What Is Final Expense Insurance and How Does It Work?

If you've heard the terms final expense insurance, burial insurance, and cremation insurance, you may have wondered what the difference is.

Usually, there isn't one.

They're different names commonly used for the same basic kind of life insurance.

And the insurance itself is surprisingly simple.

Final expense insurance is generally whole life insurance in a smaller amount, commonly $50,000 or less, designed especially for people who want permanent coverage for the expenses and financial needs their family will face when they pass away.

It isn't money that can only be spent on a funeral.

The death benefit is paid to your beneficiary, and your beneficiary can generally use that money for whatever is needed.

That might include:

• Funeral or memorial expenses
• Burial or cremation
• Final medical bills
• Credit cards or other debts
• Travel expenses for family members
• Household expenses
• Money left for children or grandchildren
• Anything else your family needs

The simplicity of final expense insurance is one of its greatest strengths.

You know what you're paying.

You know how much coverage you have.

And with traditional whole life final expense coverage, it is designed to remain there for the rest of your life as long as you maintain the policy.

In Short

• Final expense insurance is usually a smaller whole life insurance policy.
• Final expense insurance, burial insurance, and cremation insurance generally describe the same type of coverage.
• Coverage amounts are usually smaller than traditional large life insurance policies, often $50,000 or less.
• The money doesn't have to be used only for a funeral.
• Traditional final expense whole life is designed to last for your entire life rather than expire after 10, 20, or 30 years.
• The scheduled premium is fixed and doesn't increase simply because you get older or your health gets worse.
• Many final expense policies require no medical exam.
• Applications are usually much simpler than traditional fully underwritten life insurance applications.
• Many companies can make underwriting decisions electronically and very quickly.
• Health problems don't automatically prevent you from getting final expense insurance.
• Guaranteed Issue coverage can provide an option even for people with very serious health problems who cannot qualify for medically underwritten coverage.

Is Final Expense Insurance the Same as Burial Insurance?

Yes.

This causes far more confusion than it should.

You may see advertisements for:

• Final Expense Insurance
• Burial Insurance
• Funeral Insurance
• Cremation Insurance

Those names generally describe the purpose for which a smaller permanent life insurance policy is being purchased, rather than completely different categories of life insurance.

Someone planning a traditional funeral may call it burial insurance.

Someone planning to be cremated may call it cremation insurance.

The insurance product behind those names is commonly a small whole life insurance policy.

We generally use the term final expense insurance because it's broader.

Your family may have expenses beyond the funeral itself.

Is Final Expense Insurance Just Whole Life Insurance?

Yes.

Final expense insurance isn't usually an entirely separate species of life insurance.

It's generally whole life insurance being used for a particular purpose and sold in coverage amounts appropriate for that purpose.

Whole life is permanent insurance.

Unlike term insurance, it isn't designed to disappear after 10, 20, or 30 years.

That's particularly important for final expenses.

If you're 68 years old and buying insurance because you don't want your children paying for your funeral, you don't want to wonder:

"Will I still have this when I'm 88?"

That's the problem permanent whole life insurance is designed to solve.

If properly maintained, the coverage doesn't expire simply because you lived longer than expected.

Learn more: Should I Pick Whole Life or Term?

How Much Final Expense Insurance Can You Buy?

Final expense policies are generally smaller than the large policies commonly used for income replacement.

Someone with young children might need $500,000 or $1 million of term insurance because they're protecting decades of income.

Someone buying final expense insurance has a different goal.

They might need:

• $10,000
• $15,000
• $50,000

The appropriate amount depends on what you want the money to accomplish.

Some people want just enough to cover a simple cremation and a few final bills.

Others want enough for a traditional funeral and burial.

Others want the funeral covered and an additional amount left behind for their children or grandchildren.

There isn't one correct amount.

The question is:

What do you want your family to have when you're gone?

Learn more: How Much Coverage Do You Need?

Does Final Expense Insurance Only Pay for a Funeral?

No.

This is another misconception caused by names like "burial insurance."

You're buying life insurance.

When the insured passes away, the death benefit is paid to the beneficiary according to the policy.

The beneficiary isn't generally handed a check that says:

"FOR FUNERAL USE ONLY."

If there is money left after the funeral, it doesn't disappear.

Your beneficiaries can use the death benefit for the needs they have.

That's one reason some people intentionally purchase more coverage than they expect their funeral to cost.

They don't merely want to pay for their own final arrangements.

They want to leave something behind.

Why Is Final Expense Insurance So Popular With Seniors?

Because it's designed around a need seniors actually have.

A 35-year-old and a 75-year-old usually aren't buying life insurance for the same reason.

At 35, someone may have:

• Young children
• A large mortgage
• 30 years of income ahead of them
• College expenses in the future

That person might need hundreds of thousands of dollars of term insurance.

