Life insurance seems like a basic topic, but there are many avenues you can explore to choose the best option in a life insurance plan. There are basic life insurance policies, and there are final expense life insurance policies. Deciding on which one to get can mean the difference in what is covered by one policy and lacks coverage in a certain area.
Final Expense
A final expense policy is the easiest to get approved for and is a whole life insurance policy. They are also known as a burial or funeral policy. This policy has a small death benefit which means funerals, memorial services, casket, and all the costs of these delicate situations are covered by the policy.1 This is often one of the most important reasons some choose to obtain life insurance. The funeral cost can be costly, but this money can also be used in other ways if your financials are in line.
Final expense policies are not too different than a regular life insurance policy. Most insurers cut the cost by breaking down a policy to meet an individual’s income’s financial needs.2 Since this policy is mainly designed for burial costs, it can be more cost-effective and is often a choice among those on a fixed income.
Regular Life Insurance
This is another type of whole life insurance. This type of policy covers the contract holder for their entire life. The difference between this plan and a final expense is that these policies payout to a beneficiary and include investment components, which can accumulate cash value and be withdrawn or borrowed against if funds are needed.3 This money can be used to pay for burial expenses and cover your beneficiary with the loss of income that may arise in situations of passing.
This is lifelong coverage that can help your family at their time in need. As long as the premium is paid, your beneficiaries can claim the policy death benefits and a guaranteed cash value. The cash value can grow over time tax-free, making this a great option to plan beyond burial cost.4
There are many companies out there who provide both types of insurance policies to fit your financial budget. Deciding on how much coverage you would like to leave your loved ones is the most important. The emotional cost and the financial cost of someone passing are difficult, especially if we are unprepared.
Final Thoughts
Planning for the future often involves considering a life insurance policy. Whether we choose a final expense or a traditional plan, understand what is covered and what your beneficiaries will receive. Life insurance is a great way to ensure your loved ones can cover all burial expenses and also may be able to pay for other costs that come with losing a loved one. No matter what stage of life we are currently in, it is never too early to consider planning for the future.
