What is final expense life insurance?
End-of-life insurance is also known as funeral insurance. If you purchase an end-of-life insurance policy, it’s typically with the expectation that the beneficiaries will use the payout to cover expenses related to your funeral and burial after death.
Fidelity Life offers end-of-life insurance to customers wishing to provide their beneficiaries with funds to cover funeral and burial expenses. These plans:
- Feature payout amounts of a few thousand dollars up to $40,000;
- Provide payouts for funeral insurance with no waiting;
- Offer affordable premiums, in part because the benefit amount is smaller than many life insurance plans;
- Disburse payouts without strings attached, giving beneficiaries the freedom to use the funds how they choose;
- Do not require a medical exam to qualify;
- Will likely offer approval for customers between the ages of 50 and 85
The flexibility of Fidelity Life end-of-life insurance policies means your beneficiaries won’t lose out on the coverage you paid for, even if they decide to use the funds for something other than funeral or burial expenses. For example, if your family chooses to donate in your name with the funds, they can do so.
What’s covered by end-of-life or final expense insurance?
Like most people, you’re probably familiar with term life insurance and what it covers. Typically, term life insurance benefits are larger as they’re intended to take care of a family following a death that would result in significant loss of income and financial stability.
Even if you’re leaving behind a large estate along with life insurance benefits, end-of-life insurance is helpful because benefits are often paid out more quickly, so they can be used to pay for funeral expenses and burial costs. Larger life insurance payouts may be delayed depending on the circumstances of the death and other factors, and it may be challenging for your loved ones to access your estate funds right away. Having a final expense insurance policy may shorten the time for claims review, especially if you purchased a guaranteed issues policy, and can help your loved ones cover costs without worrying about probate and other delays.
This peace of mind is a key benefit of final expense insurance. Final expense insurance is a smaller benefit intended to cover funeral and burial expenses, and any other end-of-life expenses. There are two types of final expense insurance – simplified issue final expense insurance and guaranteed issue final expense insurance.
What is simplified issue final expense insurance?
There’s no medical exam required to qualify for simplified issue final expense insurance. The application does include some health questions, and if you’re in reasonably good health you’ll have good odds of being approved for a policy. The benefit amount for a Fidelity Life simplified issue policy can go up to $40,000 while still offering affordable premiums. Most people purchase these with the intention that beneficiaries will use the payout to pay for end-of-life costs like burial expenses and a funeral service.
What is guaranteed issue final expense insurance?
Some people may not meet the health or age criteria for simplified issue final expense insurance. If this describes you, then guaranteed final expense insurance may be an ideal choice. Guaranteed issue final expense insurance doesn’t take health into account when approving coverage, only age. Anyone who meets the age criteria will generally be approved for a policy, and coverage amounts with Fidelity Life can max out at $25,000.
When will my family receive my final expense life insurance payout?
Typically, payouts for end-of-life insurance are disbursed quickly, in the days following your death. Beneficiaries will receive a lump sum payment of the benefit and are then free to use the funds however they see fit. You can also assign a funeral home as the beneficiary, and the funds will then be applied to cover the costs of burial and funeral expenses. To choose this option, your chosen funeral home must be aware and agree to be a beneficiary.
You might be concerned about other financial costs your loved ones may incur. The good news is, they can use the lump sum benefit to cover any unexpected bills, debts, or anything that helps make their lives easier during this challenging time.
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When should I buy end-of-life insurance?
End-of-life planning is critical for anyone who wishes to make the days and weeks after their death easier for their loved ones. If you have ever dealt with settling an estate without a will to guide you, you will know firsthand some of the challenges that can crop up when it comes to accessing funds. Even with a will, estates can take considerable time to settle and are often only settled well after the funeral. If you’re unsure it’s time for you to get final expense insurance, check out the criteria below to see if it matches your current life situation.
- Are you between 50 and 85 years old? This age group is most likely to be approved for final expense insurance. While 50 might seem young, it’s never a bad thing to prepare.
- Do you need coverage fast? If you’re concerned the benefits may be needed soon, or simply want some more immediate peace of mind, the Fidelity Life process is simple and fast. You’ll quickly find out if you qualify and can have active coverage right away.
- Do you anticipate Social Security covering your funeral or burial expenses? While this may seem like an option, Social Security offers a one-time death payment of $255, and that’s only if you qualify. Unfortunately, this is well below the average cost of even the simplest funeral or burial.
- Do you want a plan where premiums remain level and you can build cash value? Fidelity Life end-of-life insurance offers both these benefits. You may be able to borrow from the cash value during your lifetime or use it is collateral for a loan.
- Do you have a life insurance policy? Life insurance is a great option to help your loved ones recoup any financial losses related to your death. However, life insurance benefits can take several months to be disbursed, rendering them useless when it comes to covering the immediate costs of burial. Unlike life insurance, final expense insurance benefits are paid out with no waiting in a lump sum shortly after death.
- Are you anticipating potential expenses? It’s difficult to imagine what unpaid bills or other random expenses may crop up for family and loved ones after death. Final expense insurance can help bring peace of mind. Loved ones can use the funds for anything, from your burial costs to college tuition for your grandchildren. With no strings attached, the benefits to your loved ones are manifold.
