Final expense insurance, or burial insurance, is a low-cost form of permanent life insurance that pays a small death benefit to the insured’s beneficiaries upon the death of the insured. The death benefit is intended to cover the costs of final arrangements for the loved one and to cover medical expenses or debts if needed. This specific insurance is significant because it builds a cash value over time from which the beneficiary can take a loan whenever the need arises.
These are some of the reasons that make the final expense a unique and helpful choice:
Some disadvantages of final expense insurance are relatively low death benefits, which may not turn out to be beneficial if the insured person is younger and possible termination of the policy in case of one missed premium payment. Also, you will be required to pay premiums for the rest of your days.
Final expense insurance policies are primarily for people who cannot qualify for a better option because premiums can be higher than other insurance types. However, people with serious health conditions may not be eligible for final expense insurance but could be a potential candidate for guaranteed issue policies that, as a rule, have a 2-year waiting period before the benefits can be paid. In other words, if the insured person passes away during the waiting period, the beneficiaries do not stand to receive the death benefit, but instead, they will receive a return of the paid premiums plus interest.
Death benefits provided by Final expense range from $2,000 to $50,000 and can be used by the beneficiaries as they see fit. Typically these policies are aimed at people between 45 and 85 years old. Those younger than 55 can generally qualify for a $50,000 death benefit while those at age 76 may only qualify for up to $25,000.
Premiums for final expense are affordably priced due to the smaller benefit compared to most life insurance policies, which can have benefits of $250,000 or higher. Your monthly premium can remain the same for the life of your policy, never increasing even if you develop a health condition. Your premium will depend on your age, health and other lifestyle factors. Generally, The younger you are when you apply for a policy, the lower your premiums will be.
Final expense aims to cover the roughly $9,000 in expenses for funeral and burial services. Beneficiaries have a lot of costs to cover in a short span of time upon your death, which is why planning for the expense is crucial. Some policies include documentation to help you prepare your final arrangements, which will be relayed to the family when the time comes.
Almost everyone will qualify for final expense insurance. You are not required to have a medical exam, and the insurance company will only ask a few basic health questions. These questions will concern whether or not you have a history of smoking, drug abuse, heart disease, stroke, or other major health conditions. Most people can qualify. The final expense is intended to help seniors secure affordable life insurance, so the insurance companies want to sell you one.
Keep in mind that Final expense policies are available up to age 85 with the possibility of some companies might ensuring you even if you are over the age of 85. If in any case, a certain company decides to insure you over the age of 85, you would need to be prepared to pay a very high premium.
Seniors with serious medical issues can opt for a guaranteed issue policy. These have no medical exam and no health qualifications. These policies usually have a two to three year waiting period before the beneficiaries will be paid the full death benefit. If the insured dies during the waiting period, the beneficiaries will receive the premiums paid with an average interest of 10%.
The death benefit of a guaranteed issue policy is usually between $2,000 and $40,000. The age range to qualify for guaranteed life is usually 50 to 80 years old. You might know this type of insurance from commercials offering plans with rates that never go up and coverage that will not go down.
The waiting period protects the insurance companies from paying out policies instantly to people on their deathbeds. Your beneficiaries will still receive any money back at a rate with considerably high interest.
While final expense policies are not ideal for everyone, they can provide coverage for those who do not qualify for traditional life insurance policies. For more information about how you might qualify for this type of policy, call Texas Medicare Advisors today at 512-900-3008.
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