Final Expense Insurance Defined

The most important thing to understand is that “final expense insurance” is a marketing expression that has been around for decades. Final expense insurance is life insurance.

To be more specific, final expense insurance is a small whole life insurance policy.


The people who buy these policies do so to ensure their end-of-life expenses won’t become a burden to their loved ones.

You might be wondering, why is it life insurance?

A funeral only happens when a life ends. That’s why insurance to cover burial costs is life insurance at the end of the day.


Terminology: The Difference Between “Burial,” “Funeral,” and “Final Expense” Insurance.

We get this question a lot, so let’s set the record straight: All terms mean the same thing. There is no difference whatsoever.

You will consistently see us use all three labels interchangeably. Think of the words “attorney” and “lawyer.” They both have the same meaning. It’s just like that.

If you see a website suggesting these terms have different meanings, run as fast as you can.

How These Policies Work

Because they are whole life policies, the pertinent details are very straightforward. Here’s the fine print, so to speak:

Icon Montly Prices
Monthly prices will never increase
Icon Death Benefit
The death benefit is guaranteed never to decrease
Icon No-Age-Expiration
The policy cannot expire at any age
Icon Build Cash
Builds cash value over time

Once you pass away, your burial policy will result in the insurer sending a tax-free check directly to your beneficiary(s). There are no restrictions on how your loved ones spend the money.

If any proceeds are left over after all the final expenses have been paid, that money will stay with your family to enrich their lives as they see fit.


The Four Plan Options

Each final expense insurance company will usually have different rate classifications for their policy. Which one you qualify for depends on your health.

There is typically a low, medium, and high version (in terms of cost and when the coverage kicks in).

Level benefit

A person is eligible for a level benefit plan if they answer “no” to all health questions, indicating that they have no health problems and are a low-risk factor.

If you qualify for this plan, your coverage will protect you 100% from day one, and you’ll pay the lowest price they offer. Some carriers use the word “preferred” instead of “level” to describe their best rating.

Graded benefit

A graded plan is typically the medium option. An insurance company will only offer this plan if you say “yes” to specific health questions on the application (varies by the company). Graded plans typically provide partial coverage during the first two years of the policy.

For example, most graded plans will pay out 30% of the death benefit if you pass away during year one. During the second year of the policy, it will pay out 70% of the death benefit. The exact percentages vary by company. Year one payouts typically range from 25%-40%. Year two payouts usually range from 50%-75%.

Modified benefit

A modified plan is always the highest risk plan a company offers. They will only offer you this plan if you’ve had some severe recent health issues (such as heart attack, stroke, or cancer).

Modified plans are always “return of premium” during the first two years. This means that if you passed away during the first two years of the policy, the insurance company would only refund your premiums paid plus interest.

Guaranteed acceptance

A guaranteed acceptance (or “guaranteed issue”) policy has no health or lifestyle questions. Your acceptance is guaranteed so long as you possess the mental capacity to consent to a legal contract.

This type of policy is advisable for those who have experienced very severe recent health conditions. They can be costly and all come with a two-year waiting period before you’re insured.


Coverage With No Waiting Period

Some final expense insurance policies have a 2-3 year waiting period, and some do not.

It’s essential to understand that you must medically qualify for a plan that offers immediate coverage.

If you apply for any policy with no health questions, there will always be a waiting period.

Final expense insurance with no health questions and no waiting period does not exist.

You must apply with a company where you answer health questions (you don’t have to take an exam), and they approve you. 

Thankfully, most applicants can secure a plan that has no waiting period.

To give yourself the best chance to secure an immediate coverage plan, you should work with an independent broker (such as Choice Mutual). Brokers represent multiple insurance companies.

They will check with the various insurance companies to see if any of them have underwriting accepting of your particular health issues.

At Choice Mutual, over 90% of our clients are approved for a final expense policy with no waiting period.


Who Can Get a Policy?

There are a few factors that determine your eligibility:

Icon State
State of Residence: Some insurers don’t have their products approved in every state.
Icon Age
Age: Not every plan is available to all ages.
Icon Health
Health: Some products require you to qualify for the coverage medically. On the other hand, some plans have no health questions where your acceptance is guaranteed

The most common age of availability is 50-85.
If you are within 50-85, there is a 99% chance we can get you a burial insurance policy.

If you are younger than 50 or older than 85, we can still potentially get you coverage, but your options will depend on your health and state of residence.

We can even help you get life insurance for your children or grandkids who are under 17.


Be On The Lookout For Companies That Promote Temporary Life Insurance For Final Expenses Coverage

What if you were offered a life insurance policy for final expenses that would expire once you reached the age of 80. Would you take it?

Well, believe it or not, these kinds of policies do exist. They’re called “term life insurance.” The word “term” is short for termination because the policy will terminate at a preset date.

Also, once it expires, you don’t get your money back. Your protection simply ends. You would be 80 years old and have no coverage to take care of your final expenses.

