Today your Plymouth insurance agent EnviZion Insurance will be talking about the basics of Final Expense life insurance, and how it works. Final expense insurance is a type of insurance that is used to cover things such as burial costs and funeral expenses. For people that do not have a significant amount of life insurance already in place, the final expense products are generally for people that are age 50 to 85, depending on the company. Many people use this as a use final expense insurance as a type of life insurance regardless of having other life insurance in place as well. The main benefits that come along with final expense insurance because it is aimed at people that are typically older because the policies do not have medical exams, they are usually underwritten based off of questions that are answered on an application and submit submitted. They generally have, a guaranteed premium amount that won’t increase over time as well. Final expense plans usually have a level death benefit that is paid out which does not decrease your increase. Most of the final expense and product expense products are built into a permanent life insurance policy or a, which means that the policies will also build cash value which can be used if needed.These cash values can also be used to pay the premiums of the policy once they have built up enough over time. 

Many of these final expense policies that are used have online applications which makes it pretty simple to apply for. And because there’s no medical exams or blood draws, and all the underwriting is based off of the questions that are answered, you usually have a decision back right away from the insurance company and there’s not a lot of waiting like you would see in a traditional type of term or permanent life insurance policy. Being the Plymouth insurance agent we are, we always take the time to find the final expense policies that are the most simple for our clients, and for many these final expense plans are a hassle free application process that can help provide needed coverage for those final expense costs.

For these final expense plans, the benefits that are paid out when the insured passes away and they are paid to a beneficiary just like in a standard type of life insurance. Based on research of final expense costs, it has been found that the current average cost of funeral / burial expenses is about $11,000. That includes the cost of the funeral, a casket, and other options that you have that you would like for your final expenses and burial expenses. 

The other important factor that your Plymouth insurance agent find is important to understand is that although final expense insurance is primarily geared and sold as a type of funeral expense, it can also be used for other expenses by the beneficiary as well. If you have a policy that you get for final expense insurance and you have a total benefit of $20,000, you will be able to use any remaining amount of insurance after any of the funeral and burial expenses are paid out for whatever else you want. The most common places your Plymouth insurance agent  sees the remaining benefits used is to pay off any outstanding debt. What this means is that in addition to be being able to use the benefits for final expenses, your beneficiary can use any remaining money from the death benefit to pay down debts suchs as mortgage, credit card debt, etc. which is great. 

Another important piece of final expense insurance are some additional benefits of the plans that some insurance companies offer above and beyond the standard death benefit. Examples of these are critical illness/accelerated benefit riders or accidental death and dismemberment riders. These riders can be built into a policy as a standard or purchased for an additional cost to the standard premium that would normally be paid. Let’s take a second here and your Plymouth insurance agent will break down what these riders are and how they work.

For accelerated benefits for critical illness every insurance company does have a little bit different rules on their riders, but in general it’s usually  defined as an illness or chronic or sickness that will lead to the death death of the insured within a set amount of time such as 12 months. So what the accelerated benefits allow the insured to do is use the benefits before they pass away towards the medical expenses of that terminal illness. What it will do is it’ll take the money out of the death benefit. So say you have a critical illness and you need to use $10,000 and you have a policy worth $15,000, you would accelerate the $10,000 and you would have the remaining 5,000 left, which would still be paid out upon your death as well because that is still a part of the policy as the death benefit. What this also means is that you have an option to use the benefits outside of just a death benefit and it can save money as far as medical expenses are concerned, and give you some options financially while you’re still living and have a terminal illness. Many of the policies have limits on how much of a percentage that can be used towards critical illness such as 25% of the total dealth benefit. When it comes to the accelerated benefits options it is definitely something to look at and consider because if provides another layer of protection for a minimal cost.

The second type of added benefit that you’ll see on these types of policies is an accidental death benefit. This is also referred to as a double indemnity benefit in other insurance policies. But what it means is if you are to pass away due to anything outside of the medical illness or normal conditions that are declining health or any sort of accident, like a car accident or a boating accident you will receive a payout that is double the amount of your standard death benefit. So if you were to have an accidental death instead of receiving just your $20,000 standard death benefit, you would receive $40,000 because an additional $20,000 would be paid out from the accidental death rider. The additional costs for these riders are very minimal because it isn’t a very normal circumstance. But it is something that can be added to these policies. In general most of these plans we’ll have an available death benefit to be applied for between around $2,000 up to $40,000 or $50,000. Each company has its own specific set amount that it will let or will insure up to for each person that applies and also the big underwriting factors for these policies are first and foremost the underwriting questions. Depending on how these are answered, they do determine if you qualify for some policies and that is the biggest piece of it because some questions if answered a yes or no can determine if you’re even eligible for a policy. The second piece and the biggest thing that is going to affect the rating or premium cost is the insurance age and then also other factors to consider is are if the person smokes.

It’s a lot of times a question asked on the policies as well as other factor as well can be the state you live in which can change the rating or premium amount for a plan. But generally the largest factors are the underwriting questions, age. And also if you are a non tobacco user or a tobacco user, a suggestion for any type of insurance and especially final expense insurance just because there are quite a few companies out there that offer this type of insurance, is to contact your Plymouth insurance agent at EnviZion Insurance and we’ll take care of you and help you out with all your questions, help you out with the application process, and also help you to explore all of your options and explain all the pieces of the, the final expense policies so that you have a great understanding of what you’re purchasing and also help you to find the plan that fits your needs.