final expense insurance will depend on your age. Unfortunately, the older you are, the larger the premiums. This is because insurance companies take on more risk when insuring older folks, given the fact that they’re statistically closer to death. If you buy final expense insurance when you’re 45, you’ll pay less each month than if you wait to purchase until you’re 75.

Can I Pre-pay for my Funeral? 

You certainly can, and some people do. This approach does have its pros and cons. When you pre-pay for your funeral, you get to personalize it. You can grill different funeral directors until you find one you love. You can pick out the perfect casket and the choicest plot in the cemetery. Plus, pre-paying will more likely prompt you to talk to your loved ones about your choices. This may give both parties more peace of mind.

Bottom Line

If you want to leave a clear indication of your wishes without necessarily locking in the funeral home, you could always combine burial insurance with a document stating your preferences. Kept wherever you keep your will (you have a will, right?), this document would cover issues like burial vs. cremation, open vs. closed casket. etc.

Whether you choose a life insurance policy that covers funeral expenses and then some, a dedicated final expense insurance policy, or funeral pre-payment, you’ll be doing your loved ones a huge favor. Taking the time to consider and document your end-of-life wishes may be a little uncomfortable now, but it will make all the difference when the time comes.

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