Covering Final Expenses

• Money already set asideSavings genuinely earmarked for this, or a prepaid arrangement with a funeral provider. Both reduce what a policy needs to carry.
• Coverage already in forceAny policy the household holds can meet these costs, because a death benefit is not restricted to a purpose. A separate final expense policy is only needed where the existing coverage would not cover it or would not be available quickly.
• How fast the money is neededThis is the real argument for a dedicated small policy: these costs arrive in the first weeks, and a household may want money available without waiting for anything else to be settled.
• Whether the household would rather not touch savingsA legitimate preference, and often the actual reason people buy in this market. Worth naming, because it changes the amount.

• Fully underwrittenLess common at these amounts, because the cost of underwriting is out of proportion to a small policy. Where available, generally the lowest cost per dollar.
• Simplified issueA short health questionnaire, usually no exam. You can be declined. Generally more coverage for less money than guaranteed issue, which is why it is worth trying first.
• Guaranteed issueLimited or no health questions within an age band. Generally the highest cost per dollar, and most of these contracts limit what is paid in the first policy years — the structures vary and the contract governs.

How simplified issue works, and who it accepts

Guaranteed issue, and what the early years mean

• Assuming there is one universal funeral costQuoted averages are averages of choices. What it would cost your family depends on what your family would choose and where. Local providers can give you a real figure.
• Buying on the label rather than the contract“Final expense insurance” describes a purpose. Two products under that name can differ in underwriting, in cost per dollar and in what is paid in the early years.
• Assuming it must be guaranteed issuePlenty of people who assume they would not qualify would pass a simplified-issue questionnaire — which typically means more coverage for less money.
• Overlooking coverage already in forceA death benefit is not restricted to a purpose. Existing coverage can meet these costs, and a separate policy may not be needed at all.
• Forgetting the costs beyond the funeralTravel, time off work, administration and remaining medical bills are real and are usually missing from an estimate built around a funeral quote.
• Not doing the premiums-against-benefit arithmeticOn a small policy bought later in life, total premiums paid over time can approach the death benefit. Knowing that in advance is part of buying deliberately.

• Small whole lifeThe structure most products in this market actually are. Permanent coverage designed to remain in force for life, with premiums generally designed to stay level, subject to the terms of the contract.
• A small term policySometimes less expensive for the same amount, and worth comparing. The tradeoff is that it ends, and final expenses do not have an end date — so a term policy that expires has not met this goal.
• Part of a larger policyOften the simplest answer for a household that already holds coverage: add the final expense figure to the amount rather than buying a second contract.
• Savings, or a prepaid arrangementInsurance is not the only way to fund this. Money set aside, or an arrangement made directly with a provider, are both legitimate approaches with their own tradeoffs.

How whole life insurance works

• Funeral, burial or cremationUsually the largest single item, and the one with the widest range depending on what a family chooses and where.
• A memorial or serviceVenue, catering, notices, flowers. Often planned separately from the funeral itself and frequently forgotten in an estimate.
• Remaining medical billsWhatever is left after insurance. Highly variable and not always known in advance.
• Estate administrationThe costs of settling affairs. These vary by state and by how the estate is held, and this page does not attempt to quantify them.
• Travel and family costsFlights, accommodation, time off work. Real, immediate, and almost always missing from a plan.
• Small outstanding debtsBalances a family may want cleared. Worth knowing that the CFPB explains debts are generally paid from the estate, and relatives are not personally responsible unless they shared legal responsibility.