The discussion of end-of-life expenses is seldom easy, but it’s an essential conversation for ensuring the financial stability of our loved ones. Among the significant considerations is the purchase of final expense life insurance. Designed to cover burial costs and other end-of-life expenses, this insurance can reduce the burden on our family members during an already challenging time. Here are several essential tips to guide you through the process of buying final expense life insurance.
Understand What Final Expense Life Insurance Covers
Final expense life insurance policies are aimed at seniors aged 50 to 85 who wish to leave behind resources to cover their burial costs and other final expenses. These can include medical and funeral bills, legal costs, or any other debts that the deceased person may leave behind.
This policy is significantly different from traditional term or whole life insurance policies. While a whole life insurance policy covers an individual throughout their life, providing financial security to their beneficiaries, final expense insurance aims at covering only the end-of-life expenses.
Determine How Much Coverage You Need
The first step in buying a final expense life insurance policy is the determination of the amount of coverage that you need. This quantity can vary significantly from person to person. Consider aspects like anticipated final medical bills, the desired funeral and burial services, and any outstanding debts.
The National Funeral Directors Association stated that the average cost of a funeral, including viewing and burial, was $7415 in 2020. With added costs such as floral arrangements, headstones, and grave services, this figure can potentially rise. Being aware of these costs can help you determine the right amount of coverage for you.
Shop Around
Not all insurance companies are created equal. Rates, coverages, and exclusions can vary significantly from one provider to another. By comparing rates from different companies, you can ensure that you’re getting the best coverage at the most reasonable price.
Also, ensure to do some background check on these insurance companies and only settle for those with strong financial stability and good customer service reviews. The company’s rating by independent organizations such as A.M. Best and the Better Business Bureau can give you insight into their financial health and customer satisfaction levels.
Understand the Difference Between Immediate and Graded Benefits
Final expense life insurance policies can come in two forms: immediate and graded benefits. An immediate benefit policy means that the full death benefit is available as soon as the policy is effective. Meanwhile, the graded benefit policy has a waiting period (typically two to three years) before the full death benefit is available.
In general, immediate benefit policies attract higher premiums but provide immediate access to the full benefit amount. On the other hand, a graded benefit policy has lower premiums but imposes a waiting period on the full benefit.
Ask About the Premium Payment Options
Most final expense life insurance policies offer multiple premium payment options. This includes monthly, quarterly, semi-annually, or annually payments. It’s best to ask about these options upfront to adjust your budget accordingly.
Seek Professional Assistance
Navigating through final expense life insurance can be complex. It’s advantageous to seek professional guidance. Insurance advisors or brokers are well-versed in the language of insurance policies and can help to simplify the process. They can provide an unbiased opinion and help you make an informed decision about the policy that’s most suitable for you.
Review the Policy Regularly
As is the case with any economic decision, it’s important to review your final expense life insurance policy regularly. Economic situations, personal finances, and funeral costs can change rapidly – and consequently, so can your insurance needs. By regularly reviewing your policy, you can ensure that you’re always covered adequately.
Conclusion
Ensuring that your loved ones are not burdened with the heavy costs following your passing is one of the best final gifts you can offer. Purchasing final expense life insurance can be a significant step in that direction. By understanding what this policy covers, determining how much coverage you’ll need, shopping around for rates, understanding the distinction between immediate and graded benefits, seeking professional guidance, and choosing a premium payment option, you can prepare for these expenses without burdening your loved ones.