Final Expense

What does final expense insurance cover?

A basic definition of final expense insurance is that it provides financial stability to your loved ones after your death, known as the death benefit. This payout can be used to pay off any accrued debt, such as a mortgage, medical bills, or other monthly bills. It can also cover funeral costs if you did not have an amount set aside as preparation. However, it is not required for the beneficiary to use the payout for these costs. The beneficiary can use the death benefit how they like.

Granted, the topic of death isn’t the most pleasurable of conversations. Still, it’s always worth knowing if your loved ones will be financially taken care of when that time comes. 

How can the death benefit be used?

With a final expense policy, you can receive additional features that include child riders, and accidental death and dismemberment:

  • Child riders in life insurance offer coverage if your child accidentally dies. This coverage can pay for medical and funeral expenses, but the coverage amount ultimately depends on how much coverage you buy.
  • Accidental death and dismemberment (AD&D) is financial protection issued to provide a payout for your family if you die from an accident, covering your unintentional death or dismemberment (the loss or the loss of use of a body part).

However, keep in mind that each policy is different, so you will need to confirm these benefits with the insurance company.

You can expect coverage amounts averaging around $5,000 to $25,000. This benefit is guaranteed to your beneficiaries as long as you keep the policy active by paying your premium payment. The death benefit is also not taxable.

How much coverage do I need?

Before buying a final expense policy, you need to factor in how much coverage is required by estimating household, funeral, and total final expenses. It would be best if you also considered inflation, meaning that the total amount for these expenses in the present could be more expensive in the future. For example, the average funeral cost is around $9,000, but it is expected to reach $13,000 in the near future. 

If you are still unsure about coverage, an expert with BTW Insurance can help you decide on the amount that fits your needs and budget.

Is final expense insurance worth it?

Final expense policies don’t provide as much coverage as other insurance, but it’s quite affordable if you find yourself on a tight budget. It also provides peace of mind as you and your loved ones can plan what the payout will be used for, providing a sense of financial stability instead of financial worries during a time of grief.