Final Expense

Your Comprehensive Final Expense Guide for 2024

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Final expense life insurance is a specialized policy coverage designed to cater to the financial obligations associated with end-of-life expenses.

 

Its fundamental purpose is to provide a financial safety net for loved ones during grief and loss, covering the costs of one’s passing.

 

Whether you’re contemplating this type of coverage for the first time or seeking to enhance your understanding, our guide is designed to illuminate the benefits, considerations, and practical aspects of final expense life insurance in the evolving landscape of 2024.

 

Understanding Final Expense Insurance

 

The primary expenses covered under this policy include funeral and burial services, which can be considerably high. These costs encompass everything from the casket, headstone, and plot to the memorial service.

 

In addition to funeral expenses, it can cover any outstanding medical bills left behind. This becomes particularly relevant when the insured has undergone intensive medical treatment or long-term care before passing.

 

Another significant function of this policy is to cover any residual debt that the deceased may leave behind. This could include mortgage payments, personal loans, or credit card debts.

 

By addressing these debts, the final expense ensures that the financial burden does not fall onto the shoulders of grieving family members.

 

The policy is an actionable foresight, a conscientious step taken to protect loved ones from the financial stress of end-of-life costs.

 

It provides a financial cushion, allowing family members to grieve without monetary worries.

 

With this, the insured can have peace of mind knowing they have provided for these unavoidable expenses.

 

Who Should Consider Final Expense Insurance

 

It is primarily targeted towards older adults, typically those in the age group of 50-85 years. Age is a significant factor as end-of-life expenses become a more immediate concern as one ages.

 

Health status is another crucial factor. Individuals with chronic or severe health conditions, which may make traditional life insurance policies prohibitively expensive or unattainable, may find it to be a more accessible alternative.

 

It is also suited for those with limited financial resources or who want to prevent depleting their savings or assets to cover end-of-life expenses. Final expense offers a viable solution for individuals who may not have substantial savings or retirement funds to cover these costs.

 

It is also an excellent option for individuals who do not have a traditional policy or those seeking supplemental coverage. They often replace lost income, and the payout might not be enough to cover both lost revenue and end-of-life expenses.

 

Consequently, the final expense policy can be an additional layer of protection, ensuring that the financial burden of these expenses does not fall on the loved ones left behind.

 

It is a practical consideration for older adults, particularly those with health issues, limited finances, or inadequate life coverage.

 

It offers an affordable and simplified path to financial protection, ensuring the insured and their family peace of mind in the face of life’s ultimate certainty.

Benefits of Final Expense Insurance

Final expense insurance provides several specific benefits. It provides a straightforward, affordable, and compassionate solution to a challenging issue, reassuring the policyholder and their family. Take a look at the following:

 

  • Ease of qualification: Unlike the traditional type, which can require rigorous health examinations and extensive medical history reviews, the final expense policy often features a simplified underwriting process. This makes it more accessible to individuals, especially those older or with pre-existing health conditions.
  • Smaller coverage amounts: While traditional life policies typically offer large coverage amounts, the final expense policy focuses on smaller, more manageable coverage amounts explicitly tailored to cover end-of-life expenses. This makes the premiums more affordable for the insured while providing sufficient coverage to meet the intended needs.
  • No burden on loved ones: One of the most significant benefits of final expense policy is the peace of mind it brings. It ensures that the financial responsibilities associated with end-of-life costs do not burden grieving loved ones. The death benefit can cover funeral costs, resolve outstanding debts, and settle any remaining medical bills, relieving family members of these financial burdens during a difficult time.
  • Fixed premiums: For many policies, the premium amount is fixed and does not increase with age or changes in health status. This consistency makes it easier for policyholders to budget their expenses.
  • Cash value accumulation: Some may offer a cash value component, allowing the policy to serve as a modest savings vehicle.

