Not all final expense policies are created equal. Therefore, you need to be proactive when selecting the right insurance for final expense.
Undoubtedly, final expense policies are one of the best ways to prepare for death. When you die, the financial burden is on your family members. But as a policyholder, you can have the insurance company pay the bills on your behalf.
This article explains the top five things you must look for in a final expense policy when signing up for it.
Calculate Your Total Funeral Cost Beforehand
The first thing you need to do is calculate the cost you expect to incur at your funeral. Well, it’s not you but your family members who will incur the cost.
In the United States, the cost of dying isn’t cheap. The cost has risen by 227% from 1986 to 2017.
In 2019, the average funeral cost with the vault was around $9,135.
This cost also depends on what facilities you want to avail for your funeral. Do you need a vault? That’d cost you an extra $1,500. Do you need embalming? Expect to pay $1,000 extra for it.
Here are some of the cost you may have to cover when you die:
- Caskets – $2,500
- Funeral home service fees – $2,000
- Vault – $1,400
- Embalming – $725
- Funeral staff cost for ceremony and viewing – $1000
- Hearse – $350
- Transportation cost – $200
You need to get this figure as approximate as possible.
Type of Final Expense Policy
When you’re in the market for a final expense policy, you’d realize that there are different types of policies sold under the same name. For example, you’ll find policies like a final expense insurance policy, burial insurance, pre-need insurance, prepaid final insurance, etc. While they all do the same job (provide coverage for your final expense), they do it differently.
For example, with the final expense policy, the amount is paid directly to the beneficiary, who is most likely to be a family member. In the case of pre-need insurance, the money goes to the funeral service provider directly, and they take care of all the costs.
Burial insurance is the same as final expense insurance unless your carrier has included any additional terms.
Simplified Issue or Guaranteed Issue
When selecting an insurance for final expense, you must check whether it has a simplified issue or a guaranteed issue.
When it’s a simplified issue, the insurance provider will underwrite your health status based on the information you’ve provided to them. They will hand over a questionnaire to you that inquires about your current and past health. There’s a possibility that the provider may decline you.
But in case of a guaranteed issue, you can be sure that your application will be approved. This does come at a cost, which is high for the total package.
Premiums and Maturity Date
Not all final expense insurance packages will cost you the same. Various factors come into play, like your age, health conditions, gender, and total funeral cost. The higher the cost and riskier you are as a candidate, the higher premium you can expect.
Along with premiums, you must check the maturity date, i.e., till what time you’re expected to pay the premiums.
The final expense has the most lenient eligibility criteria. Anyone who applies for the policy is most likely to be accepted. But there are criteria nevertheless. And it varies from carrier to carrier. Some policies may only entertain individuals up to 85, while others are flexible enough to include people in their late 90s.
Read through the guidelines and the terms and conditions to select the best policy for you.
Last but not least, it’s the broker you work with who determines what type of policy you’ll get. If they’re reliable and experienced, then you can expect a policy that’s best for you. So always be cautious of the broker and the five things mentioned above when buying insurance policy for final expense.