Few of us want to think about the end of our lives. But if we don’t, we might leave the financial burden of a funeral, burial, and other end-of-life needs on our children’s shoulders.
One way to eliminate some money stress for your loved ones is to invest in final expense insurance. This coverage pays out a sum of money to the named beneficiary to cover end-of-life costs.
Some people fail to buy final expense insurance because of a few common misconceptions. Here are some myths about the coverage that could prove costly if they prevent you from shopping for a policy that might save you money.
If you’re over 50, take advantage of massive discounts and financial resources
Over 50? Join AARP today — because if you’re not a member you could be missing out on huge perks. When you start your membership today, you can get discounts on things like travel, meal deliveries, eyeglasses, prescriptions that aren’t covered by insurance and more.
How to become a member today:
- Go here, select your free gift, and click “Join Today”
- Create your account (important!) by answering a few simple questions
- Start enjoying your discounts and perks!
Important: Start your membership by creating an account here and filling in all of the information (Do not skip this step!) Doing so will allow you to take up 25% off your AARP membership, making it just $12 per year with auto-renewal.
Final expense coverage is too costly
Final expense insurance is typically less expensive than other forms of life insurance, including term insurance. The amount of coverage is significantly less than you will find in other life insurance policies, and that fact keeps a final expense policy affordable.
Costs vary by provider, and your age, gender, and health status also play a role in how affordable the coverage is. But it is reasonable to expect to pay anywhere from $25 to $200 a month.
It won’t cover funeral costs in full
You should be able to purchase enough final expense insurance to cover funeral costs. In fact, you can generally choose the level of coverage you desire.
Some folks are comfortable with $5,000 in coverage, while others might want $25,000.
You should wait until you are older or sick to buy it
Final expense coverage isn’t something to put off, and purchasing it when you are younger and healthier can reduce the overall cost.
If you buy a policy earlier in life, you may have a lower premium and may be able to purchase larger coverage amounts affordably.
Although you will likely be required to fill out a health questionnaire, policies generally do not require medical exams.
Resolve $10,000 or more of your debt
Credit card debt is suffocating. It constantly weighs on your mind and controls every choice you make. You can end up emotionally and even physically drained from it. And even though you make regular payments, it feels like you can never make any progress because of the interest.
National Debt Relief could help you resolve your credit card debt with an affordable plan that works for you. Just tell them your situation, then find out your debt relief options.1 <p>Clients who are able to stay with the program and get all their debt settled realize approximate savings of 46% before fees, or 25% including our fees, over 12 to 48 months. All claims are based on enrolled debts. Not all debts are eligible for enrollment. Not all clients complete our program for various reasons, including their ability to save sufficient funds. Estimates based on prior results, which will vary based on specific circumstances. We do not guarantee that your debts will be lowered by a specific amount or percentage or that you will be debt-free within a specific period of time. We do not assume consumer debt, make monthly payments to creditors or provide tax, bankruptcy, accounting or legal advice or credit repair services. Not available in all states. Please contact a tax professional to discuss tax consequences of settlement. Please consult with a bankruptcy attorney for more information on bankruptcy. Depending on your state, we may be available to recommend a local tax professional and/or bankruptcy attorney. Read and understand all program materials prior to enrollment, including potential adverse impact on credit rating.</p>
How to get National Debt Relief to help you resolve your debt: Sign up for a free debt assessment here. (Do not skip this step!) By signing up for a free assessment, National Debt Relief can assist you in settling your debt, but only if you schedule the assessment.
You don’t need final expense coverage if you have savings
It is true that you could put aside money to cover your final expenses in a savings account. While that is an option for many people, it is not always ideal. End-of-life costs can be relatively high.
More importantly, final expense coverage pays out right away at the time of death, making it more accessible to your heirs, who won’t have to wait for your estate to be settled.
You don’t need it if you have life insurance
Final expense insurance and traditional life insurance seem similar because they both pay out a death benefit at the time of your death. However, there are fundamental differences in these policies you shouldn’t overlook.
Traditional life insurance allows you to leave funds behind to your named beneficiaries that they can use for anything they need or want.
