What is Final expense Life insurance?
- These are permanent, whole life policies specifically designed to affordably cover funeral and related expenses generally for those 50-85 years of age.
- Benefits range typically from $2,000 to $30,000.
- They are designed to cover most everyone, even those with serious medical conditions.
- These policies have limited underwriting which means they are easier to qualify for than typical life policies. There is no medical exam, first of all. No Physician's statements. And, a limited number of questions on the application. Plus, issue is extremely fast, many times that very day.
What are the 3 basic types of coverage?
- Immediate coverage is meant for those in overall good health the least expensive typically. If you qualify for this coverage, there is no need to apply for Modified or Guaranteed issue as you will pay more for essentially the same benefit.
- Modified coverage is meant for those with some health issues and otherwise would not qualify for Immediate coverage. There is a 2-year wait. This means that once you qualify and begin paying premiums, benefits are on hold for two years. If you pass within that period, no benefits are paid. But, the premiums you've paid are given to your beneficiaries.
- Guaranteed Issue is just that - virtually everyone qualifies! The cost of insurance is more than Immediate and Modified. However, if the premium is affordable this can be a great solution. Thousands of Guaranteed issue policies have been issued over the years.
Does everyone offer these 3 basic types of coverage?
- No. Some insurance companies do. Some don't. For instance, you might find a company that only specializes in Guaranteed issue policies and that's all they offer. If you were to qualify for Immediate or Modified from another insurer, you could pay more.
What is Term Insurance?
- Term Life is generally more suited for younger people with families. It offers a significant death benefit designed to replace a breadwinner's income. To keep these policies affordable, they are limited to a "Term" of time. Usually 10, 15 or even 30 years. Once the policy ends, you have an option of continuing the policy typically but are asked to "re-apply" to determine the new premium. These new premiums can be so large it can be unaffordable.
- Using Term Life for Final Expense is an option but generally not a great one. Why? It will end at a certain date. Final Expense Whole Life is meant to be in force your "Whole Life". Since we all pass but don't know when, you want to make sure a policy stays in force until you do. And, the premiums remain the same throughout the policy whereas a Term policy may go up annually.
- The main feature is it's cost. These policies have very low premiums. But, you get what you pay for which is the risk that it won't be in force when you die.