Final expense insurance is a type of whole life insurance with a low death benefit that is easier to qualify for. “Funeral insurance,” “burial insurance,” “simplified issue whole life insurance,” and “modified whole life insurance” are all terms used to describe final expense insurance. Final expense insurance can also help cover outstanding debts, probate fees, and other remaining expenses. It can be purchased as either a term or whole life policy.

How It Works

This policy's value may rise with time. It functions similarly to a savings account, with the amount increasing as you deposit money. The cost of your initial premium depends on your age: the older you are, the more you should pay.  However, the amount of your premium will not increase as you become older. You can designate a beneficiary for final expense insurance policies, which means you can choose an agent who will be legally responsible for allocating funds.

You won't have to take a medical test to get coverage, and your policy won't be canceled if your health changes. Those in poor health can purchase final expense insurance with graded benefits, which means that just a portion of your policy will be available for the first few years of coverage.

To figure out how much final expense coverage you'll need, you'll first have to estimate your entire final expenses, which is a simple four-step process:

Step 1: Calculate Your Household Expenses

The whole amount of a regular month's expenses, including housing payments, utilities, auto expenses, food and transportation costs, insurance fees, and so on, is multiplied by three to estimate family expenses. This is roughly the amount needed for your family to survive for three months.

Step 2: Count in the Cost of a Funeral

The type of services you select will impact the cost of your funeral. According to the National Funeral Directors Association, the average funeral can cost $7,360, but it may cost up to $8,755 if you include a crypt, which many cemeteries require.

Step 3: Total Final Expenses

Add the aforementioned expenses together to get your total final expenses. This amount would be the bare minimum in terms of coverage to cover both funeral and family expenditures.

Step 4: Keep Inflation in Mind

Multiply the sum you have in Step 3 by the inflation factor provided for your age group.

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