Final expense insurance is a fundamental form of life insurance coverage. Traditional life insurance offers a vast array of benefits. Life insurance is financial protection for your loved ones in the case of your passing. So, they won’t be burdened with dealing with an onslaught of bills and emergency payments, like funeral arrangements, after your death. A life insurance policy can pay death benefits to loved ones, be borrowed against for loans, pay out a self-beneficial and self-paying supplemental income, and many other benefits.
Unlike a traditional life insurance policy, final expense insurance doesn’t offer such luxurious benefits. You can borrow against the full value of final expense policy, or bequeath death benefits, but that would go against the practicality of such coverage. Final expense life insurance is designed to pay for the policyholder’s funeral expenses — the funeral arrangement and ceremony, all associated fees and costs, and so on.
Final expense insurance is an applicant pool-based kind of coverage policy. Many people cannot be approved for life insurance because they are too old, in ill health, or have severe preexisting medical conditions. Final expense insurance coverage offers such applicant’s basic policies in the $10,000 to $50,000 range. Any named beneficiary should be responsible for making all final expense arrangements.
Final expense insurance is essentially a final chance coverage for applicants who can’t be approved for traditional life insurance to be reassured that their friends or loved ones won’t be burdened with paying for their final expenses. However, that doesn’t mean that that final expense life insurance doesn’t come without some conditions.
The Waiting Period
You don’t have to endure a medical physical when applying for final expense life insurance. In some cases, you may be required to provide a medical history and prescription history. You can apply over the phone and could be approved in hours or days. Premiums usually range from about $60 to $120 a month. However, premiums become progressively more expensive the older and unhealthier you are. Most final expense life insurance companies even cover an array of preexisting conditions.
However, some final expense insurance companies enforce a “graded death benefit,” policy. Meaning, based on the severity of an applicant’s health, they may be forced to wait two years, or more, before a policy is fully implemented. That means that if you are approved for a policy, no benefits would be paid out if you died within two years. Death benefits couldn’t be paid, but more importantly, your funeral arrangements wouldn’t be paid for.
Partial waiting period policies mean that the company may release a percentage of benefits if you died during a two-year waiting period. That means that 25%, 35% or 50% of the policy’s value could be paid out over time increments within two years. Only apply for final expense companies with a no-waiting period or partial waiting periods. It’s just too much of a gamble that your final expenses won’t be paid if you settle for a policy with a waiting period.
Preexisting Conditions Are Covered
Many final expense life insurance companies will cover numerous preexisting conditions. Often with no waiting periods or a partial waiting period. Like Type 1 and Type 2 diabetes, conditions related to diabetes like amputation, aneurysm, angina, blood clots, congestive heart failure, cirrhosis of the liver, high blood pressure, and more.
Tips to Escaping The Waiting Period
Your best bet is to research every final expense insurance company that doesn’t ask about your particular health condition on their application questionnaire. That will involve a lot of research, but is worth your time. It would help if you also considered working with an insurance agent or broker who can find a company to suit your needs. Final insurance companies like American Amicable and Fidelity Life offer day one coverage or partial waiting periods.
Learn the System
You will inevitably end up paying more money against your premium, but it should be relatively affordable. However, remember that no two companies are alike, and each has their list of conditions that they may approve or not. The truth is that while many companies may help you, the system is designed to benefit the insurance company. Learn how the system works and make it work for you.