The difference between life insurance and final expense insurance is that the latter has a smaller benefit and an easier application process. This makes it a good option for seniors who want to provide their loved ones with enough funds to cover final expenses, but there may be better options for those who are estate planning.
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What Is the Difference Between Final Expense Insurance and Life Insurance?
Final expense insurance is a type of whole life insurance with a specific purpose: to pay for any costs associated with your death, such as funeral expenses. With final expense insurance, the death benefit is significantly smaller than other types of life insurance and the application process is often more straightforward.
Final Expense Insurance vs. Life Insurance
- A type of whole life insurance policy.
- Has a small death benefit.
- Mainly used for final expenses like funeral costs or medical bills.
- Offered as term, whole, universal or variable life insurance.
- Has a larger benefit than final expense insurance, with a rule of thumb being it should be 10X your annual salary.
- Used for various expenses, such as college or day-to-day expenses.
If you’re trying to determine whether you need final expense insurance vs. life insurance, consider that final expense insurance is best for small, short-term expenses you expect your beneficiaries to pay after your passing, such as funeral costs. Conversely, life insurance is best for large, long-term expenses to help your beneficiaries financially in your absence.
Benefit | Final Expense Insurance | Other Types of Life Insurance |
|---|---|---|
Affordability | Costs almost the same as | Can be more affordable if you get |
Cash value | Has no cash value | Has cash value if you have whole life or |
Death benefit | Has a small death benefit meant for | Has a large death benefit to replace |
Main Purpose | Is mostly for final expenses or burial | Is better for estate planning and leaving |
Overall, final expense insurance is better for seniors who only want coverage for final expenses. However, getting a no medical exam policy may be better if you are a senior with a challenging medical condition or someone who doesn’t want to go through a medical exam.
No medical exam insurance includes instant, simplified and guaranteed acceptance life insurance. These policies are easier to qualify for and may offer higher coverage, letting you leave something for your loved ones aside from coverage for final expenses.
Cost of Final Expense Insurance vs. Life Insurance
In terms of life insurance costs, final expense insurance is a type of whole life insurance with a smaller death benefit, which may be cheaper. On average, a final expense life insurance policy costs $62 to $98 monthly for $25,000 in coverage for a 60-year-old.
Review our infographic below to see the difference between final expense and life insurance.
While final expense life insurance is a type of whole life policy, it’s usually cheaper given its overall purpose. Generally, final expense policies are meant to cover short-term, small expenses — not larger expenses like mortgages or college.
Should You Get Final Expense Insurance or Life Insurance?
In most cases, a traditional life insurance policy (term, whole, universal or variable) offers more coverage than final expense insurance. However, final expense insurance is an excellent way to go if all you want to cover is burial costs after your passing, whether because your beneficiaries are financially independent or you want a more straightforward option.
Review our table below to help decide which option is best for your situation.
Goal | Best Option |
|---|---|
Retirement fund | Life Insurance |
College fund | Life Insurance |
Estate planning | Life Insurance |
Final expenses | Final Expense Insurance |
Final expense insurance is a good option if you’re a senior who wants enough coverage for final expenses. You can compare options to find the best final expense insurance providers.
You can also compare the best term life insurance providers if you’re looking for another option that has affordable coverage with a larger death benefit.
Compare Life Insurance Rates
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Frequently Asked Questions
When it comes to life insurance, understanding the differences can be confusing. MoneyGeek has answered some frequently asked questions below to help you understand the difference between final expense and life insurance.
About Mark Fitzpatrick