Later in life, the picture is often different.

The children may be grown.

The mortgage may be paid off or much smaller.

Retirement income may have replaced employment income.

The need for $500,000 of temporary income replacement may have disappeared.

But one financial need hasn't disappeared.

Eventually, someone will have to deal with the expenses that come at the end of your life.

Final expense insurance is designed specifically around that reality.

Learn more: When Is It Too Late to Buy Life Insurance?

Do I Need a Medical Exam for Final Expense Insurance?

Usually, no.

Many final expense policies use simplified underwriting.

That generally means:

• No nurse comes to your home
• No blood draw
• No urine sample
• No EKG
• No traditional physical examination

Instead, the application normally includes a relatively short set of health questions.

The company may also electronically verify information such as prescription history and other underwriting information with your authorization.

For many people, the process is surprisingly quick.

Learn more: Why Do They Ask Medical Questions If There's No Exam?

Why Do They Ask Health Questions?

Because answering a few health questions may actually help you get better coverage for less money.

If an insurance company knows enough about your health to determine that you qualify for immediate coverage, it can price the policy accordingly.

That's usually preferable to automatically placing everyone into a policy with a waiting period.

The important thing is that insurance companies don't all ask the same questions or treat the answers the same way.

That's where shopping among companies becomes particularly valuable.

Learn more: Can I Get Life Insurance If I Have Health Problems?

Can I Get Final Expense Insurance If I Have Health Problems?

Very often, yes.

This is one of the biggest strengths of the final expense market.

People regularly assume that conditions such as:

• Diabetes
• COPD
• Heart disease
• A previous heart attack
• A previous stroke
• Cancer
• Mental health conditions
• Neuropathy
• Other chronic medical problems

mean they cannot get life insurance.

That simply isn't always true.

The important question is often not:

"Can you get insurance?"

It's:

"Which company is the best fit for your health?"

Insurance companies have different underwriting guidelines.

One company may dislike a particular medication.

Another may accept it without difficulty.

One company may decline a particular medical history.

Another may offer immediate coverage.

That difference is one of the strongest arguments for comparing multiple companies rather than assuming the first answer you receive is the only answer available.

Learn more: Can I Get Life Insurance If I Have Health Problems?

Learn more: Can I Get Life Insurance With Diabetes?

Learn more: Can I Get Life Insurance With COPD?

Learn more: Can I Get Life Insurance After a Heart Attack or Stroke?

Learn more: Can I Get Life Insurance If I Have Cancer?

How Fast Can I Find Out If I'm Approved?

Final expense underwriting is often much faster than people expect.

Many companies use electronic underwriting systems that can check the information needed to make a decision very quickly.

For many applicants, that means you can complete the application and receive a decision during the same conversation or shortly afterward.

Sometimes a company needs additional information.

But this usually isn't the old-fashioned process people imagine where you automatically schedule a medical examination and wait weeks for someone to review a large stack of medical records.

Final expense insurance has been streamlined specifically to make smaller permanent policies easier to obtain.

What If I Don't Qualify for Immediate Coverage?

You may still have excellent options.

Some applicants qualify for a graded-benefit policy.

And for people with serious medical conditions who cannot qualify for medically underwritten coverage, Guaranteed Issue whole life insurance can be an extremely important option.

Guaranteed Issue doesn't ask health questions to determine eligibility.

There is no medical exam.

If you meet the policy's basic eligibility requirements, serious health problems don't prevent you from obtaining the coverage.

Guaranteed Issue policies commonly have a waiting period, often two years, for natural death.

During that initial period, qualifying accidental death is commonly covered for the full benefit. If death occurs from natural causes during the waiting period, many policies return the premiums paid plus an additional amount rather than paying the full face amount.

After the waiting period, the full death benefit is available for covered natural death according to the policy.

Guaranteed Issue isn't a bad policy.

It's insurance designed to solve a difficult problem:

How do we provide permanent life insurance to someone whose health makes traditional underwriting impossible?

Whenever possible, we first look for immediate coverage.

But when immediate coverage truly isn't available, Guaranteed Issue can provide a way to put permanent protection in place regardless of serious health problems.

Learn more: When Does Life Insurance Coverage Begin?

Does the Price of Final Expense Insurance Increase as I Get Older?

With traditional whole life final expense insurance, the scheduled premium is fixed according to the policy.

This is enormously important for seniors.

Suppose you retire knowing you have a particular amount of money coming in every month.

You don't want a life insurance policy that costs $65 today, $90 several years from now, and $150 later because you've gotten older.

Traditional whole life is designed to avoid that problem.

If your scheduled premium is $65 per month when the policy begins, it doesn't suddenly increase because you turn 75.

It doesn't increase because you turn 80.

And the company doesn't raise it simply because you develop diabetes, have a heart attack, or receive another medical diagnosis after the policy is properly in force.

