Dying can be an expensive business. Many families are burdened by the final expenses for loved ones and sometimes they are stretched to make the final preparations.
But you can help your family by securing final expense insurance, which is designed to cover the bills that your loved ones will face after your death. Costs include medical bills and funeral expenses. That said, if you are considering this type of insurance, you have to make sure you get it right.
Here’s what you need to know.
What is it?
A final expense life insurance policy isn’t the same as other life insurance. Term and permanent life insurance value your policy as proportionate to your earning power now and for the rest of your life, and are meant to help your family make up for the loss of income that your passing may cause.
With final expense insurance, the value of your policy is proportionate to the expense of your desired funeral. While coverage in other forms of life insurance can exceed a million dollars, it’s rare for final expense insurance policies to pay out more than $20,000.
Do you need insurance?
It depends. If you already have term or whole life insurance, the payout from those policies can help your loved ones pay for final expenses. But, if you have term life insurance and you outlive the policy term, it’s a different story. In that case, you may want to consider final expense insurance.
Alternatively, maybe your family will have plenty of assets to work with when you die. In that case, you may not need insurance as they could afford to foot the bill for your final expenses on their own.
It’s a good idea to assume around $10,000 for funeral expenses. But don’t forget to take into account whether you will want a catered party after the service. Maybe you’ll end up leaving big bills behind. If situations like these sound like your situation, you may want to consider securing final expense insurance.
What does it cost?
The exact cost of your final expense insurance will depend on your age. The older you are, the larger the premiums. This is because insurance companies take on more risk when insuring older individuals, given the fact that they’re statistically closer to death. If you buy final expense insurance when you’re 45, you’ll pay less each month than if you wait to purchase until you’re 74.
The takeaway
Whether you choose a life insurance policy that covers funeral expenses and then some, a dedicated final expense insurance policy, or funeral pre-payment, you’ll be doing your loved ones a huge favor.
Taking the time to consider and document your end-of-life wishes may be a little uncomfortable now, but it will make all the difference when the time comes.
If you’re having a hard time figuring it out on your own, you can contact us.
