Funeral and burial expenses, as well as final medical bills, may seem predictable, yet they sometimes come as a surprise to families who have recently lost a loved one. Data gathered by GoBankingRates shows that the cost of end-of-life care can range from $18,000 to more than $42,000, depending on where you reside. Many people look into open-care final expense insurance to help with the expense plan. We’ll examine how final expense insurance companies work and final expense vs life insurance.
What Is Final Expense Insurance?
Final expense insurance is a type of whole life insurance that is easier to get and has a small death benefit. Final expense insurance is also called “funeral insurance,” “burial insurance,” “simplified issue whole life insurance,” and “modified whole life insurance.” All of these are marketing terms that the insurance industry uses to sell small whole-life policies with a face value (death benefit) of $2,000 to $50,000.
Richard P. Sabo, a financial adviser and insurance fraud expert in Gibsonia, Pa., says the only difference between final expense insurance and regular life insurance is that insurers sell smaller policies to make them more affordable.
The death benefit of final expense insurance is meant to pay for things like a funeral or memorial service, embalming, a casket, or cremation. On the other hand, beneficiaries can utilize the death benefit however they see fit, such as to pay property taxes or take a vacation.
“Those who market final expense insurance to older people who are starting to think about funeral costs, and they make it seem like they need to do it to take care of their family,” says Sabo. “Some people already have life insurance that can help pay for funeral costs, so do they really need a new policy?” He also says that someone may not need final expense insurance if they have already paid for their funeral costs.
How Does Final Expense Insurance Work?
Let’s say you’re retired and no longer have life insurance through your job or through a separate policy. As a result, you’re reluctant to leave your spouse and/or children with a large debt load if you die.
You contact a life insurance provider and begin the registration procedure, which includes health questions. The death benefit is great, but your age and health make it impossible for you to pay the premiums. Regrettably, they don’t sell policies with small enough death benefits to make the premiums affordable. You might give up at this point and think you can’t even afford life insurance.
This is the problem that life insurance is meant to solve. “The insurance companies made these policies so they could handle the risk of some serious health problems,” says Anthony Martin, CEO of Choice Mutual, a company that sells final expense life insurance. “This means that most seniors can still get a policy, even if they are in bad health.”
Should I Get Final Expense Insurance?
Final expense insurance doesn’t normally require a medical exam, so it’s easier to get if you’re older or in poor health. So, if you can’t get traditional whole life insurance, you might be able to get final expense insurance.
Final expenditure insurance may not give your loved ones enough security. If you have people who depend on you financially, a final expense policy might help pay for your funeral and any medical costs you might have at the end of your life. It might make more sense to get term life, whole life, or a mix of the two to get a much bigger death benefit.
Unless you have life insurance, your death benefit may cover funeral costs, so you may not need last expense insurance.
Talk to a financial advisor if you aren’t sure if you have sufficient life insurance. They can help you understand your options and the role that different life insurance vs final expenses can play in your financial plan.
Final Expense Insurance vs. Life Insurance
Final expense insurance is similar to “pre-need insurance” or a “prepaid last plan,” but there are some differences that are important to know. With a last expense policy, you can choose any beneficiary against life insurance, and we can use the death benefit whatever the beneficiary wants. To ensure that the payout may only be for funeral expenses, most people purchase pre-need insurance and identify the funeral home as their beneficiary.
Life insurance is often sold as a way to “lock in” funeral costs at the time of purchase. This is because many of these policies guarantee specific costs for services.
It’s critical to understand the differences between final expense vs life insurance and pre-need insurance, even though they’re both commonly referred to as “funeral insurance.” If you’re thinking about buying pre-need insurance, make sure you know what your rights are and what you need to do. The NFDA gives consumers a “bill of rights” for funeral pre-planning and a list of important requirements that every pre-need policy should have.
Open Care Final Expense Plan
Open Care final expense seniors plan in Florida is a real and well-known independent insurance agency that specializes in selling life insurance without a medical exam to pay for funeral costs. Furthermore, the Open Care final expense plan is a legitimate insurance agency that sells term life insurance to people who need it, as well as accidental death insurance with Medicare product alternatives to help you avoid running out of money before you die.
Even if you have term life insurance, you probably won’t use it because only 2% of term policies pay out.
It’s difficult to know about this company, but our research turned up some interesting facts, like the fact that they have a long list of TV commercials that show $25k worth of free benefits that can only be gotten through the insurer’s services. Wow, that’s some persuasive form of advertisement, huh?
