Your Final Expense Insurance Questions Answered
What is final expense insurance?
Final expense insurance, or burial insurance, is meant to cover the cost of funeral and burial services. Final expense insurance can also help cover outstanding debts, probate fees, medical bills, time taken off work, household bills, and other remaining expenses. This type of life insurance also allows you to choose your beneficiary. Some other plans, such as a preneed plan, is typically paid to the funeral home. A final expense benefit, however, goes straight to the beneficiary you choose. This gives your family immediate access to funds dedicated to covering your final expenses.
How much does a funeral cost?
Funeral costs are rising and doing so quickly. Even the most basic funeral can be outrageously expensive. According to worldpopulationreview.com, the cost of an average funeral in Oklahoma is $6,755. Here’s a breakdown of where that price comes from:
Metal Casket: $2,400
Basic Services Fee: $2,100
Embalming: $725
Facilities/Staff for Viewing/Ceremony: $500
Hearse: $325
Removal or Transfer of Remains: $325
Miscellaneous Preparation (hair, makeup, etc.): $250
Printing for Memorial (guestbook, funeral program, etc.: $130
The estimates listed here do not include additional charges for flowers, obituaries, grave plot, or monument or marker costs.
In addition to the funeral, there are many other expenses that the end of life brings. Medical bills, legal fees, outstanding credit card debt, time taken off work, household bills, among other things total an average of $11,948 in the state of Oklahoma. That amount, in combination with the average cost of a funeral, totals a staggering $18,703 which could be left on the shoulders of your loved ones.
How much coverage do I need?
These 3 steps are a good way to get a general idea of how much coverage you should buy:
1. Estimate Household Expenses
Start by taking the total amount of a typical month’s expenses (including house payments, utilities, car expenses, food and transportation costs, insurance fees, etc.) and multiplying by 3. Roughly, this will be the amount your family needs to survive for 3 months. For example, if your total monthly expenses are $2,500, then your amount for family expenses will be $7,500. ($2,500 x 3 = $7,500.)
2. Consider Funeral Expenses
Funeral expenses are determined by what kind of services you end up choosing. The examples above show commonly incurred funeral-related expenses that should help you come to an accurate estimate. Let’s say your expenses will be the average of $10,000.
3. Add to Find Total Final Expenses
To find your total final expenses, add the above figures together, which in this case are $7,500 for family expenses and $10,000 for funeral expenses. This amount, $17,500, would be the minimum coverage required to account for both funeral and family expenses.
What’s the difference between final expense insurance and using savings?
While simply saving money to be used for your final expenses may seem like a good idea, there is no way to know whether you will be forced to dip into that money before you die. The number one cause of bankruptcy in the U.S. is medical debt. Disease, illness, and injury are unpredictable, and a single stay in the hospital could wipe out a lifetime of savings. By paying into a final expense insurance policy, you can avoid the uncertainty that comes with relying on personal savings.
Is there any reason to buy final expense insurance if I already have a regular life insurance policy?
Final expense insurance is itself a form of life insurance, but most people choose to purchase it to accompany an existing life insurance policy. Having a separate policy dedicated solely to funeral and burial expenses will protect the policyholder’s beneficiaries from having to take money out of the general life insurance policy to cover final expenses.
Here are the main things I want you to takeaway:
This type of policy can increase in value over time. It works like a savings account, with the balance going up as you pay in.
The price of your initial premium will be higher the older you are, but your premium’s amount will not go up as you age.
Final expense insurance policies allow you to select a beneficiary, which means you can choose a trusted person who’s legally responsible to ensure instructions are followed and funds are properly distributed.
You won’t be required to take a medical exam to receive coverage, and your policy won’t be canceled due to changes in health. Final expense insurance is available to those in poor health under certain conditions, meaning only a portion of your policy will be available for the first few years of coverage.
Final expense insurance can cover a number of costs. This allows loved ones to use the benefits for the expenses they need to pay, as opposed to just covering burial costs.
The flexibility of final expense insurance also extends to your choice of service providers. This means you can designate funds without being tied to a certain provider, geographic area, or plan. Final expense insurance leaves your options open, a great benefit given the length of time that may pass between choosing and using a policy.
You don’t have to wonder whether your ceremony will reflect your personal values or whether your remains will be dealt with in a way that you find appropriate. You can have the time to make those decisions and be at peace knowing that your funeral will represent who you really were.
The biggest, intangible benefit of final expense insurance is to ease the burden for grieving loved ones. When people have to plan and pay for the funeral of a loved one, they might view the responsibility as a final expression of their feelings toward the deceased. This mindset can lead them to spend money beyond what their income allows for, causing even more stress during an already-trying time. When you choose to invest in funeral insurance, you are ensuring that your family and friends will face their grief without the extra burden of planning and paying for a funeral. So, for your family and your peace of mind, call Andrews Insurance today to ask more questions about purchasing your affordable final expense insurance.
