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What Is Final Expense Insurance?
Final expense insurance, sometimes called burial insurance, is a form of life insurance generally designed to provide a modest death benefit for your beneficiaries.
Beneficiaries may use the proceeds for funeral and burial costs, medical bills, outstanding financial obligations or other needs. The benefit is paid according to the policy terms and is not restricted exclusively to funeral expenses.
Coverage amounts, premiums, underwriting requirements, waiting periods and policy features vary by insurer, product and individual eligibility.
Preparing for Final Expenses
Final expenses can include more than the cost of a funeral. Planning ahead may help families prepare for expenses that arise during an already difficult time.
Depending on your circumstances, potential needs may include:
- Funeral home and memorial services
- Burial or cremation expenses
- A casket, urn or burial plot
- Transportation and obituary costs
- Outstanding medical bills
- Personal financial obligations
- Temporary household expenses
- Other needs selected by the beneficiary
A licensed insurance agent can help you consider an appropriate coverage amount based on your goals, budget and eligibility. Insurance benefits may not cover every expense or financial obligation.
How the Death Benefit May Be Used
Life insurance proceeds are generally paid to the policy’s named beneficiary. The beneficiary may ordinarily decide how to use those funds based on the family’s needs.
Life insurance death benefits are generally received free from federal income tax under current law, but exceptions may apply depending on policy ownership, transfers, interest payments and individual circumstances. Consult a qualified tax professional regarding your situation.
What to Consider Before Applying
Before applying for final expense insurance, consider:
- The amount of coverage your family may need
- Whether premiums fit your long-term budget
- How long the coverage and premiums are designed to remain in effect
- Whether health questions or underwriting requirements apply
- Whether the policy includes an immediate, graded or modified death benefit
- Available riders, exclusions and limitations
- Who should be named as the beneficiary
A licensed insurance agent can explain available products and help you compare policy features. Approval and pricing depend on the insurer’s underwriting requirements and your individual eligibility.