Plan types like Open Care final expense plan Life Insurance should never be taken seriously. It’s not surprising that this company has so many different prices, some of which start at just $7.49 per month!
Final Expense vs Life Insurance
Traditional life insurance helps your family or other beneficiaries out financially if you die. It can be either temporary or permanent.
Term plans are affordable and offer protection for up to 30 years. Permanent plans give you lifelong protection and financial worth you can use. People usually buy life insurance when they are in their prime of life to help their families fill financial gaps if they die suddenly, like replacing income, paying for daily expenses, or saving for retirement.
Final expense insurance, which is also called “burial insurance,” has one major goal: to pay for a funeral and other costs that come up at the end of life. A funeral can cost up to or more than $10,000 on average. Final expense takes care of these costs so you don’t have to pay for them out of pocket or add financial stress to a time when your family is already sad.
Your family can use a payout for final expenses to pay off debts or leave money to your children or grandchildren. There are no strings attached. Final expense plans are a type of permanent insurance, so your family can be sure that the money will be there for them when they need it.
Who is Final Expense Best For?
Because of its primary focus on providing financial protection for burial and other last expenses, this category of life insurance is ideal for older people. It’s possible that you’ve heard this kind of protection advertised as burial insurance for seniors or funeral insurance, but these are all essentially the same thing as final expense insurance.
Seniors are the best candidates for final expense insurance due to its low cost, the fact that it typically does not require a medical exam to qualify, and the fact that it can assist with the planning of some aspects of their last rites and arrangements (choosing a funeral home, flowers, music, etc.).
How Do You Apply for Final Expense?
The purchase of any life insurance policy will necessitate the completion of an application. The application for life insurance might be anywhere from one to two pages long, or it can be anywhere from five to ten pages long, depending on the life insurance provider. The more in-depth application will pose dozens of questions to the applicant, including inquiries about their height and weight, blood type, family history, and activity level. In most cases, these businesses call for a medical examination that includes blood and urine testing.
Other businesses only demand a single page of an application and don’t require a medical exam. The applicant’s responses to health-related questions are considered, rather than the results of any medical examinations.
When applying for coverage, you can typically get a free quotation over the phone or online by filling out a form. There is typically no commitment to purchase the coverage if you accept the offer. Your estimate will come either directly from the insurance company or from one of its licensed salespeople, whichever you choose. There are rare instances in which coverage can be purchased through the telephone, but the purchase of the vast majority of plans will include some type of in-person encounter.
How Much is Final Expense Insurance for a Smoker?
The rates for smokers are typically thirty percent higher than the rates for people who don’t use tobacco. No matter what kind of life insurance policy you have, the prevalence of smoking is likely to be higher. Tobacco use is associated with a greater mortality rate the older you are.
The burden of financial responsibility that is placed on mourning families by the purchase of final expense insurance is alleviated. This kind of coverage is an excellent choice to consider if you want to give the people you care about a safety net to help them get through their time of loss.
Final Expense Insurance Companies
We looked at more than 30 different types of life insurance to find the best final expense insurance companies. We looked at a number of things, such as the cost of the insurance, how to apply for it, policy options and riders, and the financial health of the insurance company.
#1. Mutual of Omaha
Mutual of Omaha, which is also known as “United of Omaha,” has been in business since 1909 and has an A+ rating from A.M. Best. You can be sure that they will pay your claim when it’s time.
Their insurance to pay for funeral costs is called “Living Promise.” Overall, it’s the best plan available.
Their quotes for funeral insurance are always among the lowest, and they cover a wide range of common health problems. The best part is that if you get in, you don’t have to wait. For people over 80, they offer up to $40,000 worth of life insurance. Most businesses only give out $10,000 or $20,000 each. If you need life insurance for a child, the United of Omaha is also the best place to go.
#2. Aetna
This list includes Aetna for more than one reason. First of all, they’ve been in business since 1853, and A.M. Best currently gives them a rating.
Amazingly, even people who are 89 years old can get new coverage. Final expense insurance vs life insurance companies almost never give out new policies to people over the age of 85.
Their burial life insurance for seniors has competitive prices and people with high-risk health conditions can get a policy with no waiting period.
#3. Royal Neighbors of America
Even though Royal Neighbors of America isn’t a well-known name, don’t worry about that. They’ve been in business since 1895, and A.M. Best gives them an A rating.
