What is Final Expense and Burial Insurance?
There are many terms given towards the various implementations of Life Insurance. When it comes to permanent, whole life insurance for the over 45 market, those terms may include; Pre-need insurance, final expense, burial planning, senior life, funeral planning, or guaranteed life. Despite the synonyms, these plans all do the same thing, albeit in some different ways. They are all geared toward giving seniors initial or additional permanent insurance, specifically aimed at removing the financial burden death could bring to their heirs. This article aims to parse out the few differences between the common names so that any confusion may be removed for those that find themselves in this market.
What is Final Expense Insurance?
Final expense insurance is the most common name given to life insurance that is placed in force to specifically be used to satisfy all the final affairs that traditionally need to be paid for at the end of ones life. These plans usually are made payable to a beneficiary or familial heir that is a trusted person in the insured’s life. Although funeral or cremation costs are a significant part of those costs, we often also see things like medical debt, vehicle payments, and end of life celebrations used in calculating the desired coverage. Some final expense plans offer discounts for those in better health with preferred ratings that can be some of the lowest rates in the industry.
What are Burial Plans/ Pre-Need Plans?
If you took a final expense, whole life insurance plan and made a funeral home the beneficiary for an amount that would satisfy their fees, you would have what is often referred to as a burial plan or pre-need insurance. These plans are typically more narrow in their scope of coverage, aimed at providing the exact amount of funds needed for a funeral or cremation. Often the funeral or cremation is planned and designed along with the issuing of the policy. Upon death of the insured, the funeral home receives the death benefit directly from the insurer allowing a smooth process for those arrangements.
What is Guaranteed Life Insurance?
Guarantee whole life or final expense plans can be used as both burial and final expense coverage. The thing that separates these policies are the way in which the insurance company underwrites the coverage. When a client has too many medical or legal complications to be able to qualify for an immediate payout final expense or burial plan, advisors usually turn to guarantee plans. In a Guaranteed Life Insurance plan the insurer is willing to issue a policy for an amount of insurance usually not greater than $25,000 in death benefit. In return the insured is promising to pay premiums for 2-3 years during which the full death benefit is not payable. This means that within the first few years of a Guaranteed plan, if you pass away your beneficiaries will only see a return of your premium payments instead of the death benefit they desired. After those initial years, the full benefit would be payable. These plans are great for those whose health precludes them from the standard options.
All of these plans require the proper guidance and shopping for the individual need to be met. Bay Life Brokerage specializes and enjoys offering that guidance, best of all our service is free as we are paid by the financial firm and not the client.
