If you are looking for final expense life insurance, you may be wondering about your final expense life insurance eligibility.
Expenses associated with your death (casket, embalming, funeral home, etc.), can be unaffordable for those who love you who are left behind. Final expense life insurance can help protect your loved ones from paying or borrowing this money for your funeral.
In this article, we will offer some background on final expense life insurance and final expense mortgage protection insurance. We will also discuss the underwriting process for both of these types of life insurance.
What is the final expense life insurance policy?
A final expense life insurance is also commonly called a burial life insurance policy.
This life insurance is purchased to cover the cost and to help pay other expenses associated with a funeral. Burial insurance costs a fraction of what the actual funeral service and associated fees will cost.
Who purchases final expense life insurance?
The primary reason people purchase final expense life insurance policies is that they don’t want to leave the financial burden to the loved ones they will leave behind.
Everyone will die, and having something in place to pay for your funeral while not transferring your funeral costs to family and loved ones is a responsible decision.
Why do they call it “final expense” life insurance?
When you die, there will be expenses associated with your death. There will be funeral expenses.
There may also be medical bills, debt, and expenses that must be paid. Final expense life insurance can be used to pay off outstanding automobile loans, credit card debt, and other financial obligations.
Can final expense life insurance be used for my mortgage?
Final expense life insurance is often used to help pay mortgage bills. Many of our clients purchase final expense insurance to pay their monthly mortgage payments for a fixed period.
Here’s an example:
Your parent, Bob, and Suzanne are ages 83 and 81, respectively. Their home is worth $215,000, and they have a mortgage payment of $833 a month. Their mortgage balance is $75,000.
BOB & SUZANNE EXAMPLE
Bob and Suzanne are like many seniors that are “house rich” and “bank poor.” Bob and Suzanne had a lot of equity in their home, but they had little savings in the bank.
Bob and Susan purchased a final expense policy for each that would pay $10,000 each to their loved ones when they passed away. His $10,000 was to be used to pay their mortgage payments upon their death for one year.
By assuring that the mortgage payments would be for one year, Bob and Suzanne were comfortable knowing their children would not be responsible for this financial burden.
By having the mortgage payments paid for one year, Bob and Suzanne’s children would have time to grieve properly, liquidate assets, get the home ready for sale, and not have to sell the house quickly to get the best possible pricing.
Final expense life insurance can be used to make sure the mortgage payments are made for 12 months, 18 months, 24 months, (or longer). It also assures the home will not go into foreclosure due to lack of cash to make the mortgage payments.
Bob and Susan’s children can then sell the house for the best possible price in the next 12 months. If the home sold for $215,000, the children could pay off the existing mortgage balance of $75,000, leaving them with $140,000 profit.
Bob and Susan realized that, with a small monthly investment for a $10,000 final expense policy intended to protect their home equity, their children would receive at least $140,000 from their estate.
The small amount of money they put in their final expense equity protection policy protected a large amount of equity they had in their home.
How much final expense life insurance can I buy?
Final expense life insurance policies can be purchased for any amount you feel appropriate. Most final expense policies will be for face amount under $100,000. Most final expense policies require no physical or medical exam.
Most of our clients at Life Wealth choose final expense policies in the $10,000-$35,000 range. This is an adequate amount of money for most families’ burial, mortgage equity protection, and end of life expenses.
What should I look for when shopping for a final expense policy?
The first thing you need to shop for is an honest life insurance agent with your best interest in mind. You also want a life insurance agent who works with many life insurance companies to ensure you get the lowest rates and highest face amount.
You also don’t want a life insurance agent who will pressure you into purchasing more final expense life insurance coverage than you need. This coverage is very important to your loved ones when you die, and if you can’t afford an expensive policy you were sold by a commission-hungry life insurance agent, it will do your family no good after it is canceled.
At Life Wealth Win, we work with you to find you the most affordable coverage possible and find your final expense coverage that comfortably fits your budget. If you need more coverage, you can always add to your plan as money becomes available.
Read the fine print
Nobody likes reading the fine print in life insurance contracts, so your agent should be very clear when explaining any policy provisions or restrictions. Ask lots of questions, and even refer to this website page to get the best pricing and plan you qualify for.
Will I be eligible for final expense life insurance?
Everyone under the age of 85 years old will qualify for final expense life insurance.
How much will final expense life insurance cost?
The cost of your life insurance is calculated using your age, height, weight, health, and hobbies/lifestyle.
For most people, your age, height, weight, and health are the factors that will determine your life insurance eligibility in premiums.