Additionally, the company has a strong history of giving back to the community and is run by women. Royal Neighbors has very flexible underwriting, which means that most seniors can get life insurance without having to wait.
If you have diabetes, RNA is a company that will almost certainly let you get a death benefit right away.
Also, their premiums are about the same as those of other final expense insurance companies. Lastly, all of their policyholders get free access to a lot of great member benefits.
#4. Foresters Financial
Foresters Financial has been in business since 1874, and A.M. Best currently gives them an A rating.
They do a lot of charity work all over the United States. As part of their charitable work, they work with places like the Ronald McDonald House and the Red Cross.
Their life insurance has reasonable premiums and is easy to get. They don’t mind much when seniors have health problems that are common among their age group. Also, Foresters Financial gives every policyholder access to great member benefits at no extra cost.
#5. Transamerica
Transamerica’s Immediate Solution funeral life insurance combines affordable premiums with easy approval. Transamerica has strong finances as a company. They have been in business since 1904, and A.M. Best has given them an A rating.
Transamerica has a unique plan where people with high-risk chronic conditions like COPD don’t have to wait. The main problem is how they are used. It is difficult to obtain approval, which can take up to five business days.
#6. Prosperity Life Group
A.M. Best has given Prosperity Life Group an A- rating, which means you can trust that they are financially stable. They have a good plan for burial insurance that is a good choice for a lot of people. For instance, people who use tobacco or nicotine but don’t smoke cigarettes can get a non-tobacco rating. Prosperity will only charge a price for tobacco to people who smoke.
They cover a wide range of high-risk health conditions, are available in almost all states, and are easy to apply for (15 minutes).
#7. AIG
AIG is a well-known company that has been around for a long time. They have been in business since 1919 and have a rating from A.M. Best.
Their burial insurance is a type of life insurance that anyone can get. It’s a type of life insurance that doesn’t ask about your health or do a medical exam.
Since there are no health questions, there aren’t as many benefits for the first 24 months. If the person dies during this period, AIG will only give back 110% of the premiums paid. There are also two free riders that come with the policy.
If you can’t do two of the six “activities of daily living,” the chronic illness rider will give you your money back (dressing, continence, bathing, eating, toileting). It will also happen if I diagnose you with a serious problem with your mind, like dementia.
If your doctor says you have less than 24 months to live, you can get up to 50% of your death benefit with the other rider for terminal illness. It’s important to remember that both riders don’t take effect until 24 months have passed.
How Much Does Final Expense Insurance Cost?
This is something that is determined by a person’s gender, age, condition of health, the desired level of coverage, and the state in which they reside. The majority of websites that provide it contain calculators that you can use to get an estimate of the price. For the purpose of illustration, a woman who is 65 years old and wants a $10,000 face amount and no waiting period may pay around $41 each month. They would pay $51 for a policy that assured they would be accepted. A man who is 65 years old and wants an insurance policy with a $10,000 face amount and no waiting period might pay around $54 per month and $66 for acceptance which is assured.
Does Final Expense Build Cash Value?
Does Final Expense Have a Cash Value? Due to the fact that it is a sort of whole life insurance, last-expense insurance does in fact enable the accumulation of monetary value over time. Nevertheless, the funds must be accumulated, and there are a few things you need to bear in mind if you wish to borrow against the cash value of the policy.
Do I Need Final Expense Insurance?
Certainly not in every case. If you already have enough money saved up to pay for the bills that need to be paid after your death, then you do not require it. Despite this, a lot of people aren’t aware of how expensive funerals are (and how much they’re going up every year). Or that a medical facility may surprise them with a big amount of unanticipated fees. If you don’t have the funds to meet these and other connected costs, or if you don’t have normal insurance that may help cover them, final expense insurance may be something that your family will find to be of great assistance.
FAQs
What is the difference between final expense and life insurance?
Final expense vs life insurance is a type of whole life insurance, and its face amount is usually less than that of traditional insurance. It focuses on paying for end-of-life costs, while most other types of life insurance focus on replacing income.
What is the maximum age to get final expense insurance?
That depends on the insurance company. Most people can get insurance up until they are 85 years old. There are some companies that will insure people over 85, but the cost will be very high.
How quickly are final expense insurance policies paid out?
This is up to the life insurance company alone. Some companies can take weeks or even months to pay the policy benefit. Others, like Lincoln Heritage, pay claims 24 hours after they have been approved.
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