What Is Final Expenses Insurance, and Do I Really Need It?

If you have made it into your later adult years without life insurance, or if your life insurance will only cover your family’s living expenses if you die, it’s wise to consider other options. Final expenses insurance is one of these. Here, we will take a look at what it is and how it can fit into your estate planning strategy.

Final Expenses Insurance Explained

Final expenses insurance, which is also sometimes called burial insurance, is a life insurance policy. However, instead of the funds being earmarked to pay for things like your family’s mortgage and your children’s college, the money they receive upon your death is slated to go toward your funeral arrangements. 

Final expenses insurance can also be put toward paying off unpaid debts, including medical bills and unsecured personal loans. It’s important to sit down with your financial planner to determine how much coverage you need and how a final expenses policy can fit into your estate planning tactics.

Reasons to Buy

If you already have life insurance, you might be wondering why, exactly, you need yet another insurance policy. Although it is not a necessity, final expenses insurance does have a plethora of benefits, particularly if you only have minimal existing coverage. Aside from using the money for final expenses and to pay off debt, having a policy in place puts you in a better position to take control of your own end-of-life arrangements.

When you have a certain amount of money set aside, you can look at this benefit to decide how you want your funeral to play out. Using the dollar amount owed upon your death, you can work with a local funeral home to pre-plan. 

Planning might include things such as choosing your coffin, which you can purchase directly from your funeral planner or even from places like Amazon and Costco. You can also choose the type of viewing you want and prearrange for things like a video memorial. It is important to note that simply planning what to do with your final expenses insurance is not the same as a pre-paid funeral—something ElderLawAnswers warns against.

Another significant benefit of a final expenses insurance policy is cost. Because the benefit is low, your monthly payments will be manageable, often less than $50. And if you value your privacy and don’t wish to have an invasive blood test, which is a common practice in the insurance industry, you can likely avoid this.

Who Needs Final Expenses Insurance

While anyone can benefit from final expenses insurance, there are a few of us that should consider it sooner rather than later. If you have a family and have recently lost your job and company-sponsored life insurance policy, only have a small nest egg, or have no life insurance and do not want to burden your family, a burial policy is an affordable way to provide some financial protection for your loved ones. Further, retirees may also find it easier to qualify for a burial policy, and many insurers will issue them well into a person’s 50s, 60s, and even 70s.

What Other Insurance Policies Do I Need?

There are many different types of insurance. Home, auto, and health are the three that come to mind when most people think about financial precautions and safeguards. Everyone should have these types of protections in place, but it’s also important to understand what they do not cover. Auto insurance, for example, may cover personal injury protection and medical bills, but it does not offer a death benefit. 

Final expense insurance might not be something you relish thinking about. But if you want to protect your family and the integrity of your assets, it’s time to step out of your comfort zone. Talk to your financial planner or insurance agent about what final expense insurance can do for you and your family. You won’t regret it, but you can be sure your family will regret it if you don’t.

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