While end-of-life insurance policies are a great benefit, those whose children or other loved ones depend on their income should also explore plans with larger payouts, like term life or permanent life insurance. These policies aim to replace potential lost earnings for many years and will help your beneficiaries retain assets and move forward after their loss.
How can I apply for end-of-life insurance?
For many people, age 50 is when they really start thinking about making an end-of-life plan. If you’re considering end-of-life insurance to cover your final expenses, there are a few things you can do to make applying go as smoothly as possible.
- Add up the cost of your ideal funeral plans. Think about how you would like your loved ones to celebrate your life. This can include expenses like burial plots, casket, or cremation all the way to musical selections and the location of your funeral service. Add up the costs of your preferred selections to guide you in choosing the benefit amount for your final expense policy.
- Consider other bills you might incur. This can be more challenging, but it’s best to think of any potential unanticipated costs like medical bills, outstanding debt, and other potential expenses your loved ones may incur after you pass.
- Explore the variety of final expense plans available. Fidelity Life can help you find a plan that best suits your needs. They can assist you in starting your application online or over the phone once you determine the plan you want.
Since there is no medical exam to qualify, the application process for your final expense plan will not take long. You can obtain coverage very quickly, and it will be active immediately.
How do I pay for final expense life insurance?
Once you’ve selected your plan, you will make regular premium payments to maintain your policy. These payments will last the remainder of your life if you choose to keep your policy active. Fidelity Life offers guaranteed rates for final expense level premiums, so your payments will not increase over time. This is beneficial as your income or earning potential may change during your lifetime. Regular on-time payments will help with building up the cash value of your policy, which in turn can be available to borrow in case of emergency adding to the living benefits (or value) of your policy
Who should I tell about my policy?
Having a final expense plan isn’t beneficial unless your loved ones are aware they should be receiving a payout. Make sure to tell your loved ones like your spouse or other relatives about the policy. Include details like the policy name, the payment method, and the insurance company it is with so your family will be able to obtain the payout when it’s time. If a funeral home is the beneficiary, make sure your family is aware. It’s a good idea to keep the physical copy of your policy with other important end of life documents.
Why should I purchase final expense insurance?
There are many benefits to purchasing funeral or final expense insurance. Some of the benefits of end-of-life insurance include:
- Cash value: your policy will continue to increase in cash value if you make regular on-time premium payments. You may also be able to use this cash to borrow from or as loan collateral.
- Guaranteed coverage: once you get approved for and purchase your plan, coverage will begin. In most cases, the final expense insurance is paid with no waiting to your beneficiaries shortly after your death, so they can use the funds to pay funeral expenses.
- Level premiums: Fidelity Life offers premium payments that don’t increase, which is helpful for those on a budget or fixed income. You don’t have to worry about suddenly ballooning payments.
- Flexibility: After the claim is approved, your beneficiaries receive the funds from your final expense plan to use without restrictions. Your loved ones can use the funds to pay for anything they like, including burial costs, funeral service, flowers, a donation in your honor, a trip to celebrate your life, or even a nest egg for a young relative.
- Peace of mind: just knowing your family will have access to these final expense funds is a relief, especially as estates can take time to settle, leaving your beneficiaries without access to your funds in the meantime.
What are alternatives if final expense insurance doesn’t meet all my needs?
While final expense insurance is a great benefit for your loved ones, the benefit amount is relatively small in comparison to other types of insurance policies. If you’re concerned about your loved ones having enough to cover expenses after your death, you may want to speak to an experienced agent to discuss alternative insurance plans to account for these future needs. Specifically, you can select a term life insurance plan or other whole life insurance plans. Each has their benefits and you can select the option that best suits your needs.
Term life insurance
What is term life insurance? As the name implies, it’s a type of life insurance that is intended to last for a set term of your life, from 10 to 30 years. It’s simple and affordable, and it allows you to choose how long you wish to stay covered. One of the benefits of term life insurance is higher amounts of coverage. If you do pass away during the coverage period, your family will receive these benefits to help recover from the loss of your income and put towards other unexpected expenses that may arise. Since term life insurance is only active for a limited term of your choosing, you’ll usually have to purchase another policy (often at a higher rate). With Fidelity Life’s RAPIDecision® Senior Life Term policy, you can apply up to age 70 and purchase up to $150,000 of coverage.
Whole Life Insurance
What is whole life insurance? Unlike term life insurance, whole life insurance offers protection as long as you live, if you pay your premiums. Like final expense policies, whole life insurance policies also offer a savings feature called cash value, which grows over time. You can use this cash value to borrow from for expenses while still living. For adults concerned about potential expenses incurred by their loved ones after death, whole life insurance could be a better option as it will offer a larger payout. Fidelity Life RAPIDecision® Senior Whole Life offers permanent coverage for seniors between 50 and 85 and coverage amounts up to $150,000.
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At Fidelity Life, our goal is to make life insurance simple, affordable, and understandable for everyday families. This content is intended for educational purposes only. Each post is carefully fact-checked, reviewed, and updated regularly to ensure the information is as relevant as possible. We encourage you to speak with your insurance representative if you have additional questions and make sure you read your policy contract to fully understand your coverage.
National Funeral Directors Association
Social Security Administration
