Life Insurance Plan – Moving Beyond Funeral Expenses

All of us understand the value of life insurance in allowing our loved ones to continue to cover their daily expenses in case of death. The aim is to ensure that there is sufficient money to clear unpaid debts, and to continue to meet the needs of your family.

Life insurance is considered a long-term measure of financial stability and depending on the needs, there is a broad range of different choices. When you’re on the insurance policy market to cover your clients, you need to make sure you understand what you’re looking for and what your purchasing choices are.

Does Life Insurance Cover Funeral Costs?Oregon-Life-Insurance-Plan

There are also unexpected financial burdens left to manage on their behalf when a loved one passes away. This includes paying for the funeral if no plans have been made in advance. 

While almost 60 percent of Americans have life insurance, the payout you may obtain as a living family memory. And it is not always a funeral expense choice. Also if your loved one has a program in place, the refund might not be issued in time, or it may not cover the entire amount— leaving you to pay out of pocket for final arrangements.

What is Final Expense Insurance?

Final expense insurance is a form of permanent life insurance where the death payout is used to cover medical and other end-of-life costs. Most often requiring funeral or cremation facilities, things such as caskets and urns, and more. 

Permanent life insurance shall not expire and shall remain in place as long as the premiums are paid. When you buy final expense insurance, the policy will be in place until you die. And the beneficiaries earn the death benefit, as long as you continue to pay the premiums. (Learn more about Life Insurance with Living Benefits.)

  • Guaranteed Issue Policy asks only a few knockout questions to guarantee that you don’t have a terminal illness at the moment. But then it would protect people at high risk. This is also more expensive than condensed lifetime and provides smaller average coverage rates, usually at or below $25,000.
  • Simplified issue life insurance is for persons who may not qualify for full life insurance policy, but are only considered moderate risk. A comprehensive medical questionnaire would have to be answered but there is no medical review involved. This is the best chance for having an inexpensive life insurance policy of up to $50,000 in coverage.

Is it worth it?

When it comes to life insurance a term policy will always be the first choice. It’s the most cost-effective way to pay funeral costs, and your loved ones could have some other costs.

However, if you desperately need financial insurance and can only be protected by answering health questions and avoiding medical review. It may be worth looking into a final expense plan. You should also talk to a licensed professional who can help you compare options. This is before you agree to an expensive life insurance policy for the final payment.

How to use final expense insurance as funeral insurance?

Final expense insurance is meant to be used as burial insurance for funeral expenses but the recipient is not expected to do so practically (or legally). The value of death can be used for whatever they wish.

Policyholders name someone a beneficiary that they trust to use the death benefit money to fulfill their funeral plan. It is particularly true of final expense insurance policyholders; they usually skew older people in age and may not have trusted individuals such as a spouse or siblings to appoint as their beneficiary.

Many funeral homes will consider a mortgage benefit payout grant from insurance policy. This means the proceeds go straight to the funeral home to cover the burial expenses. (The funeral home would be the main beneficiary, and the secondary beneficiary would earn some money over the funeral costs.) When making plans, make sure you inquire about this. And don’t presume that the funeral home will consider this kind of payment method; some funeral homes demand payment up front and won’t wait until the insurance policy ends up paying out.

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