Final Expense Life Insurance: How It Works, Benefits & Whether You Should Buy

Final expense life insurance provides insurance coverage for burial, funeral and other related final expenses, which is how this policy got its name. It’s a permanent whole life insurance policy mainly for seniors because it has a smaller death benefit coverage to pay for end-of-life costs.

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Last Updated: 9/8/2022
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Final expense life insurance is a type of whole life insurance geared towards seniors 50 and older, offering small death benefit amounts to pay for final expenses. Final expenses life insurance is also called burial insurance or funeral insurance since many beneficiaries use death benefit proceeds to pay for the insured’s funeral or burial expenses.

Currently, burial and funeral final expenses could cost $10k or more. Final expense whole life insurance can pay for the costs, so your loved ones don’t have to carry the financial burden. Final expense life insurance for seniors locks in your rates and the coverage amount, plus provides a cash value savings account you can access while you’re still alive.

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Key Takeaways

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Final expense life insurance is a type of whole life insurance geared towards seniors. It has small coverage amounts, builds cash value and offers locked-in rates.

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A 60-year-old can expect to pay between $31 and $75 per month for $10k in coverage or $62 to $98 per month for $25k in coverage.

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Final expense whole life insurance is best for someone who has been denied coverage, doesn’t qualify for term life, has serious health issues or only needs a small coverage amount.

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What Is Final Expense Life Insurance?

Final expense life insurance is for seniors needing a small amount of coverage for estate planning and who prefer not to take a medical exam. You can buy coverage directly from final expense life insurance companies or insurance brokers offering life insurance for final expenses. When comparing final expense insurance vs. life insurance, final expense insurance can be expensive.

For instance, life insurance rates for a 60-year-old with a 10-year term policy and $500,000 in coverage are around $137 per month. The same 60-year-old would pay between $62 and $98 per month for $25,000 in senior final expense life insurance. There are two types of final expense life insurance. The type you choose or qualify for will affect the price.

1

Simplified Issue Life Insurance

This type of final expense insurance doesn’t require a medical exam but has health questions on the application. It’s cheaper than guaranteed acceptance because your health factors into the insurance company’s decision. If you’re turned down for simplified issue final expense life insurance or don’t qualify, you have another option available.

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Guaranteed Acceptance Life Insurance

Guaranteed acceptance insurance is final expense life insurance with no medical questions or exams. You can’t be turned down, regardless of your health status. Since your health risk isn’t a factor, final expense life insurance rates are the most expensive. You’ll get cheaper rates If you’re looking for more affordable rates and can qualify for simplified issue final expense insurance by answering health questions.

How Does Final Expense Life Insurance Work?

Final expense life insurance works like any other life insurance contract. When you die, your beneficiary receives the death benefit. They can use the money for any reason, including paying for your end-of-life costs and final expenses.

If you have specific needs or wishes for your death benefit, communicate them to your beneficiary, understanding that they can use the money any way they choose. Consider these final expense insurance qualities to help you decide if it’s the right fit.

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    Very few requirements

    It’s easy to apply for final expense insurance and to qualify for coverage. Final expense life insurance doesn’t require a medical exam. Those who apply for guaranteed issue life insurance don’t have to answer medical questions or take an exam. You just have to meet the age criteria (if applicable), choose your coverage amount and apply.

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    Very expensive

    Compared to other types of life insurance, final expense insurance can be costly. Without a medical exam to decide the insured’s risk, the insurance company will use high-risk final expense life insurance rates instead.

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    Guaranteed death benefit

    The death benefit amount is guaranteed to be paid upon death, as long as the policy premiums are paid. The beneficiary can use the death benefit for anything; it is up to them to decide how to use it.

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    Cash value

    Since it’s a whole life policy, final expense insurance builds cash value over time. It grows tax-deferred, and you can access it while still alive. You can borrow against it or use the cash value to pay premiums instead of paying them out-of-pocket. The insurer will deduct any outstanding loan balance from the death benefit upon death.

