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Is Final Expense Insurance a Good Deal?

is final expense insurance worth it

This is a question that a lot of folks will ask from a variety of different perspectives.

For example, some folks may be wondering if a Final Expense or Burial Insurance Policy is a good deal for them personally?

While others…

May be wondering if a Final Expense Insurance Policy is a good deal for them to purchase on a family member? Perhaps maybe a parent or a sibling?

The good news is…

That unlike many other “types” of life insurance policies which may be purchased for a wide variety of different reasons, including:

  • Replacing one’s lost income,
  • Covering the cost of a mortgage,
  • Covering education costs,
  • Etc…

Which can complicate what “kind” of life insurance policy might be the best life insurance policy for you. Buying a Final Expense or Burial Life insurance Policy will usually only have one goal in mind…

“Covering one’s end of life costs.”

As a result…

Many of the complicated questions that usually need to be to asked and answered before one will know what “type” of life insurance is right for them usually won’t come into play. Instead, all we really need to know is if a family is…

“OK”

With having to pay between 7,000 to 15,000 dollars out of pocket for a “proper burial” or 3,000 to 5,000 for a proper cremation ceremony?

You see…

If you or your family are in a situation where you would be able to finance such an expense, then choosing to purchase a burial life insurance policy or a final expense insurance policy might not be right for you.

However…

If the idea of having to come up with these amounts suddenly would be significantly burdensome, choosing to purchase a small burial life insurance policy may end up being a suitable alternative or a “good deal” for you and your family.

So…

Now that we’ve helped folks get a better idea about whether or not a Burial Life Insurance Policy “might” be a good idea let’s now dive in a bit deeper and take a look at exactly what are some of the pros and cons of actually purchasing a Final Expense Insurance policy. And along the way, let’s take a moment and highlight some of the pitfalls one should avoid should they decide to purchase such a policy.


Pros and Cons of purchasing a Burial Life Insurance Policy.


Benefits of purchasing a Final Expense Insurance Policy.

  1. Small monthly payments vs. one large burial payment.

The main benefit of owning a burial life insurance policy is that you won’t have to pay an enormous lump of money to pay for a loved one’s funeral. This of course, assumes that you purchase a large enough burial life insurance policy to cover one’s costs and that that policy is “fully enforce” at the time of the insureds death (we’ll address what it means to be “fully enforce” later on during our “cons” portion of this article).

  1. Immediate benefit.

One reason why many folks will decide NOT to purchase a burial life insurance policy is that these types of policies are quite small. And while it may be true that an individual may not have 5 to 10 thousand dollars on hand right now to pay for a burial, many choose to believe that they could save this amount very quickly.

Now…

We could argue that if it were easy to save 5 to 10 thousand dollars in a relatively short period of time, many more amongst us would, but that’s not the point of our argument here. What we want to stress with this particular “Pro” is that if you can qualify for a burial life insurance policy that does not contain a “graded death benefit” (more on this later), your coverage will be immediate.

Meaning that…

Should you choose to purchase your burial life insurance policy today (absent any graded death benefit) and you die tomorrow, your policy should pay out in full, which in our opinion, is quite a good deal!

  1. Peace of mind.

The last “Pro” that we want to stress when it comes to purchasing a Final Expense Insurance policy is the “peace of mind” factor that comes along with purchasing such a policy. You see, for many, knowing that they have a whole life insurance policy with a fixed monthly cost that will provide a fixed death benefit for their loved ones when they die is an excellent source of comfort to them.

And while “technically”…

They may have been able to save for their burial on their own or may have been able to “finance” their burial some other way, knowing that they have a small life insurance policy that will be in place when they die can and often does provide an insured with a sense of peace that they won’t be a burden when they die.

 Now…

We could probably come up with another ten or so “Pros” why it may make sense to purchase a burial life insurance policy. However, our goal here in this article isn’t really to try to sell you on the “idea” of purchasing one of these types of policies. Instead, our only goal is only to point out why so many people do choose to buy these “types” of policies and form there help guide you in selecting the “right” burial life insurance policy for you and your family (should you decide to move forward).

Cons of purchasing a burial life insurance policy.

  1. Cost.

One of the major objections many individuals may have regarding a final expense insurance policy is that “dollar for dollar” they do tend to cost more than other “types” of life insurance policies (particularly if you are looking to purchase your final expense life insurance policy later in life).

  1. Confusing.

Despite what you might believe, it can sometimes be quite confusing trying to determine “which” final expense life insurance policy one should buy. This is because while it is true that all final expense life insurance policies are designed to help someone pay for their “end of life” expenses, not all final expense insurance policies attempt to do this in the same way.

Some…

Final expense insurance companies attempt to do this by offering a “term” period of coverage by which the insurance policy can be “renewed” for a set period of time at a new premium. In contrast, others attempt to accomplish this goal by offering a level payment whole life insurance option.

This is why…

Even though you may be led to believe that purchasing a final expense insurance policy is easy, you want to make sure to take your time and only work with an agent who will explain exactly how your insurance policy will work before actually applying for coverage.

Three questions that…

You’ll want to be sure you know the answer too before applying for coverage will be:

  • How long will my policy stay in force?
  • How much do I need to pay per month for my policy? And will that price every change during the life of the policy?
  • Will the death benefit (or coverage amount) change in any way over the course of the policy?
  • Does this life insurance policy contain a graded death benefit?
  1. Graded Death Benefits.

Unlike other types of life insurance policies, final expense life insurance policies and/or burial life insurance policies will often contain a “graded death benefit” clause. These types of clauses are typically reserved for final expense insurance policies that don’t require an individual to take a medical exam (no medical exam life insurance) or answer any health-related questions to qualify for coverage.

Consequently…

These “types” of life insurance policies are commonly referred to as “guaranteed issue life insurance policies” because technically, someone only needs to:

  • Be a US citizen,
  • Meet the minimum age requirement,

And live in a state where these types of life insurance policies are offered in order to be able to qualify for coverage.

Which means that…

Regardless of how sick you may be or how many pre-existing medical conditions you may have been previously diagnosed with, in theory, you should be able to qualify for these “types” of life insurance policies.

This is why…

Insurance companies attach Graded Death Benefit clauses to these types of life insurance policies, which will state that in order for a particular final expense insurance policy to pay out in the event of one’s death, they must first own the life insurance policy for a period of time.

This set period of time is usually 2 to 3 years, depending on the insurance company you choose to apply with.

Now…

Graded death benefit clauses only apply to “natural” causes of death, which means that should the insured die from some type of “accidental” cause of death such as a:

  • Motor vehicle accident,
  • Slip and fall,
  • Natural disaster,
  • Victim of crime,
  • Etc…

The final expense insurance policy would payout in full immediately. However, should the insured die of a “natural” cause of death, such as:

  • Cancer,
  • Heart disease,
  • Diabetes,
  • Covid 19,
  • Etc…

The policy would not pay out unless the graded death benefit period had expired!

The good news is…

That here at IBUSA, we offer a wide variety of different “types” of life insurance policies from dozens of different life insurance companies. This means that when it comes time to helping our clients find the “best” life insurance policy for you, we don’t have to rely on just one or two options.

It also means that…

We don’t have to try and “sell” you on the benefits of any one company or one policy. Instead, we’re usually able to provide most of our clients with multiple options for them to choose from and ultimately decide where or not a Final Expense Insurance Policy will be a good deal for them!

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