Do I Need a Final Expense Policy?

Last updated November 23, 2022

What is Final Expense?

Final expense is a type of permanent life insurance that is meant to cover expenses associated with the end of life such as funeral and burial costs, final medical bills, and sometimes costs associated with settling an estate. Final expense is also commonly known as burial insurance or funeral insurance.

Your final expense policy can give your beneficiaries peace of mind upon your passing and ensure you get the funeral and burial you want.

Why would I need a final expense policy?

Most commonly, people get a final expense policy for one of the following reasons:

They want to make sure their family can pay final medical bills and funeral/burial costs
They want to pay for or plan their own funeral and burial services – this can be accomplished with a traditional final expense policy or a pre-need policy through a specific funeral home
They want to leave their family some money for end-of-life expenses but they do not want to have the results of a medical exam impact their life insurance policy – most final expense policies do not require a medical exam

Do I need final expense if I already have a term life policy?

If you have term life insurance, the death benefit can be used to cover any funeral or medical bills. However, term life policies are usually intended to cover your loss of income in the event of your passing. If you are a primary wage-earner in your family, you may decide that you would like to reserve your entire term life death benefit for your family’s day-to-day expenses.

You can supplement your term life policy with final expense insurance to allow your family to use the entire term life benefit to cover their living expenses while using the separate final expense funds to cover any pricey, unexpected end-of-life costs.

Ultimately, the decision of if you need a final expense policy or a term life policy – or both – depends on your personal goals for your life insurance.

Do I need final expense if I already have a whole life policy?

Again, the answer to this question is: it depends. The primary purposes of a whole life insurance policy include wealth transfer, preservation, and tax-deferred wealth accumulation. Your beneficiaries can use the death benefit to cover your loss of income, their living expenses, any outstanding debt, their school tuition and more, or you can leave the death benefit to a charity of your choice.

Your beneficiaries can use your whole life policy death benefit to cover funeral and medical expenses. However, if you have a specific desire for how they use your death benefit, like if you want it to cover your child’s college tuition, for example, you may want a separate final expense policy that is dedicated to your end-of-life costs.

How to get the right life insurance policy

Your life insurance is highly personal decision. To make sure you have a life insurance policy – or a combination of policies – that will meet your goals and the needs of your beneficiaries, it’s often best to talk to a professional.

Learn more about life insurance and find an agent >

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