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Final Expense Insurance (Pros and Cons)

Death, taxes, and funeral expenses are the three certain things in life that you can’t escape from. But, at least when it comes to one’s funeral costs and burial expenses, that’s something that you’re not going to have to deal with.  Right?

Unless of course, you don’t want to burden your family members and other loved ones with this expense.  In that case, you may want to consider purchasing a final expense life insurance policy as they are frequently the perfect solution for those who want to ensure their final expenses and burial costs are taken care of, without putting that financial burden on family members and other loved ones.

But before you go ahead and apply for a policy, let’s first take a look at the pros and cons of final expense insurance, so you can decide if it’s the right choice for you.

What is Final Expense Insurance?

A final expense insurance policy, also known as “burial insurance” or “funeral insurance” is essentially a type of insurance that covers the costs of your funeral and burial expenses, in case you die.

It’s sort of like a pre-paid funeral plan, only in this situation, the money you pay each month/year goes towards paying for an insurance policy rather than to a specific funeral home.  This way, when you die, your loved ones will receive the death benefit from your policy, which can be used how they see fit (including paying for your final expenses and funeral costs).

Think of it as a “peace of mind policy” for you and your family. It’s a way to say “Hey, I got this” without having to go through all the “nitty gritty” of planning a service and making payments to a funeral home or funeral director.

Advantages of a Final Expense Insurance Policy

  1. You can plan and pay for your funeral costs and burial expenses in advance, without leaving your loved ones to haggle with funeral directors at the last minute.
  2. Your loved ones won’t have to worry about the expenses of your final send-off, they can grieve and remember you in peace, instead of worrying about paying medical bills and other lingering debts.
  3. Unlike other types of insurance, final expense policies are permanent life insurance, so you don’t have to worry about the policy expiring or the premium increasing as you get older.
  4. “Die Rich or Poor, but die with dignity” : With a final expense insurance policy, you can ensure that you have a proper send-off, regardless of your financial situation.
  5. The death benefit from a final expense insurance policy can be used to pay off any outstanding debts you may have, so your loved ones don’t have to.  Unlike other options like a prepaid funeral plan, insurance death benefits can be used to pay for whatever your beneficiaries see fit.
  6. You can have peace of mind knowing that your loved ones will be taken care of in your absence.

Disadvantages of a Final Expense Insurance Policy

  1. These policies may only be available to people within a certain age bracket and may be more expensive for older individuals.
  2. They may be more expensive than term life insurance, so it may not be the most affordable option for everyone.
  3. Some final expense policies may require a medical exam and may ask for detailed personal information.
  4. With final expense insurance, the earlier you buy it, the less you pay for it. So, if you’re not ready to face the fact that one day you will die, you can end up paying more down the road.

Factors to consider when choosing a final expense insurance policy

  1. Coverage amount: Determine how much coverage you need to cover any outstanding debts or expenses you may leave behind. Most final expense insurance policies will only provide up to $25,000.  Will that be enough coverage?
  2. Premiums: Compare the cost of premiums from different insurance providers to find the most affordable option.
  3. Term or permanent coverage: Decide whether you want a term policy that lasts for a specific period of time or a permanent policy that lasts for your entire life.
  4. Guaranteed acceptance: Consider if you want a policy that does not require a medical exam or health questions, but may have higher premiums.
  5. Beneficiaries: Make sure to specify who you want to receive the death benefit in the event of your passing.
  6. Company’s reputation: Research on the insurance company’s reputation, look at the company’s ratings, and read customer reviews
  7. Speak with a seasoned independent insurance agent: They can help you understand the different options available and make an informed decision based on your specific needs and budget.

Three things you must know before applying for final expense coverage

Here at IBUSA, we generally recommend that all of our clients look for final expense policies that have a level premium, a level death benefit, and don’t contain a graded death benefit (if at all possible).

#1.  Does the policy have a Level premium payment?

Level premium life insurance is a type of life insurance where the premium remains the same throughout the policy term. This means that the policyholder pays the same premium amount each year, regardless of their age or health status.

Level premium policies can come in the form of term life insurance or permanent life insurance. It’s important to keep in mind that while level premium life insurance can provide predictable costs.

And while the premiums may be initially higher than other types of life insurance having the security of knowing that the price won’t become unaffordable later on is generally worth it to those seeking a lifetime of coverage.

#2.  Does the policy have Level death benefit?

A level death benefit, in the context of life insurance, refers to a policy where the death benefit, or the amount that the beneficiaries will receive in the event of the policyholder’s death, remains the same throughout the policy term. This means that regardless of when the policyholder passes away during the term of the policy, the death benefit will be the same.

Level death benefit policies can come in the form of term life insurance or permanent life insurance. Term life insurance is coverage for a specific period of time, typically 10, 20, or 30 years, and the death benefit remains the same throughout the term.

Permanent life insurance, such as whole life or universal life, is coverage for the policyholder’s entire life, and the death benefit also remains the same for the entire life.

Level death benefit policies provide financial security for the policyholder’s beneficiaries in the event of their passing. It ensures that the beneficiaries will receive a fixed amount of money regardless of when the death occurs.

This can be helpful for families that have a mortgage or other debts to pay off, as well as for providing for the needs of the surviving family members.

#3.  Does the policy contain a graded death benefit?

Graded death benefit policies are typically found in guaranteed issue or simplified issue life insurance policies, which are intended for people who have health issues or are older and may not qualify for traditional life insurance policies and states that the policy will not provide any coverage for natural causes of death for the first 2-3 years (depending upon the insurance carrier).

After the graded death benefit period (waiting period) expires, the death benefit will pay the insured beneficiaries the full face value of the policy.

Graded death benefit policies can be helpful for people who may not qualify for traditional life insurance policies, and can provide some coverage for their beneficiaries in case of an untimely death.


Now as one can see, final expense life insurance policies can be a valuable tool for covering the costs of a person’s funeral and burial expenses. It can provide financial protection for loved ones during a difficult time and can help alleviate the financial burden of these expenses.

However, it is important to consider the pros and cons of final expense insurance before purchasing a policy. While it can offer peace of mind and protection for loved ones, it may not be the most affordable or flexible option for everyone.

Also, it’s important to weigh the options and speak with an insurance professional to determine if final expense insurance is the right choice for you.

Fortunately, we here at IBUSA offer a wide variety of different final expense products in additional to more traditional term and whole life insurance policies as well, so should you choose to give us a call, we’ll be able to review all of your options with you.

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