Final expense insurance: what it is and who it’s for

Many families are surprised by how much a funeral and final bills can cost. Final expense insurance is designed to help pay those costs so your loved ones don’t have to.

What is final expense insurance?

Final expense insurance is a type of whole life insurance with a smaller death benefit than a traditional life policy. It’s meant to cover costs like:

• Funeral, burial or cremation
• Medical bills not covered by insurance
• Small debts and other final bills

The money is paid to your beneficiary, who can use it however it’s needed.

How it works

• Coverage lasts your whole life as long as premiums are paid.
• Premiums are designed to stay level for the life of the policy.
• Policies can build cash value over time.
• Applications are usually simpler than for larger life policies. Many ask a few health questions instead of requiring a medical exam.

Two common types

• Simplified issue: you answer health questions, and if you qualify, full coverage typically starts right away.
• Guaranteed acceptance: no health questions, but there’s usually a waiting period (often two to three years) before the full benefit is paid for death from natural causes. If death happens during that period, the policy typically returns premiums paid, sometimes with interest.

Who it may be a good fit for

• People in their 50s to 80s who want to make sure final costs are covered
• People who don’t need, or can’t qualify for, a large life insurance policy
• People who want to spare their family a financial burden

Questions to ask before you buy

• How much coverage do I really need?
• Does the full benefit start right away, or is there a waiting period?
• Will my premium ever go up?
• Who will be my beneficiary, and do they know the policy exists?

You have time to review your policy

Texas gives you a review period after you receive a life insurance policy. During that time you can review it and cancel for a full refund of your premium. Your policy shows exactly how many days you have.

Comparing a few policies side by side can make a real difference in what you pay for the same coverage.