Insurance Advisors of St. Louis has recently had several inquiries about final expense life insurance. There are two types. One type is the Whole Life Insurance policy. When you purchase a whole life insurance policy, part of the premiums you pay is going toward building cash value. If you live long enough the amount of money can grow to be a substantial amount.
What Is Final Expense Life Insurance?
Final expense life insurance is a specialized type of insurance designed to cover the costs associated with one’s funeral and burial expenses, as well as any outstanding debts or medical bills they may leave behind. Also known as burial insurance or funeral insurance, this type of policy provides peace of mind to individuals and their families by ensuring that financial burdens are not passed on to loved ones during a difficult time. Final expense life insurance policies typically offer coverage amounts ranging from $5,000 to $25,000, with premiums based on factors such as age, health, and coverage amount.
Unlike traditional life insurance policies, final expense insurance policies are often easier to qualify for and do not require a medical exam, making them accessible to individuals of all health levels. With final expense life insurance, individuals can rest assured that their end-of-life expenses will be taken care of, allowing their loved ones to focus on grieving and healing rather than financial stress.
Is Final Expense Life Insurance Worth It?
Determining whether final expense life insurance is worth it depends on individual circumstances and financial goals. For those who want to ensure their end-of-life expenses are covered and alleviate the financial burden on their loved ones, final expense insurance can be a valuable investment. It provides peace of mind knowing that funeral and burial costs, as well as any outstanding debts, will be taken care of without placing undue financial strain on family members during an already difficult time.
Additionally, final expense policies are often more accessible and affordable, making them an attractive option for individuals who may not qualify for traditional life insurance due to health issues or age. However, it’s essential to carefully consider factors such as coverage amount, premiums, and policy terms to determine if they align with one’s needs and budget. Consulting with a financial advisor or insurance agent can help individuals make an informed decision about whether final expense life insurance is the right choice for them.
How Does Final Expense Life Insurance Work?
Final expense life insurance works similarly to other types of life insurance but with a focus on covering end-of-life expenses. Policyholders pay premiums to the insurance company, and in return, the insurer promises to pay out a lump sum benefit to the designated beneficiaries upon the insured’s death. This benefit can be used to cover funeral costs, burial expenses, outstanding debts, medical bills, or any other financial obligations the insured may leave behind.
The application process for final expense insurance is typically straightforward, with minimal underwriting requirements and no medical exams in many cases. This makes it a viable option for individuals who may have health issues or be older and have difficulty obtaining traditional life insurance. Once the policy is in place, as long as premiums are paid as agreed, coverage remains in effect for the duration of the policyholder’s life.
Final Expense Life Insurance Options
The Cincinnati Life Insurance Company offers a whole life insurance policy that has some unique features and options. Since you will have a policy that is building cash value, Cincinnati Life will allow you to, if necessary, borrow against the cash value.
Other options include:
Surrender for cash. The company will pay the insured accrued cash value and terminate the policy. Continue as Extended Term Insurance. If there comes a time when you can no longer afford to pay your premiums or simply desire to stop paying the premiums you would instead be able to use your accumulated cash value and convert the policy to a term insurance policy. The individual would then be covered by a term life policy that would last for a specific period of time. The length of the term insurance policy will depend on the amount of cash value that has been accumulated. Your life insurance proposal will have a table that calculates the extended time period.
Continue as Paid-Up Insurance. Paid-up life insurance also allows for the continuation of life insurance without paying additional premiums; however, the face value (death benefit) of the original policy is reduced. At any time during the policy, you can choose to stop making premium payments and opt for a paid-up life insurance policy. The face value will depend on the cash value at the time of the policy. No additional premiums will be paid and coverage will last until the policy anniversary date following the client’s 99th birthday.