There are some companies out there that will attempt to sell you a term life insurance policy. They will make it appear as if it’s a whole life burial insurance policy.

You will be completely unaware that the policy they are selling you expires one day. In addition to an expiration date, these temporary life plans typically have a price increase every five years.

For example, AARP and Globe Life Insurance aggressively market term life insurance policies to folks looking for final expense insurance. If you look at the fine print, you will see their insurance expires once you turn 80, and the premiums increase every five years.

Full disclaimer: Term life insurance policies do cost less per month (because they expire).

If you compare the cost of a permanent plan to a temporary one, you can surely guess which one will be cheaper.

Do you really want to roll the dice and take a chance on a temporary plan just so you can save $10 a month? Just know, that the numbers are not in your favor. Less than 1% of all term life insurance policies sold in the USA result in a death claim.

For final expenses, go with a permanent policy so you know with 100% certainty that your family will never bear the burden of unpaid funeral costs.


Four Big Ways Burial Expense Insurance Plans Are Unique

In multiple ways, final expense life insurance policies are unlike any other kind of life insurance.

From the underwriting to how quickly they pay out claims, final expense life insurance is incredibly unique.

1) Extremely lenient underwriting

By far, underwriting is the most unique element of funeral life insurance. Life insurance companies designed these plans to absorb the heavy risk of various high-risk conditions.

Most health issues accepted by final expense life insurance policies would get you automatically declined for traditional life insurance products.

The lax underwriting is fantastic because it enables seniors with high-risk conditions to qualify for a policy. They can have peace of mind knowing their funeral bills will not burden their family.

If you have any of the following health issues, you can still get a final expense policy that fully protects you from day one.

(Please remember that your age and state may affect your options.)

  • High blood pressure
  • Cholesterol issues
  • Type 2 diabetes
  • Insulin usage
  • Diabetic neuropathy
  • Type 1 diabetes
  • Diabetic nephropathy
  • Diabetic retinopathy
  • Heart attacks over 1 year ago
  • Full-blown strokes over 1 year ago
  • Cancer over 2 years ago
  • Mini strokes
  • Blood thinners
  • Blood clots
  • Water pills
  • Arthritis (all kinds)
  • Asthma
  • Atrial fibrillation
  • Bipolar disorder
  • Schizophrenia
  • Depression
  • Anxiety medications
  • Blindness
  • COPD, emphysema, & chronic bronchitis
  • Crohn’s disease
  • Hepatitis A, B, or C
  • Cystic fibrosis
  • Defibrillator or pacemaker
  • Epilepsy
  • Fibromyalgia
  • Home health care
  • You need help with activities of daily living
  • Chronic kidney disease
  • Systemic lupus
  • Parkinson’s disease
  • Multiple sclerosis
  • Obesity
  • Seizure issues
  • Sleep apnea
  • Noncancerous tumors

Many other mild to high-risk health issues are easily insurable as well. If you have a condition not on that list, please don’t assume you cannot be insured because you can.

2) Guaranteed issue no health question policies

For certain ultra high-risk conditions, a guaranteed issue life policy is the only solution. Guaranteed issue plans have no health questions. As long as you are mentally capable of entering into a legal contract, your acceptance is guaranteed.

So what’s the catch?

There are two drawbacks to these no health question plans, so they should be a last resort:

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They all come with a 24-36 month waiting period. The insurer will merely refund all premiums paid plus interest (usually 10%) for non-accidental death during the waiting period
Icon Expensive
The cost is much higher relative to policies that do have health questions. The insurance company knows nothing about your health. For that reason, they are taking on a large amount of risk. As is the case with all forms of insurance, the higher the risk, the higher the cost.

If you have any of the following health issues, a guaranteed issue final expense policy is your only option. (There may be more conditions than the ones listed here.)

  • Terminal illness
  • Hospice care
  • Dialysis
  • HIV or AIDS
  • Currently in a hospital or nursing facility
  • Alzheimer’s or dementia
  • Organ transplant
  • Wheelchair-bound
  • Oxygen to assist with breathing

Again, these plans should be a last resort to the elevated cost and the waiting period. That said, if your health is so dire, a guaranteed issue plan may be your only path to coverage.

3) Small coverage options

If you can believe it, some burial insurance companies will allow you to buy as little as $1,000 in coverage.

Most final expense companies tend to have face value options somewhere in the $2,000-$40,000 range. There is no other form of life insurance that will allow you to buy such small amounts of protection.

This is a great feature because it allows you to buy what you need. You won’t have to pay out a bunch of money for coverage that you don’t need.

For example, let’s say you want a cremation service. For cremation, you would need roughly $2,000-$5,000 in coverage to ensure enough money exists to pay for your service.

Whether you want $2,000, $5,000, $10,000 or $25,000 in final expense protection, you can do that!

