You hear the term Final Expenses thrown out pretty regularly these days. There are countless commercials advertising coverage for your burial or final expenses for pennies a day. But what does this cover? How does this work? Is it worth the investment? When should you consider purchasing protection? This article aims to answer all of these questions.
Final expense coverage is a special type of life insurance that is designed to cover or offset your final expenses. Dying is expensive and when people begin to consider the financial impact it will have on their loved ones, they often times look to a life insurance policy to provide protection. When you pass, your family members simply inform the company, or better yet their trusted agent, and the proceeds are sent tax-free to them. Oftentimes, funeral homes will accept the assignment of benefits as payment for a funeral. This means that your family could not have to front any money for your funeral. In addition, excess funds are retained by your family and can be used for things such as lost income, medical bills, estate taxes, legal proceedings, or any of the other many unforeseen expenses when you pass.
How does this work?
Attaining a Final Expense policy is simple. There are, however, many different companies to work with which is why it is imperative to work with a trusted agent that is a broker. This means that they do not work or endorse any specific carrier. A broker will be more in-tune with what your needs are and find the most appropriate fit for you. Once you settle on a company, the application is taken and submitted for approval. There are carriers that can approve you on the spot while others may take a few days. The application is taken either over the phone or in person. Regardless, there may be an interview with an underwriter and the application is sometimes signed using your voice. These are some of the factors that we, as agents, consider when choosing a carrier to apply for coverage with. Again, having a trusted advisor is very important in weighing the pros and cons of each carrier.
Is Final Expense Worth the Investment?
Without a doubt!!! Most people grossly underestimate the expenses involved in passing away. There are many, many unforeseen expenses – even when much time has been spent in preplanning. This being said, I never advise my clients to look at FInal Expense as an investment from the literal sense of the word. Yes… Final Expense accumulates cash value. Yes.. some policies will grow with interest. But at its core, it is a PROTECTION for your family. You purchase auto insurance to protect your car. You purchase homeowners insurance to protect your house. You purchase life insurance to protect your legacy. I have often seen the relief on a family member’s face when they find out their loved one had coverage.
When Should I Purchase Coverage?
The biggest factors in determining availability and affordability are age, health, gender, and tobacco use. The short answer is now!!! You are as young as you will ever be right now. You are as healthy as you will ever be right now. I have heard people tell me, well let me quit smoking first. We actually have companies that will give you non-smoking rates…even as a smoker. The most important thing is to obtain coverage now. You simply don’t know what the future holds, and having coverage in place is going to provide the needed relief to your family and peace of mind to you.