What Is Final Expense Insurance, and Who Is It For?

"Final expense insurance" is a phrase you've probably heard on TV or seen in your mailbox. It sounds simple, and in many ways it is. But it's not the right fit for everyone, so it helps to understand what it is and who it's really designed for.

What it is, in one paragraph

Final expense insurance is a type of whole life insurance with a smaller death benefit, often in the range people use for a funeral and final bills. When you pass away, it pays cash to the person you name as beneficiary. They can use the money however it's needed: funeral or cremation costs, a headstone, medical bills, a credit card balance or travel for family. Most policies are designed to last for life as long as premiums are paid, and the premium usually stays the same once the policy is issued. Features may vary by company.

For more detail, see our final expense insurance page.

Who it tends to fit

Final expense coverage often makes sense for people who:

• Are older and want coverage that lasts for life. Term policies end after a set number of years. Final expense coverage is designed to stay in place.
• Want to keep the bill off their kids. A funeral can be a large, sudden expense for a family. Many people simply don't want their children to pay for it.
• Have health conditions. Many policies don't require a medical exam. Some ask a few health questions, and some ask none, usually with a waiting period. Our post on life insurance with a serious health condition explains how those options work.
• Want a smaller, fixed amount. If you don't need a large policy to replace income, a smaller benefit can keep the premium manageable.

Who may want something else

Final expense insurance isn't always the answer. If you're younger and healthy, a term life or traditional whole life policy may give you more coverage for your premium. If you have young children or a mortgage, you may want more coverage than a final expense policy is designed to provide. And if you already have enough set aside for your final costs, you may not need it at all.

How it compares with a pre-need funeral plan

A pre-need plan is an arrangement with a specific funeral home, often paid in advance. A final expense policy pays your beneficiary in cash, so your family can choose any funeral home, and any money left over can go toward other bills. Some people use both. It's worth understanding the difference before you sign anything.

Choosing a coverage amount

Start with the kind of service you'd want, then add any bills you wouldn't want to leave behind. Costs vary a lot by funeral home, location and choices like burial or cremation. Around Mooresville and Lake Norman, it's reasonable to call a local funeral home or two and ask for their price list.

Our final expense coverage estimator can help you land on a number, and our guide to what affects final expense costs in NC explains what drives the premium.

Questions to ask before you buy

• Does the full benefit pay from day one, or is there a waiting period?
• Is the premium level for life, or can it change?
• Does the benefit stay the same, or can it go down at a certain age?
• What happens if I miss a payment?
• Can I name more than one beneficiary?

The answers may vary from one company and policy to the next, so read the details before you apply.

Talk it over with a local broker

Matt MacMillan is an independent insurance broker in Mooresville. He compares final expense options from the companies he represents, explains the health questions and any waiting periods in plain English, and helps you choose an amount that fits your budget. You can meet in person, by phone or by video, and there's no fee for his help.

This article is general information, not legal, tax or financial advice. Coverage, rules, features and availability may vary by insurance company and state, and every policy is subject to the insurer's underwriting and eligibility rules.