You might be wondering: Can I get higher face amounts?

Yes, you can!

Some companies have high face amount limits such as $40,000 or $100,000. Even then, you could always buy multiple policies to get the total amount of coverage you desire.

4) Fast claims payout

Traditional life insurance plans can take many weeks or months to payout. With final expense insurance, the payout is typically just a couple of days at most once a claim is approved.

Funerals are a time-sensitive issue. For this reason, the insurance companies know how it is crucial to pay these claims quickly, and they certainly do.

Who Needs a Funeral Insurance Plan?

Not surprisingly, those who buy a funeral insurance policy do so because they love their family and don’t want to burden them with their final expenses.

Beyond that, these policies are an excellent option if you:

  • Have coverage now and need a little more.
  • Don’t have the cash on hand to cover your funeral bills.
  • Want to leave a charitable donation to an organization(s).
  • Want to pay off medical bills or debts in addition to final expenses.
  • Have cash but would prefer it not to be explicitly allocated for funeral bills.

Everyone has different goals. Fortunately, these plans are customizable to suit everyone’s desires.


How Do You Apply For Coverage?

Applying for a final expense life insurance plan is easier than renting a movie. That is true even if your goal is to get life insurance for a parent.

First, there is never a medical or physical exam to qualify. Furthermore, you won’t need to provide your medical records.

The application will have you answer some basic questions about your health (except for guaranteed issue policies).

The insurance companies will conduct a prescription history check. They analyze your past medications because that tells them a great deal about your health.

You won’t need to get a printout from your pharmacist or anything like that. With your consent, they can electronically analyze your medications in seconds.

Your prescription history and answers to the health questions are how they determine you are medically eligible for coverage.

Most applications take less than 20 minutes, and they very often render an immediate decision.


The Five Ways To Submit An Application

The medium by which you apply varies by the company. Regardless of how the application is taken, you will get a physical paper copy of your policy once the insurance company has accepted you.

This section outlines the application submission options we use at Choice Mutual.

Icon Web signature
Website signature. Your agent will compile from you all the information needed to complete the application. Then you’ll log into our website via a special access code that your agent will provide to you. After signing in, you’ll be able to see the application to verify that everything is accurate. Once you verify the accuracy of everything, you merely click a button to apply your electronic signature. From there, an underwriting decision can take anywhere from ten minutes to a couple of business days.
Icon Security Question
Security question signature. Your agent will gather all your information to fill out the application, including the health questions. For you to sign the application verbally, they’ll ask you to provide the answer to a security question (such as “What is your mother’s maiden name?”). That allows your agent to submit the application for processing. A decision will be made within ten minutes to a few days.
Voice Signature
Voice signature. You and your agent complete a phone interview with the insurance company. They take all your information, including authorizations. You ultimately sign your application using your voice. There’s no paperwork to sign. Everything is done in minutes using just your voice. All voice signatures will yield an immediate decision regarding your eligibility on that phone call.
Email Signature
Email signature. Your agent will collect all the information to fill out your application. At that point, the insurance company will send you an email where you can sign the application with the click of a few buttons. You can sign using your phone, tablet, or PC. Once you sign the application, it goes to underwriting. Some companies give an immediate decision, and some may take 1-4 business days before they render a decision.
Paper Signature
Paper application. Although rare, there are some situations where a paper application via snail mail is necessary. In this scenario, your agent will collect all your information to fill out the application. Then the papers will be generated and sent to your address. You sign the documents and return them to our office. Once we get them, we will call you to verify everything before they are submitted. After the application is submitted, we wait for a decision (usually 1-4 business days).

How To Save On Your Insurance Policy

The real secret to finding the most affordable burial insurance policy is to compare prices from multiple companies before you make any decisions.

But here’s the kicker.

You cannot buy these policies directly from the insurance companies. If you were to call them and ask to sign up, they would merely inform you that you need to find an agent.

The cheapest burial insurance for seniors is solely available through agencies.

The best thing you can do to find the lowest cost on a final expense policy is to work with an independent agency representing many insurance companies.

Their job is to evaluate your health to determine all the final expense companies that would accept you.

Then they’ll present you with quotes from all those companies, so you can decide which one is best for you.

Working with an independent agency that specializes in funeral life insurance is just like shopping around.

The thing about it is, you aren’t the one doing the shopping per se.

Your agency does the comparing on your behalf.

When selecting an agency to work with, make sure they have the following attributes:

  • They represent at least ten different funeral insurance companies.
  • Burial insurance is their focus (they aren’t a “jack of all trades”).
  • They have at least two years of experience exclusively with this type of insurance.
  • They have good online reviews and ratings from other customers who have dealt with them.

Once you find an agency that fits that profile, call them and let them serve you.

Here’s a quick tip: Choice Mutual has all those qualifications and then some. If you need final expense insurance, call us, and we’ll help you find the best policy on the market.