That predictability is one of the biggest reasons whole life works so well for final expenses.

Learn more: Can My Life Insurance Rates Go Up?

Can the Insurance Company Cancel Me If I Get Sick?

Not simply because your health gets worse.

Once your policy is properly in force, the company doesn't get to re-underwrite you every year because you've aged or developed new medical problems.

You qualified for the coverage when you bought it.

Later changes in your health do not ordinarily allow the company to simply take away a properly maintained policy.

That's another major advantage of obtaining coverage while you can.

Learn more: Can a Life Insurance Company Cancel My Policy If My Health Gets Worse?

How Long Does Final Expense Insurance Last?

Traditional whole life final expense insurance is designed to last for your lifetime as long as the requirements for keeping the policy in force are met.

That's one of the most important things about it.

Final expenses are not temporary.

Everyone hopes to live a very long life.

Your insurance should account for that.

If you purchase a temporary policy at 65 and it expires at 85, you've created the possibility that you'll have to solve the same problem all over again when you're 20 years older.

Your health may be different.

Your available options may be different.

Your cost for new insurance may be dramatically different.

Whole life removes that uncertainty.

You put the coverage in place.

You maintain it.

And it is designed to still be there when your family eventually needs it.

What Happens If My Health Gets Worse After I Buy It?

Your health can change without changing the scheduled premium or causing you to lose properly maintained traditional whole life coverage.

This is one of the most powerful aspects of permanent life insurance.

Imagine buying a policy today and developing cancer five years from now.

If you went shopping for new insurance after the cancer diagnosis, your options might be very different.

But the whole life policy you already own doesn't ordinarily disappear because you became sick.

You already have it.

That's one reason we encourage people not to wait unnecessarily.

You know what your health is today.

You don't know what it will be five years from now.

Learn more: When Is It Too Late to Buy Life Insurance?

Learn more: Can a Life Insurance Company Cancel My Policy If My Health Gets Worse?

What Happens If I Miss a Payment?

Most policies provide a grace period rather than immediately terminating coverage because a payment was a few days late.

But you don't want to allow the policy to actually lapse.

Once a policy lapses, reinstating it can become more complicated and may involve additional requirements.

That's why affordability matters so much when choosing final expense insurance.

We don't want to find the largest policy you can possibly squeeze into your budget.

We want to find an amount that you can comfortably maintain.

As we regularly tell clients:

"This is supposed to fix a problem, not start a new one."

The best policy isn't necessarily the biggest one.

It's one that accomplishes what you need and that you can comfortably keep.

Does Final Expense Insurance Have Cash Value?

Because final expense insurance is commonly whole life, it generally builds cash value over time.

But for someone buying final expense coverage, we usually don't make cash value the center of the conversation.

If your purpose is:

"I want $25,000 available for my children when I die,"

then two numbers are particularly important:

• What does the policy cost each month?
• What will your family receive when you die?

Cash value exists and may provide options while you're alive, but repeatedly borrowing against a policy purchased for your family's final expenses can work against the reason you bought it.

Learn more: What Is Cash Value in Life Insurance and Does It Matter?

Who Receives the Money?

You choose your beneficiary.

That's the person or people who will receive the life insurance benefit after you pass away.

You can usually choose a primary beneficiary and one or more contingent beneficiaries.

You can often divide the benefit among multiple people using percentages.

And in most cases, you can change your beneficiaries later without buying an entirely new policy.

We also strongly encourage clients to make sure several trusted people know that the policy exists and know how to contact the agent.

Your family shouldn't have to search through drawers wondering whether you had insurance or whom they're supposed to call.

Learn more: Who Should I Name as the Beneficiary of My Life Insurance Policy?

How Does My Family Get the Money?

The claims process is generally straightforward.

When the insured passes away, the family should contact the agent as quickly as possible.

The beneficiary will need to file the appropriate claim information and obtain a certified death certificate.

Once the insurance company has everything it needs and approves the claim, payment can be made to the beneficiaries according to the policy.

This is another reason we believe having a real agent matters.

The first time your family files a life insurance claim shouldn't also be the first time they're trying to figure out whom to call.

Learn more: How Do Life Insurance Claims Work?

Why Should I Compare Final Expense Companies?

Because the policy may be simple, but underwriting isn't.

This may be the most important thing to understand when shopping for final expense insurance.

Suppose you have diabetes.

Company A may offer you one price.

Company B may offer a better price.

Company C may treat one of your medications differently.

Company D may have an underwriting rule that makes it a poor choice for you.

The same thing can happen with COPD, cancer history, heart disease, stroke history, mental health medications, and many other conditions.

You shouldn't have to learn every company's underwriting manual.

That's the agent's job.

A good independent agent should ask enough questions to understand your situation and then compare companies to determine which ones appear to fit you best.