Costs and Affordability

Final expense insurance is comparatively less expensive than most traditional policies due to its lower coverage amounts. However, several factors influence the cost of these policies:

 

  • Age: Age plays a critical role in determining the premium. The older the applicant, the higher the premium.
  • Gender: Statistically, women live longer than men. Consequently, companies often charge lower premiums for women.
  • Health Status: While the final expense does not require a comprehensive health examination, answering a few health-related questions could result in lower premiums.
  • Smoking Status: Smokers are generally charged higher premiums due to the increased health risks associated with smoking.
  • Policy Type: The cost can also vary based on whether the policy is a “level benefit” (full death benefit paid from day one) or a “modified benefit” (partial payout in the initial years).

 

In terms of affordability, the lower coverage of the final expense life policy results in more manageable premiums, making it a feasible choice for many. But it’s essential to consider one’s budget realistically.

 

Individuals on a tight budget might consider policies with guaranteed acceptance, although they come with a higher premium.

 

Those with more financial flexibility could opt for policies that require a simple health questionnaire, often leading to lower premiums.

Average Cost of Final Expense Insurance

Costs vary widely based on age, gender, health status, and smoking habits. However, on average, individuals can expect to pay between $30 to $70 per month.

 

A healthy 50-year-old might expect premiums as low as $30 per month, while an 85-year-old with underlying health conditions could pay over $200 monthly.

 

It’s critical to remember that these are average figures, and actual premiums can vary considerably.

 

As with any product, it’s wise to shop around and seek professional advice to find a policy that offers the right balance of affordability and coverage to meet your needs.

Coverage Limitations and Exclusions

While final expense policies offer several benefits, it’s crucial to understand their potential limitations and exclusions:

 

  • Coverage caps: They are designed to cover end-of-life expenses, so the coverage amount is often capped. Most policies offer coverage ranging from $2,000 up to $50,000. This may not be sufficient for those looking to leave a substantial financial legacy or cover sizeable debts.
  • Waiting periods: Some final expense policies come with a waiting period, often two to three years. If the insured passes away during this period, beneficiaries may only receive a refund of the premiums paid rather than the full death benefit.
  • Exclusion of inevitable deaths: Although rare, some policies may not pay out the full benefit if the insured’s death is due to specific circumstances, such as suicide, within the first two years of the policy.
  • Non-guaranteed policies: Policies that aren’t guaranteed issue may exclude applicants based on specific health conditions. Even with simplified underwriting, some applicants may be denied coverage.
  • Higher premiums for health conditions: While easier to qualify, individuals with pre-existing health conditions may face higher premiums on their final expense policy.
  • Lack of cash value: Unlike some whole life insurance policies, many final expense insurance policies do not build cash value over time.

 

Understanding these limitations and exclusions will help you make an informed decision when considering final expense insurance. It’s essential to read the fine print of any policy before purchasing and consult with a qualified professional for personalized advice.

Comparisons with Other Life Insurance Options

When comparing final expense to other life plan options, it’s essential to assess each based on your specific needs and circumstances:

 

  • Term Life Insurance: This policy covers a specified “term” of years. The death benefit is paid out if the insured passes away during this period. No benefit is paid if the insured survives beyond the term. It typically offers higher coverage amounts at a lower cost than final expense, making it an appropriate choice for those needing substantial coverage, such as replacing income or paying off a mortgage. However, a final expense policy may be better for those beyond their working years looking for a policy to cover final expenses.
  • Whole Life Insurance: This type of permanent life plan offers a guaranteed death benefit and a cash value component, which can grow over time. While it’s more expensive than term life and final expense, the cash value accumulation and lifelong coverage can be attractive to some. However, if end-of-life expenses are your primary concern and you don’t need the cash value feature, the final expense policy may be more cost-effective.
  • Universal Life Insurance: This is also a form of permanent life type, but it offers more flexibility. Policyholders can adjust their premium payments and death benefit amount over time, and the policy also accrues cash value. However, this flexibility comes with a higher cost and more complexity than the final expense.

 

Each option serves different needs and priorities, so consider your situation and financial goals before choosing. Always consult with a professional for personalized guidance.

