What is Final Expense Life Insurance?
Final expense insurance is a whole life policy that pays funeral expenses, medical bills, income replacement, end of life party and/or a small next egg to leave to loved ones when you die. It’s also known as burial or funeral insurance. It’s a popular choice among seniors.
Most final expense plans have these features:
- Whole life insurance – no expiration if premiums are paid
- Fixed premiums as long as they’re paid
- Easy application process
- Affordable rates
- Cash value – insured may be able to take out a policy loan
- Simplified issue – usually no medical exam is required, just health questions on the application
- Fast approvals – coverage can often be approved immediately or issued within days
Can You Get Life Insurance for Your Parents?
Yes, you can purchase life insurance for your parents to help cover their final expenses, medical bills, mortgage payments, income replacement. It offers some peace for your family during this difficult time. In order to buy a policy on a parent, you will need their consent along with proof of insurable interest. The type of policy you buy will depend on their age, financial situation, and their overall health. Having life insurance is essential when it comes to preparing for the passing of a loved one. It prevents the stress from financial burden on one of the worst days of your life.
Life Insurance Guide
Know you should probably be thinking about getting life insurance but don’t know where to start? Make sure you know what options you have available, and which are right for your specific circumstances.
Although Final Expense Brokerage of America focuses on final expense, we can provide families with the following plans:
- Life insurance plans up to 2 million
- Final expense
- Term with and without living benefits – terminal, chronic and critical illness
- Mortgage protection
- Universal life
- Critical illness
- Disability
- Cancer
- Heart Attack & Stroke
- Vision, Dental & Hearing
- Hospital Supplemental Plans
- Medicare Supplemental Plans
When searching for a life insurance provider, one of the top ways to determine the most suitable policy is to consider your current age, health status and income. This will help narrow down your choices and simplify what can at times be an overwhelming number of options.
Individual vs Employer Plans
Having private coverage is ALWAYS the best option rather than relying on a “temporary” employer life insurance plan. A private plan NEVER changes, and employer plans can change at will each time HR decides to cut benefits and when you retire – typically, your life insurance plan does not go with you and now you are stuck paying $$$$ for a plan at an older age when you could have gotten it REAL CHEAP at a younger age. Some issues that may arise include the possibility of losing coverage alongside the job, not being offered enough coverage for oneself or a spouse, or not receiving the most favorable rate.
When deciding whether to use the coverage that an employer offers or not, look at the rates of that plan versus what can be obtained with an individual policy. Often, younger employees can go with an option outside their workplace and take advantage of lower rates for decades, while for an older employee the company plan may be the most cost effective. However, it is strongly recommended to shop around for the most favorable rates, because employer plans are often not the ideal options for those seeking more affordable solutions. On the other hand, employer plans also might give a less healthy employee the chance to receive the same coverage as their peers at the same premium. They might also be able to add spouses and family members easily, and without additional medical checkups, meaning that if starting a family is on the horizon, going with an employer plan could be a bonus. Complimenting any employer coverage with a private life insurance plan is ALWAYS THE BEST OPTION!
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What is term life insurance?
Term life insurance charges a fixed monthly premium over the life of the policy, for a fixed death benefit should the policyholder die during the term. It is not meant to cover someone until they die but rather provides protection against sudden income loss or ongoing debt, like a mortgage. Usually providers offer terms of 5, 10, 15, 20 or sometimes as much as 30 years. The “set it and forget it” system of fixed premiums and fixed death benefit make it ideal to budget with, providing an efficient safety net for a relatively small amount each month.
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When is the right time to buy term life insurance?
The time to buy term life insurance is generally when the individual seeking a policy is young and needs real coverage for the first time in their life. This kind of policy is inexpensive for young singles or couples because providers entertain smaller odds that the policyholder will pass on before their time, and accordingly offer term life plans to a maximum age – usually to about age 50. It is possible to get term life after this age with some providers, but the premiums will likely be higher. Final Expense Brokerage of America has many options for ages 50+ for term coverage!
