Answering Your Questions: How Final Expense Works

January 28, 2022Stephen MFinal Expense

What’s the difference between final expense insurance and using savings? While simply saving money to be used for your final expenses may seem like a good idea, there is no way to know whether you will be forced to dip into that money before you die. Consider this: The No. 1 cause of bankruptcy in the U.S. is medical debt. Disease, illness, and injury are unpredictable, and a single stint in the hospital could wipe out a lifetime of savings. By paying into a final expense insurance policy, you can avoid the uncertainty that comes with relying on personal savings.

Do I need final expense insurance if I’m a veteran? Burial benefits for veterans max out at $2,000 for a service-related death and as little as $300 otherwise. Veterans also qualify for free burial in national cemeteries. However, as we’ve discussed, the average cost for a funeral and burial is around $7,131*. So even if you do qualify for these benefits, it is likely there will still be a large financial sum not accounted for. Final expense insurance is flexible enough to fill in the gaps.

Won’t the provisions set aside in my will be enough? Making arrangements for your funeral through a will can lack results. This is because wills are often read after the funeral takes place and because they have to go through probate court before provisions can be executed. The process can take several months, even in best-case scenarios. While it’s possible that the person who ends up paying for the funeral will be reimbursed once the will makes it through court and other bills are paid off, it is unlikely that it will provide any immediate relief when it comes to your final expenses.

What if I have Medicaid or receive Social Security benefits? Unfortunately, Medicaid and Social Security benefits only scratch the surface in terms of covering final expenses. Medicaid allows, at most, $1,500 to be applied toward funeral expenses, and Social Security provides just $255 to a surviving child or spouse to be used for the same purpose.

Does it make sense to purchase final expense insurance if I have or preneed insurance? The limitations and uncertainties associated with preneed insurance can make buying an additional final expense insurance policy a logical choice. Remember that a prepaid plan will typically only cover the cost of the funeral. If you leave behind medical bills, attorney’s fees, taxes, or any other debt when you die, preneed insurance will not cover those expenses. For this reason—and because it is not unheard of for funeral homes to mismanage prepayments or misrepresent plans—if you are still weighing your options and have yet to buy any sort of final expense, final expense is the safest way to be sure your remaining debts are covered in the way you desire.

Is there any reason to buy final expense insurance if I already have a regular life insurance policy? While final expense insurance is itself a form of life insurance, some people choose to purchase it to accompany an existing life insurance policy. Having a separate policy dedicated solely to funeral and burial expenses will protect the policyholder’s beneficiaries from having to take money out of the general life insurance policy to cover final expenses.

We’ve covered a lot of ground, and it’s not surprising if you still have questions about final expense. The good news is, you don’t have to figure it out on your own. We’re ready to help you choose the final expense insurance plan that’s best for you.

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