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Final expense insurance policies have evolved as a necessity for most senior citizens, most of whom don’t want to leave their family in the lurch after they pass. Have you been checking out the final expense insurance reviews online lately? If so, you’ll realize that so many companies offer final expense or burial insurance that can be quite confusing.
Whether you have been doing some casual research online or are seriously looking for a suitable insurance policy, you should be able to get some clear-cut answers.
What Is Meant By Final Expense Insurance?
Final expense, burial expense, funeral expense – they all mean the same thing. Such terms indicate permanent whole-life insurance policies that will help your family members tide over the financial problems related to your funeral. This type of insurance also enables you to cover your medical bills, legal expenses, and other payments related to your property (estate taxes). Due to many people taking out policies like these to address funeral costs, they received the nickname burial insurance policies. Many well-known insurance companies like Gerber Life, Lincoln Heritage, and Colonial Penn offer these types of policies.
You can make your family members the beneficiary or the funeral provider the direct beneficiary. However, that comes under a different name, preneed insurance, linked to a prearranged contract, with the funeral home as the beneficiary.
Term Life Policy
A term life policy cannot be considered the same as final expense policies as they cease to exist when the term expires. The policy’s expiration is when the insured attains a specific age or a particular number of years. Typically, term life policies are for 10, 15, or 20 years, or if calculated by age, they mature when the insured attains age 70, 75, or 80. In contrast, a whole life policy remains in force until the insured person’s death, or the policy maturity, whichever the policy specifies. However, a necessary condition is that all premium payments need to be up-to-date.
The Significant Highlights of a Final Expense Policy include:
- Face Value ranging from $1,000 to $50,000
- Coverage includes the full life of the insured (with a cap of 100 years or more)
- Accumulation of cash value, which is eligible for loans
- Unlinked to a prearranged contract (with a funeral home, like in preneed)
How Do You Apply For A Final Expense Insurance Policy?
Final expense insurance reviews help in choosing policies that are straightforward and easy to apply. You don’t have to undergo any medical exam to get the coverage, though the insurer may ask you a few health-related questions. It is a regular practice for insurance companies to seek Medical Information Bureau (MIB) reports, prescription checks, and an interview by a panel. Almost all the final expense insurance policy applications breeze through without any hitches. Such a policy is known as a simplified issue policy.
The other type of Final Expense Insurance policy is a guaranteed issue policy, where there are no medical or treatment-related questions to be answered. They are usually for people between the ages of 40 and 80, with the maximum coverage of $25,000. While simplified issue policies distinguish smokers and non-smokers, guaranteed issue policies do not.
How Do You Fill Out The Application?
Most of the application forms feature the disqualifying questions first, and if the answers are favorable to the insurer, the questions will focus on the best pricing for the carriers. However, you can expect both medical and non-medical questions, and the typical questions include:
- Date of Birth
- Medical history and medication details
What Coverage Does a Final Expense Policy Include?
As the name signifies, a final expense policy covers the funeral cost, which hovers around $10,000 at current prices. The other expenses covered include professional fees for wrapping up the estate, medical bills, outstanding bills, household expenses (clearing the household). The primary purpose of a final expense policy is to spare the family members the onus of the financial burden caused by a funeral.
If it is a level benefit policy, the policy pays the specified death benefit amount from day one, whatever the cause of death (includes death by accident). The payout is the face value of the policy. In contrast, a modified benefit policy features a death benefit that reduces after a period, around 36 months, also known as the restriction period.
Summing it Up
Final expense insurance policies ensure that the insured’s family does not experience financial distress while conducting the funeral. It also covers medical and other bills, leaving the family members without any encumbrances.