Get the Best Rates on Final Expense Coverage
By James P. Tobin, CFP ®
Expert Review Of Burial Insurance
If you are up in years or in poor health and concerned that your family will be burdened by your burial expenses, then simplified issue final expense insurance may be for you.
Final expense life insurance is one of the fastest growing segments of the life insurance business. Companies large and small have gotten in on the act.
The purpose of this article is to provide basic information about final expense insurance and arm you with the info needed to get the best possible deal for your situation.
If you already know a bit about "Final Expense" insurance and would like to skip around, you can easily do so with the quick nav table of contents tool,
What is Final Expense Insurance?
The basic premise is that of traditional (non-participating) whole life insurance; pay the premium and prices will never go up and you will always be covered.
Because these policies are geared toward an older and sicker population they are offered "simplified issue" without a medical exam.
Underwriting is largely done by checking prescriptions and asking medical questions based on the result of the prescription check.
Many of the tools used in traditional fully underwritten policies are not employed. For instance, driving history, blood & urine samples, and attending physicians statements are generally not required.
Underwriting is largely done by the answers on the application to medical questions and checking the applicants prescription history. Follow up questions may arise if the prescription check shows drugs that are not mentioned on the application.
What are the Underwriting Classes for Final Expense Insurance?
Unlike traditional fully underwritten life insurance, simplified issue policies do not have a full range of underwriting classes
Generally you are looking at non-smoker or smoker with so called "level" day one coverage or you are looking at graded coverage that takes 2-3 years for the full benefit amount to be paid.
These underwriting classes are determined by the carriers appetite for a certain risk.
Because there are so many fewer categories, simplified issue underwriting tends to be far more lenient than traditional policy underwriting.
Is Final Expense Insurance Expensive?
Whether final expense insurance is expensive is really an individual question.
You see, if someone is in reasonably good health and purchases a life insurance policy for a smaller face amount - say $25000- then yes it is very expensive compared to what is available though traditional carriers.
The reason for this is that most final expense insurance is priced at twice the cost per $1000 unit of benefit as traditional carriers at standard class rates.
If however, the applicant is in poor health, but finds a final expense carrier to provide a "level- first day coverage"l offer, then it may not be viewed as expensive.
For many seniors, the idea of same day coverage with no tests is appealing and, worth any extra cost.
Why You Need to Use an Independent Agent for Final expense Insurance
How using an independent agent can save you money when shopping for traditional life insurance is documented all over this site.
However, in the final expense market it is just as important, if not more so.
Final expense carriers vary greatly in the prescription drugs that they allow.
For instance, an applicant on insulin for type ll diabetes will get a far better first day offer from one company and a graded offer from another.
Only independent agents will have access to the prohibited prescription lists of multiple carriers.
Final expense shopping is additionally complicated by the fact that the market is dominated by small carriers with limited financial histories and state specific availability.
That is, many carriers only operate in a handful of states.
Many of the articles on this site end with a price comparison of potential offers for a client with a specific condition and benefit need.
I have chosen not to do that here because of the factors I have laid out above.
Carriers are state specific, underwriting guidelines are all over the place and prices and benefit periods vary greatly.
As a result seeking the lowest possible price may be less important than finding the carrier who offers day one coverage for your condition in your state. The best choice is to contact an independent agent for help.
Please contact us with any questions you may have.