Tips for Choosing a Policy

When selecting a final expense policy, consider the following tips to ensure you choose the right plan for your unique needs:

 

  • Determine Your Coverage Amount: Estimate your final expenses, including funeral costs, medical bills, and any outstanding debts. This can guide your decision on the coverage amount you need.
  • Examine Policy Terms: Thoroughly review the policy terms. Pay attention to any waiting periods, exclusions, and the presence or absence of a cash value component.
  • Choose a Reputable Provider: Select a provider with a strong reputation for customer service and claims response. Look for companies with high ratings from independent agencies like Pacific Life or Protective.
  • Consider Your Health Status: If you have a pre-existing condition, consider policies with guaranteed acceptance. Bear in mind that these usually come with higher premiums.
  • Policy Premiums: Assess if the policy premiums fit within your budget. Remember, a final expense policy is typically more affordable than other types due to lower coverage amounts.
  • Professional Advice: Consult with a professional before making a decision. They can provide personalized recommendations based on your circumstances.
  • Compare Policies: Don’t settle on the first policy you find. Compare several policies from different providers to ensure you’re getting the best value and coverage.

Get Final Expense Protection Now

Final expense life insurance in 2024 is straightforward and accessible. The key is clear whether you’re new to it or enhancing your understanding. It’s a practical solution to protect loved ones from financial stress during end-of-life expenses.

 

Understanding its scope, benefits, and costs lets you decide if it fits your financial goals. It’s especially beneficial for older adults or those with health concerns.

 

The simplicity of qualification, smaller coverage amounts, and relieving loved ones of financial burdens make it an affordable choice.

 

Explore options, consult professionals, and compare policies for the right balance of affordability and coverage.

 

With the right plan, final expense insurance guarantees peace of mind, allowing you to focus on what truly matters during life’s transitions.

Whole Life Insurance Advantages And Disadvantages

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Like any other financial product, whole life has advantages and disadvantages, along with some unique features. It provides permanent coverage, guaranteed premiums that don’t increase, has guaranteed cash values, a guaranteed death benefit, and offers possible dividends.  However, it is typically more expensive than most other policies, and the cash value growth may be more limited than other permanent policies depending on the performance.

 

Whether whole life insurance is worth it depends on your life situation and goals. If you want protection that lasts your entire life, then a whole life policy from a reputable provider can be an option to consider for your needs. It can also be worthwhile for older people concerned about estate planning strategies and reducing the effects of taxes on their heirs.

 

It is important to find a financial professional who will take the time to learn about your unique situation, listen to your concerns, and clearly explain the different insurance options that best fit your needs and your budget.

 

Whole life insurance, by definition, offers coverage for your entire lifetime so long as you continue to pay premiums. It is sometimes referred to as “guaranteed whole life insurance”, because insurers promise to keep the premiums constant over the life of the policy. Should you die, and the policy hasn’t lapsed, the beneficiaries will receive a payout.

In addition, whole life insurance offers tax benefits and has a cash value component which grows over time.  It’s suitable for those who want not only the benefits of life insurance coverage, but who also plan to use the cash value as an investment vehicle.

 

What is the downside of whole life insurance?

Compared to a term life policy, a whole life policy is more expensive and complex, in part because it’s designed to provide a death benefit that lasts a lifetime. On the other hand, a whole life insurance policy can be a powerful and highly customized asset that provides tax advantages, financial protection, and numerous guarantees and benefits. It can complement your 401k or other savings, but it’s not suitable for everyone – before buying, you need to understand how it works and what it can do, then work with a knowledgeable insurance broker or agent to ensure you get the right policy for your needs.

Why do people choose whole life insurance?

Whole life insurance builds cash value, provides permanent coverage, and can help build your family’s wealth over the long term. These policies also offer more guarantees than other types of coverage, making them an option for many people to consider.

 

When Should I Write a Will?