If you work at a dangerous job, engage in hazardous sports or hobbies, or travel to dangerous places throughout the world, these will also be considered when issuing you a final expense policy.
What types of final expense life insurance policies are there?
Three types of life insurance are used for final expense policies. They are whole life insurance, universal life insurance, and term life insurance.
The preferred policies will have immediate eligibility, so your life insurance will go into force immediately.
If you have had significant health problems like diabetes, epilepsy or cancer, you still may qualify for competitive final expense rates. The life insurance companies may, however, require a two-year waiting period before full payment of a death benefit.
Here are two stories of people we have helped:
JOHN & MARGARET EXAMPLE Couple #1:
John and Margaret are 72 and 69 years old, respectively. John and Margaret each purchased a $25,000 whole life final expense life insurance policy to pay for their funeral expenses and 12 months of their mortgage payments upon their death.
John and Margaret had normal health problems most seniors will experience as they get older. They were both on high blood pressure medications, John had had heart stent surgery four years ago, and Margaret was on thyroid medication and hormone replacement therapy. Margaret had also had basal skin cancer treatment five years ago.
We found John and Margaret final expense policies that qualify them for immediate coverage, even with their past health and medical challenges. Because enough time had passed since there were serious medical problems, we got them qualified for immediate coverage at the best rates in the industry.
ROBERT & PAULINE EXAMPLE Couple #2:
Robert and Pauline were 79 and 78, respectively. Robert had had prostate surgery two years ago, and Pauline had a small stroke in the previous two years. Despite these health problems, Robert and Pauline were in excellent health. They were released from their doctor with no restrictions and had no further medical requirements.
We got Robert and Pauline each a $15,000 whole life policy with a two-year waiting period before the full final expense death benefit became available. Robert and Pauline were comfortable with this, as their medical condition was stable.
This policy also guarantees, if they died during the first two years, they would get refunded their full premium paid into the policy +10% additional payment. Even if they died in an accident during this time, they would be paid the full final expense policy face amount of $15,000.
Robert and Pauline were thrilled to have coverage that offered them a return of premium +10% if they died in the first two years, a guaranteed payout of $15,000 if killed in an accident in the first two years, and a guaranteed payout of $15,000 after two years had passed.
We also help clients structure universal life insurance policies as final expense policies. These policies can be more affordable than other final expense policies if structured properly.
Term life insurance can also be used for final expense policies, but if you die after the term period has ended, your loved ones will receive no payout from your life insurance contract.
If you’re older than 50, whole life policy or properly structured universal life policy would be our primary recommendation.
What’s the maximum age I can be to purchase a final expense policy?
85 is the maximum age at which you can purchase any life insurance or final expense policy. Life expectancy for females is 81.2 years. The life expectancy for males is 76.4 years. The earlier you purchase final expense coverage, the easier it will be to fit your budget.
Although you can purchase final expense coverage later in life, your age and health will affect your eligibility and premiums.
What if I need less than $100,000 in final expense coverage?
Whole life insurance or a properly structured universal life insurance policy is our recommendation for clients. We can help you with policies that have no medical exam requirement and get you locked in a premium that will never increase.
What if I need more than $100,000 in final expense or life insurance coverage?
We can help you with whole life insurance or a properly structured universal life insurance policy. Most of our clients seeking more than $100,000 in final expense coverage are good candidates for guaranteed universal life insurance policies.
The premiums for guaranteed universal life insurance policies will be less expensive than whole life insurance, coverage amounts are flexible, and a guaranteed universal life insurance policy can be structured to provide final expense coverage up to age 90, 95, 100, and even 121 years of age.
If you have significant health problems, we will help you understand your eligibility for guaranteed universal life insurance. For people with significant health problems, smaller face amount and whole life insurance may be a more appropriate and financially viable solution.
What about term insurance for final expense life insurance?
A properly structured term life insurance policy can work for the final expense policy. Most term life insurance policies are purchased for 10, 15, 20, 25, or 30 years of coverage. But what happens after the term period expires?
If you want a term insurance policy that would have the flexibility to offer final expense coverage, we would recommend a term policy with a conversion option.
The conversion option allows you, at some point in the future, to convert your term policy into a universal life or whole life policy with no medical examination or other health restrictions.
With this option, you can purchase a higher face amount term policy to protect your family, home, income, children’s education, and other financial requirements when you’re younger and convert your policy to a final expense policy as you age later in life.
I have health problems. Can I still get final expense life insurance?
