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VGLIUnderstanding Final Expense Insurance
If You Die Tomorrow ...
How will your loved ones
pay for your final expenses and obligations?
Final expenses may include:
- Casket
- Hearse
- Flowers
- Grave plot
- Embalming
- Professional service charges
- Opening and closing of grave
- Marker (headstone) and engraving
- Transfer of deceased to funeral home
- Newspaper death notices and death certificate
- Use of other facilities (chapel for funeral services)
- Forwarding or receiving of deceased from out-of-town location
- Legal or attorney fees
- Hospital or doctor bills
- Outstanding debts or obligations
- Your income may be reduced by 50% due death of spouse
Plus, there may be additional expenses:
The average cost of a traditional funeral in 2020, including embalming and a metal casket, is between $7,000 and $12,000. The average cost of a funeral with cremation is $6,000 to $7,000. If you are over 50 years old, don't have traditional life insurance or a hefty savings account, and wish to protect your loved ones from the burden of these many death related expenses there is an alternative solution called final expense insurance. This type insurance comes in several forms and is described below.
Download the FTC Funeral Guide
Term Insurance
You will see ads on television and may receive mailers for term insurance. It is fairly inexpensive, however, the typical term policy offered to seniors will have premium rate increases every 5 years, and you will not be able to renew it after age 80. With many people living into their 90's and beyond this type insurance carries the risk of not being there when you need it. Make sure you always read the fine print on any insurance policy prior to purchase.
Guaranteed Issue Whole Life
Final Expense Insurance
You will also see ads on television and may receive mailers for guaranteed issue whole life insurance. As the name would indicate, they will tell you that you can not be turned down. There are no medical questions. There is a price to pay for that benefit. The insurance is expensive and it will include a 2 to 3 year period that you will not be eligible for the death benefit (face value of the policy). If you die during that period for any reason other than an accident, the company will only pay back your premiums paid plus interest. This is better than having no insurance, it is permanent, and it may be your only choice if you currently have any serious medical conditions. If you are in reasonable current health, save yourself some money and receive better coverage with the next option.
Whole Life Final Expense Insurance
This essentially offers the same benefits as the Guaranteed Issue version with a couple of differences. You will have to answer some medical questions, but if you are in reasonable health you will receive first day coverage of the entire face value and the premiums will be less. It is a permanent policy. If you do have health issues, but they are not too serious you may also qualify. There may be a limit on the amount of face value you can purchase or a waiting period depending upon the seriousness of the medical problems.
What You Need to Do Now
Having some form of life insurance in place is an excellent idea, but in addition you need to have your personal affairs in order. This includes such things as having a last will and testament, a living will regarding your heath care decisions, a durable power of attorney in case you can't make decisions for yourself, and, if applicable, even a guardian trust for your pet. If your situation is not too complicated there is a no cost service available which allows you to prepare your own documents by filling in the blanks using online forms. You can access this service using this link:Do Your Own Will at No Cost.