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Most people do not consider writing a will or testament unless they are directly concerned about the loss of their lives or have been diagnosed with a terminal illness. However, there are many reasons why you should write a testamentary will well before you are advanced in years or diagnosed with a serious illness. Consider the guide below for information on the process of writing a will.

Signs That You Should Write Your Will

Listed below are the most significant reasons to write a will, regardless of your age or health. Remember that, while no one plans to pass away, not planning a will can make it complicated for your spouse, children, and family to manage what has been left behind.

  1. You Have Children and/or Grandchildren. You should include instructions regarding what money, items, or other accounts from your estate will go toward benefitting your children or grandchildren. If you are the legal guardian of any child under the age of 18, you should leave behind legal instructions for who gets guardianship over him or her in the event of your death.
  2. You Have a Spouse. If you have a spouse, you should write a will. This ensures that your spouse will be guaranteed to receive their due from your estate. This is especially important if you have a spouse and children, as your spouse will be financially responsible for your children on their own in the event of your death.
  3. You Have a Trust or Inheritance. If you have any type of inheritance, even if it is still in a trust, you will need to write a will. This ensures that your inheritance goes to a particular person or group of your choice in the event of your death. This can be written as a testamentary trust.
  4. You Want to Leave Specific Items to Specific People. If you have anything that you want to leave to a certain person or group, such as a charity or foundation, then you should write a will to ensure everything will be in legal order after your death. It is common for familial conflicts to occur over who gets what assets in the event of a death. If you want to give an individual or group something specific, a will is the best way to accomplish that goal.

What happens if you do not write a will before your death?

If you do not write a will before your death, your estate will be handled according to state laws. This will vary from state to state, but the state law may not line up with your intentions for the money, objects, and estate that you leave behind. This is why it is important to write a will if you have any specific intentions for your estate, or if any number of your family members will be relying on your estate in the event of your death.
If you are not sure when you should write a will, keep the above guidelines in mind.

How to Begin the Process

Before we begin listing the steps of the process, there is one vital thing you need to do first before you do anything else. This key step is finding an attorney or program that will guide you through the steps necessary to write your will. Different steps will need to be taken depending on your financial and familial situation to tailor your will to your needs.

Without an attorney present, you can mistakenly create a will without understanding some of your state’s guidelines, which could heavily complicate the process when you pass away. Or, if you don’t utilize the correct legal terms and language, it could be deemed invalid.

Although it may be nerve-wracking to have an attorney present, you will be helping yourself and your beneficiaries by drafting one.

  1. Choose a Beneficiary: Your beneficiary could be anyone from a spouse to a family member, friend, institution or organization. You can also have multiple beneficiaries if you wish to distribute your assets between certain individuals. This shows that you truly have free reign as to who you would like your beneficiary to be and how you can distribute your funds. If you have children, it may be smart to delegate them to be beneficiaries, especially if they have children of their own. For example, if you state that you would like your grandchildren to use your life insurance benefit toward their education should you pass away before they turn 18, your children could be excellent beneficiaries. This is because they will be able to handle and distribute the funds properly.
  2. Choose an Executor: An executor is the person in charge of distributing your assets according to the guidelines listed in your will. This person should be extremely trustworthy, as they will have a certain amount of power over your assets until they are distributed fully. Ensure your executor is available and willing to serve this role to its fullest capacity. This means it’s ideal to have someone within a close proximity to you, and someone who has experience with taking inventory of estates as well as handling funds and assets. You do not have to select a friend or family member to be an executor. However, if you select a third-party executor, you will have to be prepared to pay fees. The fees will be set by your estate and can vary in prices.
  3. Allocate your Estate, Be Specific: Once you begin to make decisions about which family member will receive which items or funds after your death, it is recommended to be as specific as possible to avoid later conflict. It is important to predict how each family member might respond to the situation you describe in your will. For example, if you have four children, and you state that all of your assets should be distributed equally between them, but one child insists on keeping one valuable item to themselves, conflict may arise.  Although it may be difficult to decide which family members receive which items, it is likely that your family will benefit from those choices in the future.
  4. Attach an Explanatory Letter: This is a step that is fairly self-explanatory, so we won’t spend too much of your time going over it. What you need to know is that an explanatory letter can serve as a way to comfort your family members and explain the conditions listed in your will. If you want to give a special item to a certain family member, there is no doubt that having a written explanation of your gift to them will be valuable. You want your family to be on the same page as you, which is another reason why you’ll want to include an explanatory letter.
  5. Sign Your Will: In many cases, states will require one or more witnesses during the signing of your will. Without witnesses or a notary of some sort, it’s possible that your will is going to be deemed invalid by the state government. Check with a lawyer or professional who specializes in assembling wills and testaments to find your state’s requirements.