Yes, you can…if you work with somebody like Life Wealth Win.
We work with over 40 life insurance companies. It is rare that we cannot find an affordable final expense life insurance policy for our clients.
If you have health problems, we can find you the best rates available. Even with significant health challenges, you can purchase guaranteed issue life insurance policies that will pay for your final expense needs.
In our story above, we told you how we help Robert and Pauline qualify for a plan with a two-year waiting period due to their recent health problems. They were still covered against accidental death and got a refund of all their premiums +10% should something happen in the first two years.
Depending on your health, another example of a final expense plan would provide 30% of the death benefit in the first year, 70% of the death benefit in the second year, and 100% of the death benefit in the third and following years. You would also be eligible for a common carrier accidental death benefit of 100% of the face amount during the first two years.
What about the final expense policies I see advertised on TV?
We don’t recommend the final expense policies you see advertised on TV. Advertising on TV is expensive, and this cost is passed on to clients.
Television advertised final expense policies are often plans with a two-year waiting period for the death benefit to be paid.
Since most people will qualify for immediate coverage, purchasing final expense coverage you saw advertised on TV is not a wise financial decision.
Because the final expense TV coverage has a two-year waiting period, this means unhealthy people or people with significant medical problems will qualify for this coverage…along with healthy people.
Because healthy people qualify for better final expense rates, there’s no sense purchasing the same, more expensive TV advertised final expense policy that people with significant health problems will also qualify for.
What does a TV coverage life insurance final expense policy application look like?
Most policies ask only three questions. However, within each question, a bunch of other questions will be used to determine your eligibility for a final expense policy.
We do not recommend these TV life insurance policies, as your eligibility will often be determined in the “fine print” of your policy.
Many TV life insurance policies will increase in price over time, expire or terminate before you need them, or will not pay your loved ones due to an exclusion in the “fine print”.
Here’s an example of a final expense life insurance application you may want to consider avoiding:
The above example is a final expense policy offered by AARP. If you fill out an application like the one above, you may be denied coverage in the first two years if you accidentally forgot to disclose some health information.
Should I purchase an AARP final expense policy?
We recommend you not fill out a life insurance application mailed out to everyone your age throughout the United States. You probably will qualify for higher premiums at better rates than an AARP life insurance policy.
One thing most people don’t realize is that AARP does not underwrite or pay out life insurance claims.
AARP uses New York Life to underwrite and issue their life insurance policies; AARP is not an insurance company. AARP is a marketer for New York life insurance and receives commissions on every sale of life insurance to their members.
AARP life insurance policies increase in price every five years. When you need this final expense coverage and life insurance coverage the most, the policies become so expensive you cannot afford them any longer.
Your AARP/New York Life insurance policy will expire at age 80. This is a huge drawback, as our elderly citizens are living longer and longer.
For less money than you are spending with your AARP/New York Life insurance policy, you can invest in a policy that will last until you die (not just until age 80), your premium will not increase every 5 years, and your premiums will be less than an AARP New York life insurance policy sent to you in the mail.
You can view the AARP/New York Life insurance policy reviews to see what other people say about these policies.
We see no advantage in purchasing an AARP/New York Life insurance policy when they will not pay in the first two years, your insurance rates will go up every five years, and your policy will only expire at age 80.
Isn’t it better to “self-insure”?
Self-insuring means you take the money you would be paying for life insurance coverage or final expense coverage and deposit it in the bank.
If you need $15,000 final expense coverage, and you plan on self-insuring, you won’t have that $15,000 in your bank account for a long time. For an affordable monthly payment, you can purchase a life insurance policy that will pay your loved ones $15,000 the day your policy is approved.
Most people don’t have money in their bank account to pay for final expense coverage; that’s why they are shopping around for final expense life insurance.
If you want to self-insure, we recommend you purchase a final expense life insurance policy, so you have immediate and guaranteed coverage.
You can then save additional money in your bank account each month. When you are comfortable with the amount saved in your bank account, you can cancel your final expense life insurance coverage and add that additional amount each month into your savings account.
By doing it this way, you will have immediate coverage and have established a savings plan that puts money in your bank account monthly to reach your total final expense financial requirements.
If you have been shopping for final expense life insurance, call us to help you understand your final expense life insurance eligibility options.
At Life Wealth Win, we specialize in healthy to high-risk life insurance cases. We can help you understand your final expense life insurance options.
We work with clients across the nation to get the best life insurance rates possible. If you need final expense life insurance, we can help you get the best final expense life insurance rates.