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End of life expense can be affordable!
Fortunately, you don't have to scramble to start saving every spare dollar for your final expenses. Several reasonably priced solutions are available if you are suddenly caught with no life insurance. Available options are, Pre-needs insurance, Burial insurance, Easy Issue Insurance, and Graded Benefit Life Insurance.
Pre-needs insurance—also called "final expense" insurance—is an alternative that has become more popular in recent years in spite of fears about scams and policies that could not be used. With this type of life coverage there is generally no medical, health or physical exam required. And if purchased from a reputable undertaker—with the proper provisions in place—pre-needs insurance can take care of the final expenses so your family won't have to.
Pre-needs insurance is simply a type of policy for which you pay a premium, and the benefit goes to the funeral home. The policies can be written in a variety of ways. For example, you can pre-select everything you want at your funeral, from type of casket, to service accessories, number of cars, and so forth. When you have made your selections, the funeral director can add all the costs and sell you an insurance policy with a face value that will cover your choices. Usually you will receive some sort of guarantee that the costs will not exceed the face value of your policy. Also, you want to make sure the policy can be moved from one state to another in case you decide to relocate.
With another type of final expense policy, you simply choose a face value that you do not want your funeral to exceed. When you die, the benefit will go to the funeral director first. However, if the face value exceeds the actual cost at the time, any additional funds should go to a beneficiary. It's something you have to ask about as many funeral directors will assume that they are to have the entire face amount regardless of costs unless your contract indicates something different.
Burial insurance is often so-named because people think of it as just enough life insurance to pay final expenses. However, when purchased through an insurance company, it is actually just a small whole life policy. Because of the small face value, there will usually be limited health questions.
If your health is such that you cannot get whole life burial insurance, you can still get a graded benefit life. With the graded benefit, you must live two years before the entire face value will be paid. If you die in the first two years, your beneficiary receives the premium plus interest—except in the case of an accident whereupon he/she receives the entire face value. A graded benefit policy is a "guaranteed issue," meaning you cannot be turned down. It is more expensive than whole life, but is a good policy if you have no other options.
When calculating the amount of final expense insurance you will need, you should keep in mind the following expenses. Some are optional. Your choices plus the amount of money you want to leave for final unpaid bills like medical bills and taxes should influence your decision. You may find additional peace of mind by allowing a reputable agent to sit down with you and help you decide how much coverage you actually need.
Key Features of Burial Insurance
- Burial insurance is whole life with cash value
- Premiums and benefits remain level
- Easy medical underwriting
- Face values available to fit your needs
- Simplified application
- Generally, anyone under 85 can be insured even if it means a graded benefit
- Benefit is paid to a beneficiary tax free
- Double indemnity available in the event of death by an accident
- Loans can be taken against the policies
