Final Expense Insurance
A small whole life policy made to pay for a funeral and the bills left behind. Here is how it works, what it costs to find out, and what to watch for.
What final expense insurance is
Final expense insurance is whole life insurance sold in small amounts. Instead of replacing years of income, like a large term policy, it is sized to cover the costs that come at the end of life: the funeral, burial or cremation, medical bills and small debts.
Because the amounts are small, most policies do not need a medical exam. You answer health questions on the application and the insurance company decides from your answers and its own records checks.
How it works
- You choose a coverage amount. Policies are commonly offered from a few thousand dollars up to about $25,000 to $50,000, depending on the insurance company.
- You pay a level premium. The premium is set when the policy starts and is designed to stay the same for life.
- Coverage does not expire. As whole life insurance, the policy stays in force as long as premiums are paid.
- The policy builds cash value. A small cash value grows over time. Borrowing against it reduces the benefit if the loan is not repaid.
- Your beneficiary is paid directly. The money is theirs to use for the funeral or for any other need.
The three kinds of policy
Which one you are offered depends on your answers to the health questions.
| Policy type | Health questions | When the full benefit applies |
|---|---|---|
| Level benefit | Yes | From the first day of coverage, for most applicants in fair health |
| Graded or modified benefit | Yes | After a waiting period, usually two years. Earlier deaths from illness pay a reduced amount or a refund of premiums with interest |
| Guaranteed issue | No | After a waiting period of two to three years. Accidental death is often covered in full from the start, depending on the policy |
Exact terms differ between insurance companies and states. We go through the terms of any policy with you before you apply.
What affects the price
There is no single price for final expense insurance. Insurers set your premium from:
- Your age when the policy starts
- Your sex
- Your health and prescription history
- Whether you use tobacco
- The state you live in
- The coverage amount and policy type
Applying sooner generally means a lower premium, because age is the largest factor. We give you quotes for your own details so you can compare real numbers.
Good to know: final expense insurance is different from a pre-need plan bought from a funeral home. A pre-need plan pays for specific funeral services. A final expense policy pays cash to your beneficiary, who decides how to use it. More about funeral and burial planning.
Questions about final expense insurance
Who can apply?
Most insurers offer these policies to people from about 50 to 85. Some start younger or stop earlier. The ages available depend on the company and your state.
Can the money be used for things other than the funeral?
Yes. The benefit is paid to your beneficiary in cash and there are no rules on how it is spent.
What happens if I stop paying?
A policy can lapse if premiums are not paid. Most policies have a grace period, often about 30 days, and many can be reinstated under conditions set by the insurer. If paying becomes difficult, call your insurer before the policy lapses.
Does my policy move with me to another state?
Generally yes. A life insurance policy stays in force when you move within the United States. Tell your insurer your new address so notices reach you.