Final Expense Insurance vs. Life Insurance: What’s the Difference & Which One Should You Get?

Final expense insurance is a type of whole life insurance that provides a death benefit. The difference between final expense vs. life insurance is that the former has a smaller death benefit, an easier application process and the option for beneficiaries to receive the benefit in a lump sum or monthly installments.

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Last Updated: 11/13/2022
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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

Final Expense Insurance
  • A type of whole life insurance policy.
  • Has a small death benefit.
  • Mainly used for final expenses like funeral costs or medical bills.
Other Types of Life Insurance
  • 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
    traditional whole life insurance
    policies

    Can be more affordable if you get
    term-life insurance

  • Cash value

    Has no cash value

    Has cash value if you have whole life or
    universal life insurance

  • Death benefit

    Has a small death benefit meant for
    final expenses

    Has a large death benefit to replace
    income for beneficiaries

  • Main Purpose

    Is mostly for final expenses or burial
    costs

    Is better for estate planning and leaving
    an inheritance or to replace your income

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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.

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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
    The cash value of a permanent life insurance policy can be useful, but it might not give you as much in investments as you’d like. Instead, you may want to get a cheaper term life insurance policy and invest the premium difference into options you like best.

  • College fund

    Life Insurance
    A term life policy is a better option if you’re looking to save funds for your child’s college tuition. This way, you can get coverage at a more affordable price and use the rest towards a college fund.

  • Estate planning

    Life Insurance
    If you’re estate planning, a life insurance policy is better than final expense insurance as it has a larger benefit. Both term life and whole life are good options, and term life is usually more affordable.

  • Final expenses

    Final Expense Insurance
    If you’re only looking for insurance to give your beneficiaries something to help pay for your burial and funeral costs, then final expense insurance is a good option.

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IS FINAL EXPENSE LIFE INSURANCE WORTH IT?

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.

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Ensure you are getting the best rate for your insurance. Compare quotes from the top insurance companies.

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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 the Author


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Mark Fitzpatrick is a senior content manager with MoneyGeek specializing in insurance. Mark has years of experience analyzing the insurance market and creating original research and content. He graduated from Boston College with a Bachelor of Arts and Johns Hopkins University with a Master of Arts.