Sometimes the difference between immediate coverage and a waiting-period policy isn't your health.

It's the company you applied with.

Why Not Just Buy Directly From an Insurance Company?

You can.

But there's an important question to ask:

How many companies are being compared?

If you call one insurance company, that company can tell you about its products.

If its underwriting rules happen to fit your health perfectly, that may work out very well.

But if they don't, you need another option.

An independent agent or broker who works with multiple companies can compare those underwriting rules before deciding where an application should go.

For someone with health conditions, that can be especially important.

The goal isn't simply:

"Find a company that will insure me."

The goal is:

"Find the company that gives me the best combination of coverage, price, and underwriting for my situation."

Is Final Expense Insurance Worth It?

That depends on the problem you're trying to solve.

If you already have enough permanent assets set aside that your family will have immediate access to everything they need, you may decide you don't need additional insurance.

But if your concern is:

"I don't want my children paying for my funeral."

or:

"I want to know there will be $20,000 waiting for my family."

or:

"I want to leave something behind instead of leaving bills."

then final expense insurance was designed specifically for that kind of need.

It isn't trying to replace 30 years of income.

It isn't trying to be a complicated investment strategy.

It's doing something much simpler.

You pay a predictable amount that fits your budget so a predictable amount of money is available for your family when they need it.

That simplicity is a strength.

What Should I Look for in a Final Expense Policy?

We would concentrate on a few basic questions.

How much coverage do you actually need?

Don't automatically buy the largest amount offered.

Can you comfortably afford the premium?

You need to be able to maintain the policy.

Does the price stay fixed?

With traditional whole life, it should be structured with a scheduled premium that doesn't increase simply because you get older or sicker.

When does the full coverage begin?

Immediate coverage is preferable when you can qualify for it.

Does your health fit this particular insurance company?

Don't assume every company will treat you the same way.

How long does the coverage last?

For final expenses, permanent whole life is particularly useful because the need itself is permanent.

Who will help your family when it's time to use the policy?

That's something people rarely think about until they need it.

What Is the Best Final Expense Insurance Company?

There isn't one company that's best for everyone.

We would be very skeptical of anyone who tells you otherwise.

The best company for a healthy 64-year-old may not be the best company for a 72-year-old with diabetes.

The company that's excellent for someone with COPD may not be the company we'd choose for someone with a recent cancer history.

The best company is the company whose:

• Underwriting fits your health
• Coverage fits your needs
• Price fits your budget
• Policy provisions fit what you're trying to accomplish

That's why comparison matters.

We don't start with:

"Which company do we want to sell?"

We start with:

"Who are you, what do you need, and which companies fit?"

The Bottom Line

Final expense insurance is much simpler than its many names make it sound.

Final expense insurance, burial insurance, and cremation insurance generally refer to the same basic idea: a smaller permanent life insurance policy designed to provide money for your family when you pass away.

It's commonly whole life insurance.

Coverage amounts are often $50,000 or less.

It usually doesn't require a traditional medical exam.

The application process is streamlined.

Many companies can make underwriting decisions very quickly.

People with significant health problems can often still find coverage.

Traditional whole life final expense insurance provides a scheduled premium that doesn't increase simply because you get older or sicker.

And most importantly, the coverage is designed to last for your entire life as long as you maintain the policy.

That's why final expense insurance works so well for the problem it's designed to solve.

You shouldn't have to wonder at 82 whether the policy you bought at 65 is about to expire.

You shouldn't have to wonder whether getting sick next year will make your existing properly maintained coverage disappear.

You shouldn't have to wonder whether your premium is suddenly going to increase simply because you're older.

And your children shouldn't have to wonder where the money will come from when the day eventually arrives.

Final expense insurance is simple on purpose.

Choose an amount your family will need.

Find a company that fits your health.

Choose a premium that comfortably fits your budget.

Keep the policy in force.

Then go live your life knowing that particular problem has been taken care of.

Ready to See What Fits You?

You don't need to know which insurance company is best for your health.

You don't need to understand every underwriting rule.

And you don't need to decide how much insurance to buy before you've looked at your situation.

Our job is to help you understand what you need, compare companies, and show you the options available to you.

Continue Learning

When Is It Too Late to Buy Life Insurance?

How Much Coverage Do You Need?

Should I Pick Whole Life or Term?

Can I Get Life Insurance If I Have Health Problems?

When Does Life Insurance Coverage Begin?

Can My Life Insurance Rates Go Up?

Can a Life Insurance Company Cancel My Policy If My Health Gets Worse?

How Do Life Insurance Claims Work?

Who Should I Name as the Beneficiary of My Life Insurance Policy?

What Is Cash Value in Life Insurance and Does It Matter?

Life Insurance Dictionary: Terms Explained in Plain English