Summary

It is important to plan for the future. Writing a will can be an emotionally draining and difficult process, but the peace of mind that comes with knowing your family will not have to distribute your estate is worth the effort. The Best Senior Services (TBSS) recommends enlisting professional help for the creation of a will, especially if you have many assets to balance and distribute.

If you need more help in understanding when the best time to write a will is, you’ve found the right place at TBSS. We educate and inform seniors about topics surrounding retirement so that they can spend less time worrying about their retirement years and more time enjoying it. Additionally, we connect seniors with local licensed agents who will help answer any outstanding questions.

Visit our website or call us at 877-979-8255 to get started today

Should You Consider a Whole Life Insurance Policy?

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When you were young, purchasing an insurance policy that was just right for you was probably confusing and slightly overwhelming. As you got older, some of that confusion may have subsided, but insurance still seems like a lesson that you never truly stop learning.

 

If you have had term life insurance policies throughout your years, and it’s coming to an end, you have a couple of options: you can renew your old/current plan for another term, let your plan expire and go without life insurance, or you can switch to a whole life insurance policy. This is similar to a term policy, except it’s permanent and comes with no expiration dates.

 

This article is designed to help you understand more about what a whole life insurance policy is, and whether a whole life policy could be in your best interest.

 

 What is a whole life insurance policy?

Again, a whole life policy is a permanent life insurance policy, meaning that it will cover you for the duration of your life. In addition to a whole life insurance policy, you also have a separate account called “cash value.” When the term “cash value” gets thrown abut, it means that there is a cash amount given to the policyowner whenever the policy is cancelled. It is only applicable to permanent life insurance policies, so this is something that cannot be applied to term life insurance.

 

Many insurance agents suggest whole life insurance policies because they will have you covered for life. In fact, they will even suggest that you cover your children by getting a policy for them, too. Others, like Dave Ramsey, believe that whole life insurance policies aren’t worth it. So, let’s get into the pros and cons of this policy, so that you understand both points of view.

 

Advantages to whole life policies as a senior

Here are some of the advantages for seniors who have a whole life insurance policy:

  • Whole life insurance will pay benefits regardless of when you pass away. This is true as long as your policy is still in force. As soon as you pass away, your beneficiaries will receive the policy’s death benefit.
  • You’ll have an easier time finding coverage. It’s hard to secure term life insurance when you’re at a certain age. This is because a lot of policies are 10 to 20-year terms, and when you reach that age, it’s harder to guarantee you’ll fulfill those policies. As long as your premiums are paid on time with your whole life policy, you shouldn’t have too difficult of a time getting accepted.
  • It builds cash value over time. Cash value is built within your policy when you pay your premium. By doing that, some of it goes into a savings account, and once you have enough, you can begin to borrow from that account.
  • Premiums are predictable. Premiums will always stay the same and never differ, meaning you know how much you will owe on it each month. This can be relieving to know, especially when you have other bills to pay with fluctuating payments.
  • Living benefits are accepted on whole life insurance. Let’s explain this in a little bit more depth: if you are considering whole life insurance, one of the reasons for this could be because you are critically injured or ill, you will need to become a caregiver, or you are at the point in which you need care for daily tasks. Whole life insurance offers living benefits, in which you can receive a part of your death benefit if/when you are diagnosed with an illness or injury, or it is deemed that you will be needing care.

