Tips for considering final expense
Here’s what to think about when deciding on final expense insurance:
- Determine whether you have life insurance or other savings that may be used for final expenses. Don’t buy coverage that’s not essential.
- Review your state’s laws on pre-need insurance before you meet with a planner at a funeral home.
- Discuss a final expense policy with your family and lawyer.
- Research different companies and options.
- Remember that insurance policies have a “free-look” period. This 30- to 60-day time period entitles you to review your policy and cancel it without penalty if you don’t approve.
When you’re ready to purchase
So, you’re ready to buy final expense insurance. Here’s what you need to do:
- Get all agreements in writing.
- Verify all licenses (insurance company and agent/funeral director).
- Be sure all documents are filled out in your presence. Never sign anything that has been altered or created without your consent.
- Ask your funeral director if they offer price guarantees.
- Be sure you have (in writing) that the services, arrangements and products that were sold to you or that you are agreeing upon are included in your pre-need plan.
- Check if funeral arrangements can be moved at any time to any funeral home – in case you move after buying your pre-need insurance.
- Find out if there’s a policy cancellation fee or if you can be refunded for services and products if you do decide to cancel.
Use caution
Many states have given consumers added protection by creating laws that give them additional rights when it comes to pre-paying for funeral expenses. Some states ban the sale of some types of final expense insurance policies. That’s because many policyholders paid more in premiums than they got back in their death benefit.
Other states created protections that prohibit checks to purchase final expense insurance to be made out to the funeral home. Instead, they must be made out to the life insurance company. Some states specify that payments made ahead of time for pre-need contracts are placed into a fund. That fund becomes your property and must be available to you at any time. Your state department of insurance is the best resource for local laws.
It is important to keep in mind that states felt the need to implement these protections because of significant problems with some types of pre-need contracts. For example, an irrevocable assignment transfers ownership of your contract to the funeral director, which means you cannot withdraw any payments you have made on this contract. Similarly, if you name the funeral director as the life insurance”s beneficiary for funeral benefits, the director is the only person authorized to spend the proceeds of your policy. Always be sure you understand the terms of the policy, and weigh the costs against the policy coverage.
Final Expense insurance can give you peace of mind. However, make sure you go through your multiple options before settling on a plan.