9 Questions to Ask Before Buying Final Expense Insurance
Buy Final Expense Insurance
Final expense insurance is a thoughtful way to ensure your loved ones won’t be burdened with the costs of your end-of-life expenses. However, choosing the right policy can feel overwhelming, especially with the wide range of options available. Asking the right questions before purchasing final expense insurance can help you make an informed and confident decision.
This guide outlines the top 10 questions to ask when shopping for a final expense insurance policy, ensuring you select coverage that meets your needs and budget.
First Thing You Need To Know Before Buying Final Expense Insurance:
How Much Coverage Do I Need?
The first step in choosing a final expense insurance policy is determining how much coverage you’ll need. Consider all potential end-of-life costs, such as:
- Funeral and burial expenses (average $7,000–$12,000).
- Outstanding medical bills or debts.
- Any additional financial support you’d like to leave for your loved ones.
Tip:
Write down all estimated costs to calculate the total amount of coverage required. Final expense policies typically range from $5,000 to $25,000, making them ideal for covering smaller financial needs.
What Type of Policy Is Best for Me?
There are two main types of final expense insurance you should need to know before to buy final expense insurance policy:
- Simplified Issue Insurance:
Requires answers to basic health questions but no medical exam. Offers lower premiums and immediate coverage for healthier individuals. - Guaranteed Acceptance Insurance:
Guaranteed approval without health questions or a medical exam. Designed for those with severe health conditions but usually comes with higher premiums and a waiting period.
Which One to Choose?
- If you’re in relatively good health, simplified issue insurance may be the better option.
- If you have significant health issues, guaranteed acceptance insurance ensures you’ll get coverage.
- Simplified Issue Insurance:
Are the Premiums Fixed?
It’s essential to confirm whether your premiums will remain the same for the life of the policy. Fixed premiums mean you won’t face unexpected rate increases as you age or if your health changes.
Key Question to Ask:
- “Are the premiums locked in for the duration of the policy?”
Avoid policies with variable premiums, as they can become unaffordable over time.
Some final expense insurance policies, especially guaranteed acceptance policies, include a waiting period. This is the time (usually 2–3 years) during which the full death benefit is not payable. If the policyholder passes away during the waiting period, beneficiaries typically receive a refund of the premiums paid plus interest.
Important to Know:
- Simplified issue insurance usually has no waiting period.
- Guaranteed acceptance insurance often includes a waiting period.
Ask This:
- “Does this policy have a waiting period? If so, how long is it?”
Are There Any Exclusions?
Insurance policies often include exclusions that may prevent your beneficiaries from receiving the death benefit. Common exclusions may include:
- Suicide within the first two years of the policy.
- Death due to certain high-risk activities or criminal acts.
Key Question to Ask:
- “Are there any exclusions that could affect the payout of the death benefit?”
Understanding these exclusions ensures you’re not caught off guard.
How Quickly Are Death Benefits Paid Out?
One of the primary benefits of final expense insurance is that it provides quick financial relief to your loved ones. However, the payout timeline can vary depending on the insurer.
Ask These Questions:
- “How long does it take to process and pay a death benefit claim?”
- “What documentation will my beneficiary need to provide?”
Policies with a faster claims process can significantly ease the financial strain on your family.
Who Should I Name as My Beneficiary?
Your beneficiary is the person or entity who will receive the death benefit when you pass away. Common choices include:
- A spouse, child, or close family member.
- A funeral home (via an assignment of benefits).
Questions to Consider:
- “Who is the most responsible person to handle the funds?”
- “Should I name multiple beneficiaries and specify percentages?”
Ensure your beneficiary understands their role and responsibilities.
Is This Policy from a Reputable Company?
Not all insurance providers are created equal. Choosing a reputable insurer ensures your policy will be honored when your family needs it most.
Key Considerations:
- Financial ratings from agencies like A.M. Best, Moody’s, or Standard & Poor’s.
- Customer reviews on platforms like Trustpilot or the Better Business Bureau.
- Length of time the company has been in business.
Ask These Questions:
- “What is the company’s financial rating?”
- “Does the insurer specialize in final expense insurance?”
Are There Optional Riders Available?
Many final expense insurance policies offer optional riders that can enhance your coverage. These riders come at an additional cost but provide extra benefits.
Popular Riders Include:
- Accelerated Death Benefit Rider: Access part of the death benefit if diagnosed with a terminal illness.
- Waiver of Premium Rider: Waives premiums if you become disabled.
- Child or Grandchild Rider: Provides coverage for younger family members.
Ask This:
- “What riders are available, and how do they enhance the policy?”
Only choose riders that align with your specific needs and budget.
What Happens If I Miss a Payment?
Life can be unpredictable, and missing a premium payment might happen. It’s crucial to understand how your insurer handles missed payments and if there’s a grace period.
Ask These Questions:
- “What is the grace period for late payments?”
- “Can I reinstate my policy if it lapses?”
Some insurers offer flexible payment options or reinstatement policies, so it’s important to know your options.
Final Thoughts
Final expense insurance is a valuable tool for providing peace of mind and financial security for your loved ones. However, not all policies are the same, and asking the right questions is essential to finding the best coverage for your needs.
By addressing these 10 questions, you can feel confident in your decision and ensure your policy aligns with your financial goals and family’s needs. If you’re ready to buy final expense insurance explore your options, consult with a licensed insurance agent who can guide you through the process and help you make an informed choice.
Start Planning Today and give your family the gift of peace of mind.