 

To make this a little easier to understand, let’s set up an example: You have a $200,000 whole life policy with living benefits, and you were recently diagnosed with Stage 3 breast cancer. Upon contacting your carrier, you discover that you can receive $50,000 for treatment and care. This leaves you with $150,000 for your death benefit that will be disbursed to your beneficiaries.

 

You can do this with term life policies, but there’s something that you need to consider, and that is when your policy expires, your living benefits expire along with it. When your term ends, it’s possible that you will have to purchase separate plans that could cover a potential future illness.

  • You have control over your account. There are a lot of financial services you will sign with your insurance company in which you don’t have complete control over. Luckily, this isn’t the case for whole life insurance. In fact, it’s the opposite. When you sign a contract with your insurance company. You can access this account and use the money for anything you need.
  • It’s possible that you can receive dividends from your whole life insurance policy. You can receive dividends once per year, typically around the end of the year. You can expect dividends if the insurance company has paid off its fees and is deemed profitable. In this event, it will return payments to you, known as dividends. Not to mention, you will not be taxed on these dividends.

 

Disadvantages to whole life policies as a senior

Here are some of the disadvantages for seniors who have a whole life insurance policy:

  • It is expensive. And by this, we mean that there are cheaper options out there. Typically, the cheapest life insurance is term life insurance. And if you’re in great health, getting term life insurance may be the better option for you.

 

The cost of your whole life insurance policy is dependent upon a number of factors, so it’s hard to determine what you’re going to be paying until everything is finalized. This includes age, health, habits, how much coverage you need and more. One thing that you can bet on, though, is that your whole life policy will cost more than any term policy you would have had.

  • Loans require interest. Essentially, if you want your money out of the policy, you either have to cancel the policy or borrow your own money. And that requires interest. This may not sound like news to you because almost every loan out there comes with some sort of an interest fee. But when you think about it, this can present itself as a major disadvantage. You are being charged interest to borrow the money you paid into the policy.
  • It’s not the most flexible option. Once you select your coverage, it cannot be changed. This means that, your coverage will not be increased or decreased depending on what your needs are. Premiums are also adjustable. This means that if you are unsure about your financial future, this may not be the best option for you.
  • Your beneficiaries won’t receive everything. When you pass away, your beneficiary will only be receiving the death benefit, while the insurance company will receive the cash value. Your beneficiary cannot receive both. This may sound frustrating to most, and it’s with good reason. You are paying into a savings account that you don’t get to use unless you are borrowing from it. And, even then, we circle back to the interest fee that has been previously mentioned.
  • It’s not the best tool for retirement planning. Although you certainly can use parts of it – like the case value – for your retirement planning, it’s not in place so that you only have to rely on this policy. A great way to plan for your future is to invest your savings into your IRA accounts, as well as your 401(k) or 403(b).
  • Some don’t have the financial stability to maintain a whole life insurance policy. We understand that this sounds like a scary concept. And, unfortunately, it’s true. In the event that you experience financial catastrophe, and you are unable to pay your premium, your cash value will be able to cover it. However, your cash value is not designed to pay off your premiums, and it’s certainly not built to last forever. This means that, after a certain amount of time, if you are still unable to pay for your premiums and your cash value runs out, then your policy will disintegrate.

 

 

You may be coming away from this article thinking that you may need whole life insurance, or you may be thinking that you could never trust any insurance agent who will try to sell this to you. If you’re feeling the latter, don’t worry. At The Best Senior Services, we can help you. We will connect you with a local, licensed agent who will work with you on selecting the best policies for you.

Regardless, whether you should consider a whole life insurance policy is solely up to you because no one knows your situation like you do. If you meet with an agent who does not provide you with a specific way in which you will want to consider whole life insurance instead of term life insurance, then consider other options. The Best Senior Services will be happy to provide you information about financial services so that you can enjoy your retirement years. Call us at 855.979.8277 or visit our website today to get started.