On the other hand, final expense insurance is intended to cover the final costs of your life, including medical bills, funeral costs, burial costs, and others. And this type of policy typically pays out much faster than other forms of life insurance.
Trending Stories
Coverage can’t be customized
Final expense coverage is just as flexible as any other type of life insurance. Choose the amount that fits your needs and works for your budget.
Also, note that you may be able to add riders to your final life insurance that provide for specific needs. For example, you may be able to purchase an accelerated death benefit that you can tap to cover medical expenses if you are terminally ill.
It’s only for funeral expenses
Final expense insurance can be used for more than just funeral expenses. The payout can be used in most situations without limitation.
Your named beneficiaries can use the money to pay off personal loans, cover your medical bills, or pay for day-to-day costs if you die suddenly. The money can be used however the beneficiary sees fit.
Your beneficiaries must pay taxes on the benefit
The IRS does not levy taxes on life insurance benefits, including final expense insurance benefits. This type of payout is not considered to be part of a beneficiary’s gross income.
This means your heirs do not need to claim the benefits paid to them on their taxes.
How to shop for the right final expense insurance policy
To buy final expense insurance, start by estimating the amount of coverage you need based on the funds you wish to leave behind and what you want them to pay for after your death.
Once you do that, start to narrow down the list of policy options based on the terms and conditions, the insurance company’s reputation and financial stability, and overall policy features.
Comparing quotes from a number of providers is one of the best ways to get a deal on life insurance. So, shop around for the right final expense policy before you commit to one company.
Earn cash back on everyday purchases with this rare account
Want to earn cash back on your everyday purchases without using a credit card? With the Discover®️ Cashback Debit Checking account (member FDIC), you can earn 1% cash back on up to $3,000 in debit card purchases each month!2 <p>See website for details.</p>
With no credit check to apply and no monthly fees to worry about, you can earn nearly passive income on purchases you’re making anyway — up to an extra $360 a year!
This rare checking account has other great perks too, like access to your paycheck up to 2 days early with Early Pay, no minimum deposit or monthly balance requirements, over 60K fee-free ATMs, and the ability to add cash to your account at Walmart stores nationwide.
Don’t leave money on the table — it only takes minutes to apply and it won’t impact your credit score.
Bottom line
When you are planning for retirement, don’t forget to also make provisions for your end-of-life costs.
Covering your final expenses with insurance can eliminate concerns about who will pay for these costs after you are gone. It ensures your family won’t have to go into debt to cover these expenses.
That is a thoughtful and loving legacy to leave behind.
Lucrative, Flat-Rate Cash Rewards
FinanceBuzz writers and editors score cards based on a number of objective features as well as our expert editorial assessment. Our partners do not influence how we rate products.
Wells Fargo Active Cash® Card
Current Offer
$200 cash rewards bonus after spending $500 in purchases in the first 3 months
Annual Fee
$0
Rewards Rate
Earn unlimited 2% cash rewards on purchases
Benefits
- Low spend threshold for its welcome offer — $200 cash rewards bonus after spending $500 in purchases in the first 3 months
- Cell phone protection benefit (subject to a $25 deductible)
- Can redeem rewards at an ATM for literal cash
Drawbacks
- Foreign transaction fee of 3%
- No bonus categories
- Select “Apply Now” to take advantage of this specific offer and learn more about product features, terms and conditions.
- Earn a $200 cash rewards bonus after spending $500 in purchases in the first 3 months.
- Earn unlimited 2% cash rewards on purchases.
- 0% intro APR for 12 months from account opening on purchases and qualifying balance transfers. 19.49%, 24.49%, or 29.49% Variable APR thereafter; balance transfers made within 120 days qualify for the intro rate and fee of 3% then a BT fee of up to 5%, min: $5.
- $0 annual fee.
- No categories to track or remember and cash rewards don’t expire as long as your account remains open.
- Find tickets to top sports and entertainment events, book travel, make dinner reservations and more with your complimentary 24/7 Visa Signature® Concierge.
- Up to $600 of cell phone protection against damage or theft. Subject to a $25 deductible.
Subscribe Today
Want extra-cash moves to come right to you?
Stop browsing endlessly. Get proven ways to earn pocket money, help cover rent, and crush your debt — sent to your inbox daily.