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    Level premiums

    Premiums are locked in from the day the policy is approved. No matter how old you get, you’ll never pay more for your coverage as long as the policy stays in force. The policy may be paid in full once you reach a certain age (usually 100) depending, on the policy and insurance company,

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    Fast decision

    The application process is fast and easy, and coverage is typically approved within a few days, and you may even get approval the same day. Coverage starts after the company approves the policy and receives the first payment.

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Though the application process can differ with final expense insurance vs. life insurance, once coverage is approved, it works the same. You pay the premiums at regular intervals, usually monthly or yearly. When you die, your beneficiary notifies the insurance company. Once approved, your beneficiary will receive a tax-free lump sum death benefit within 30 days of filing the death claim.

How Much Does a Final Expense Life Insurance Policy Cost?

For a final expense life insurance policy, the average 60-year-old can expect to pay an average of $31 to $75 monthly for $10k in coverage. The average cost of $25k in coverage would be $62 to $98 per month. Final expense life insurance for seniors over 80 would cost around $98 to $240 for $10k in coverage. The same 80-year-old would pay between $198 to $400 monthly for $25k in coverage.

How much final expense coverage do I actually need?

Average Monthly Life Insurance Premium by Age per Coverage Level

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  • Age
    $10k Coverage
    $25k Coverage
  • 60
    $31–$75
    $62–$98
  • 70
    $69–$115
    $103–$221
  • 80
    $98–$240
    $198–$400
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Not all final expense life insurance companies are the same. We analyzed dozens of companies to help you choose. Before you get final expense life insurance quotes, check out our picks for the best final expense life insurance companies.

Should You Purchase Final Expense Life Insurance?

Whether you should purchase final expense life insurance is a personal choice. This policy benefits seniors who only need a small amount of coverage and don’t want to burden loved ones with funeral or cremation costs.

You should consider your age, health and financial needs to decide if life insurance for final expenses is right for you. There are several reasons final expense insurance may be the right choice, like paying for your final expenses, debts, spousal income or leaving a legacy for your family or a favorite charity.

1

Pay for end-of-life expenses

You can use final expense insurance to pay for end-of-life expenses, including medical bills, in-home care, burial, cremation and funeral costs. Seniors can consider the death benefit when helping to plan their funeral services, knowing their loved ones won’t be burdened with the expenses when they die.

2

Pay off debts

If you expect to have other debts when you die, your beneficiary can use the final expense proceeds to pay for it. Debts can include your mortgage, student loans, credit cards or a car loan.

3

Leave an inheritance

Leaving an inheritance or legacy to younger generations is another reason seniors choose final expense insurance. You can direct your wishes in your will and select a beneficiary you know will honor them.

4

Supplement spouse’s income

Another way to use final expense death proceeds is to supplement your spouse’s income. If you’re worried about your spouse being able to finance their lifestyle after you’re gone, you can buy final expense insurance to help.

5

Leaving something for charity

If you don’t want to leave an inheritance and can fund your final expenses, you can name a charity as your beneficiary. This action will leave a legacy to a cherished foundation of your choosing, so they can use the funds and remember you after you’re gone.

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Not qualifying for a term life policy

Final expense life insurance may be your next best option if you can’t qualify for term life because of your age or health. With no medical exam requirement, it can often be easier to qualify for than other types of permanent life insurance.

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MONEYGEEK DICTIONARY

Burial insurance and final expense life insurance are two terms used interchangeably to mean the same thing. Final expense insurance is also often called funeral insurance. The policy got these names because it is mainly used to pay for final expenses, such as funeral or burial costs.

Frequently Asked Questions

Still have questions about final expense life insurance? Here are the answers to some of the most common questions about life insurance for final expenses.

About the Author


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Mandy Sleight is a professional freelance writer and licensed insurance agent. She has her property, casualty, life, and health licenses and has been working in the industry since 2005. Mandy has worked for well-known insurance companies like State Farm and Nationwide Insurance, and most recently as the Operations Coordinator for a start-up employee benefits company.

Mandy earned her Bachelor of Science degree in Business Administration and Management from the University of Baltimore and her Master in Business Administration from Southern New Hampshire University. She uses her vast knowledge of the insurance industry and personal finance combined with her writing background to create easy-to-understand and engaging content to help readers make smarter choices with their budget and finances.