Young couples who have financial obligations like a mortgage are well-suited for term life insurance. The smaller premiums are easy to budget and the death benefit can be matched to the amount remaining on the mortgage, adequately covering these kinds of large debts should the policyholder die. Someone in the early stages of their career may also expect their salary and coverage needs to grow in a short span of time, and for these individuals, renewable term life plans can be readjusted yearly without breaking coverage.
Return of premiums riders allow those who outlive their term to receive their premiums back when the policy expires but pay additionally each month for the privilege. Additionally, there are riders that can go along with term plans that allow the owner to convert to a whole life policy when they feel it is necessary – sometimes even without a medical exam.
Term life insurance is not suited for those who seek more flexible financial bonuses with their life insurance policy. Generally, term life plans award only death benefits and do not accrue money or otherwise allow policyholders to take advantage of the policy’s cash value.
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What is whole life insurance?
Whole life insurance is different from term life in that it covers the policyholder for their entire life, pays out to a specified beneficiary when the policyholder dies, and accrues extra cash value over time. Premiums for whole life plans are fixed, are based on the age of the applicant at the time the policy is opened and are usually higher than term life premiums due to policyholder coverage for a longer period of time. The advantages that come along with whole life insurance are well-suited to the needs someone may experience over a long life. A primary feature of whole life policies is the ability to benefit financially. Many established providers pay dividends that are a nice yearly bonus based on performance, and policyholders can employ the cash value of their policy in several ways that help them deal with financial or medical needs that may arise.
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When is the right time to buy whole life insurance?
Typically, once you start a family and add dependents, it is a good time to consider either buying whole life insurance or converting a term policy to a whole life policy. This could reasonably occur at age 30 or beyond. While term life is beneficial for covering debt for a set period of time, nothing can compare with the peace of mind gained through lifetime coverage. Besides the financial advantages already covered, the ability to receive death benefits early if the policyholder is ill or injured, receive ongoing medical care coverage, and easily add children and spouses make whole life plans ideal for maturing individuals who want a level premium to plan around.
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What is universal life insurance?
While whole life insurance covers the policyholder for their entire life, universal life does the same but with different financial incentives. Whole life policies offer a level rate and steady cash value gain while universal life gives the ability to flexibly adjust the premium and death benefit balance, invest premiums along with the policy’s cash value, and save money in a variety of unique ways.
Premiums can be adjusted upwards to increase the death benefit at will and can also exceed the minimum amount to add to the cash value of the policy in an intentional manner. If the premiums are covered every month, either through payment or by returns on smart investments, the policy stays in effect and keeps growing.
The biggest benefit comes by way of allowing policyholders to use this cash value. The uses may include borrowing funds with the policy as collateral, withdrawing cash, paying for medical treatment, specifically stipulating how death benefits are paid to beneficiaries, and the ability to pay ongoing premiums with returns.
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When is the right time to buy universal life insurance?
Generally, young and middle-aged families looking at maturing intelligently are the most appropriate customers. While this is also true for whole life policyholders, the risk appetite and investing horizon for universal life customers is what matters. Those without other significant investments like universal policies compared to whole life policies because of their flexibility and potential.
This might be a particularly attractive strategy for younger people seeking out universal policies since they have usually not had a very long investing track record. Many universal life policies allow policyholders to invest their premiums and excess cash value as they see fit. Young couples without other investments are well-served by the ability to flexibly add to their premiums considering the prospect of earning higher returns.
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Mortgage Protection
For the special purpose of ensuring that a mortgage gets paid, even without an active income, this type of supplementary policy can be added to term or whole life plans by many providers. The coverage available with these policies usually comes at higher values due to the high cost of homes and can be matched to the exact value of an individual’s mortgage, so that if they should die, the death benefit given to their beneficiary will cover all the remaining payments.
These policies are catered to individuals who have a large amount of long-term debt.