What Is Final Expense Insurance?

When someone dies, bills arrive quickly. A funeral or cremation, a cemetery plot or niche, a headstone, a final hospital bill, travel for relatives: these costs usually have to be handled within days, often by a grieving spouse or an adult child. Final expense insurance exists to put money in the right hands at that moment.

The short definition

Final expense insurance is a type of whole life insurance sold in small amounts. Instead of the hundreds of thousands of dollars a family might want to replace an income, the benefit is sized for end-of-life costs. Face amounts commonly start at a few thousand dollars and reach about $50,000, though the exact range depends on the insurer and the state where you live.

You may also hear it called burial insurance, funeral insurance or senior whole life. The names overlap. What matters is the contract itself, so always look at the policy type, the benefit and any waiting period before you decide.

How it works, step by step

1. You choose an amount of coverage and name one or more beneficiaries.
2. You answer a few health questions, or in some cases none at all, and the insurer decides whether to issue the policy and at what premium.
3. You pay a fixed premium, usually monthly. On a level whole life policy the premium is designed to stay the same and the coverage does not shrink with age, as long as you keep paying.
4. When the insured person dies, the beneficiary files a claim with a certified death certificate. If the claim is approved, the insurer pays the benefit, generally as a single payment.

What affects the price

Premiums are not the same for everyone. The main factors are your age when you apply, the amount of coverage, your health, whether you use tobacco or nicotine products, and the type of policy. Different insurers and different states also price differently, which is why it can help to compare more than one option.

• Age: a younger applicant generally pays less for the same amount.
• Health: policies with health questions can cost less than policies that skip them.
• Tobacco: premiums for tobacco users are commonly higher.
• Amount: a larger benefit costs more each month.

Who it can suit

It tends to suit people who want a modest amount of lifelong protection, who are past the age when term life is practical, and who want to avoid leaving the cost of a funeral to relatives. It can also suit people with health conditions who cannot easily get other life insurance, although those policies often include a waiting period.

Who may not need it

If you have savings your family can reach quickly, an existing life insurance policy that is large enough, or a prepaid funeral plan, you may not need another policy. The cost of a policy over many years can also add up to more than the benefit in some situations, which is worth thinking about honestly.

What to look for in a policy

• Whether the premium is level and the benefit is guaranteed not to decrease.
• Whether there is a waiting period or graded benefit, and how long it lasts.
• The insurer name, and whether the agent is licensed in your state.
• The free look period, which lets you cancel for a refund within a set number of days.
• Any cash value, and what happens if you stop paying.

To see how the different types compare, read guaranteed issue vs. simplified issue vs. graded benefit. To work out an amount, try our coverage worksheet or the guide on how much coverage you may need.

This guide is general education about how final expense insurance typically works. It is not insurance, legal, tax or financial advice, and products and terms vary by insurer and state.