To protect their family members from burdensome end-of-life costs, many people choose to purchase final expense insurance, which is also called burial coverage. Policies pay for costs associated with the policy holder’s death, as well as expenses that family members may not be able to manage on their own, after the policy holder dies. Policies pay a set amount to a beneficiary, who then uses the money to pay end-of-life expenses.
For some, final expense policies may be an alternative to life insurance. If a person does not qualify for traditional life insurance, he or she may purchase a guaranteed final expense policy, which will require no medical exam. Also, the smaller face value of the policy means that premiums will be more affordable. On the other hand, for those who do have whole or term life policies, burial coverage will help the family pay expenses, while beneficiaries wait for the life insurance benefit to be paid.
Guaranteed burial coverage is a good choice for people who are not in good health. Guaranteed burial coverage requires no medical exam, so policy holders will not be disqualified for preexisting conditions. Premiums are slightly higher, and policy holders may have to wait for two to three years, to be vested into death benefits. However, if a policy holder passes before becoming vested, the premiums will be refunded to the beneficiary.
Simplified burial coverage is a good choice for healthy adults. Medical screening is required for simplified policies, but premiums are generally lower. In addition, simplified policies will pay end-of-life costs without requiring the policy holder to wait to become vested.
Clients should determine their coverage based on a number of factors. Funeral expenses, of course, are the major consideration, and clients should consider costs for the funeral, the minister, the hearse, and the cemetery plot. Clients should also consider rolling in expenses, like mortgage payments, or legal fees for probate, which family members may not be able to pay out-of-pocket.
Unfortunately, people must beware of burial policy scams. Premiums should be reasonable, and clients should pay no penalty for cancellation. Also, the funeral costs at the time of death should be paid in full, and not based on what funeral costs were at the time that the policy was purchased. Additionally, a family member, not the funeral home, should always be the policy’s beneficiary.
Clients should begin by tabulating their expected end-of-life costs. Then, clients should contact an agent, or fill out an online form, asking for a policy quote. When clients have found good coverage, at a good price, they should choose a beneficiary, and make sure that the beneficiary knows where policy documents are kept.
Burial benefits are usually paid within twenty-four hours of the policy holder’s death, allowing families to pay for funeral expenses immediately, without worrying about the accrual of late fees. Also, credit life insurance policies may pay for added expenses, like mortgage costs, or probate costs, while the family waits for life insurance benefits to be paid. For many families, final expense insurance, either on its own, or as a supplement to a whole or term life policy, will provide important financial support during difficult times.
