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How do final expense insurance policies work?

Because unlike other more “traditional” types of life insurance policies, which are referred to by a specific need, it’s not all that uncommon for folks to become a bit “confused” about how final expense policies or burial life insurance policies work.

For this reason…

We wanted to take a moment and discuss “how” final expense insurance policies work and focus on a few key “points” one should be aware of so that they can be sure to find the “best” final expense policy for their family.

Questions that will be addressed here in this article will include:

  • How do final expense policies work?
  • How does one apply for a final expense insurance policy?
  • What should you be aware of when shopping for a final expense insurance policy?
  • What can someone do to find the “best” final expense insurance policy for themselves?

So, without further ado, let’s dive right in!

How do final expense policies work?

Final expense life insurance policies or burial life insurance policies work like any other “type” of life insurance policy, whereby an insured will agree to pay a certain monthly or annual premium in exchange for a certain amount of life insurance coverage.

In fact…

The only real difference between the CONCEPT of a “burial life insurance policy” and a “traditional life insurance policy” is that burial life insurance policies tend to be much smaller and are referred to or “called by” the intended purpose of the policy itself.

The only problem is…

That while the CONCEPT of a final expense insurance policy may remain the same regardless of what “type” of final expense insurance policy you purchase, there will be differences between the different “types” of final expense insurance policies that are available. 

Differences that are often determined by what one needs to do to APPLY for coverage.

How does one apply for a final expense insurance policy?

One nice thing that tends to remain constant with all final expense insurance policies is that most (if not all) of them WON’T require an applicant to take a medical exam (no medical exam life insurance). This means that you should be able to purchase your policy 100% online and not have to meet face to face with an insurance agent.

It also means that…

There is a very good chance that you can complete the entire application process from start to finish in just a few minutes and receive your approval in less than 24 hours.

“Which is great!”

But watch out!

Because sometimes the “speed” and “ease” of applying for coverage and getting approved will cause some folks to act too quickly and purchase a final expense policy that they don’t fully understand. This is why we now what to shift gears a little bit and discuss…

What should you be aware of when shopping for a final expense insurance policy?

The first thing that you’re going to want to be aware of is that when shopping for a final expense life insurance policy, chances are you’re going to be offered one of two DIFFERENT types of insurance policies. Neither policy will require you to take a medical exam; however, one type will require you to “medically qualify” for coverage and likely order several “reports” during underwriting, which may prevent you from qualifying for coverage.

Reports such as:

  • A prescription medication database check,
  • A DMV and/or criminal background check,
  • A credit report,

And a MIB or Medical Information Bureau report, which will provide an insurance company with a record of any previous life insurance applications you may or may not have submitted.

This “type” of final expense insurance policy…

Is commonly referred to as a Simplified Issue Final Expense insurance policy and is not one that everyone will be able to qualify for. The good news is that if you are able to qualify for a Simplified Issue Life Insurance policy, these “types” of final expense insurance policies will often cost less than Guaranteed Issue Life Insurance Policies (or policies that don’t require one to have to “medically qualify” for coverage).

The potential “bad news” about…

These types of life insurance policies is that there are a wide variety of different “types” of Simplified Issue Final Expense Insurance Policies, which means that it can often become quite confusing when trying to determine “which” simplified issue final expense life insurance policy is going to be the “best” for you.

This is why…

We always recommend that clients ask four basic questions about the life insurance policy they are considering to be aware of “how” their life insurance policy works. Second, they are HAPPY with how it works.  

These 4 basic questions are:

  • How long will the policy that I’m being offered last? Will it last my WHOLE LIFE or is it a TERM INSURANCE policy?
  • How much insurance am I being offered, and can this amount change over the life of the policy?
  • How much do I need to pay for my coverage, and will this price ever change over the life of the policy?
  • Will my policy cover me for ALL causes of death (Natural and Accidental) immediately upon approval?

The reason why…

Knowing the answers to these questions is important is because not all simplified issue life insurance policies will last one’s entire life or have a “level payment” for the life of the policy, which is why it’s important to know that right away so that you can ask…  

“What happens to my policy when it changes?”

It’s also important to…

Understand whether your life insurance policy will provide immediate coverage for all CAUSES of death because if it doesn’t, chances are you’re not actually purchasing a Simplified Issue Final Expense Insurance Policy. Instead, you’re purchasing a Guaranteed Issue Life Insurance Policy, which will contain a pretty significant CLAUSE within it (Referred to as a Graded Death Benefit), which may make you want to reconsider purchasing that “type” of final expense insurance policy.

Guaranteed Issue Life Insurance Defined.

Guaranteed issue final expense insurance policies are the second most common “types” of life insurance policies available without taking a medical exam. In fact, unlike a simplified issue life insurance policy, which will require an applicant to answer “health-related” questions and may order a series of reports before approving deciding an applicant’s application, a guaranteed issue life insurance policy will only concern itself about three things.  

 Which are:

  • Are you a United States Citizen?
  • Do you meet the minimum age requirements?

And do you live in a state where these “types” of life insurance policies are offered? If so, you will be approved for coverage. If not, you won’t, regardless of how healthy (or unhealthy) you may be.

“But be warned!”

Because in addition to costing a bit more than most simplified issue life insurance policies (in most cases), all guaranteed issue life insurance policies will contain a GRADED DEATH BENEFIT, which is a clause written into the policy which will create a waiting period (typically 2 to 3 years) before the insurance policy will begin to cover an insured for NATURAL causes of death such as a heart attack, stroke, cancer or diabetes. (Accidental causes of death such as those suffered from a slip and fall or motor vehicle accident would be covered immediately).

“This is why it’s so important to take your time when shopping for a final expense insurance policy and be sure you COMPLETELY understand what you are purchasing before you decide to apply for coverage”.

What can I do to find the “best” final expense insurance policy for themselves?

The first thing you can do to make sure that you find the “right” final expense life insurance policy for you and your family is to make sure that you consider all of your options (or at least several) before deciding to apply for coverage.

Now we can…

Understand why it may seem a bit “daunting”, especially if it means having to speak with several different life insurance agents! But that’s not what we’re suggesting. What we’re suggesting is that if you are seriously considering purchasing a final expense life insurance policy, take a moment and give an insurance brokerage like IBUSA a call before you actually apply for coverage.

This is because…

Here at IBUSA, we will be able to shop dozens of different life insurance companies simultaneously for you, which will allow you to instantly compare both prices and options!

So, what are you waiting for? Give us a call today, and let us show you what we can do for you!

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