In today’s post I am going to go into detail about everything related to final expense whole life insurance. The end goal of this particular training is to help you understand exactly how final expense whole life insurance works.
What Is Final Expense Whole Life Insurance?
What exactly is final expense whole life insurance anyway?
Final expense whole life insurance is defined as life insurance coverage to cover costs related to funerals, burials, and cremation expenses. Final expenses include funeral items such as the casket, plot, and urn. Additional expenses include the service, delivery fees, flowers, and so forth.
Not sure if you have enough money to cover the final expense above? If so, then final expense whole life insurance is worth considering.
Hundreds of thousands of people have a final expense whole life insurance plan to cover these expenses. Why? Because they’re not sure they have the ability to pay on-demand, out-of-pocket. The lack of ready-to-use savings for events such as death is a big reason why people buy in the first place.
Generally, final expense whole life insurance plans offer smaller death benefits. Most don’t buy a million-dollar final expense plan. And while it can be done, people more commonly purchase a plan that’s just enough to cover for a burial. And usually a policy between $10,000 to $25,000 is common.
Final expense whole life insurance policies can go small than $10,000. I’ve helped people out with $2,000 or $3,000 plans, since all that’s necessary is simple cremation.
Most final expense whole life insurance plans are what we call simplified issue. There are no examinations or physicals. You simply complete an application, and that’s that! However, there are times when you must complete a phone interview to assess your health prior to approval.
With final expense whole life insurance plans, you either qualify or you don’t. Phone interviews, which typically last for only 10 minutes, tell us instantly whether or not you’re approved. You get an instant “yes or no” decision, which is what we really want in this business.
Why Get A Final Expense Whole Life Insurance Program?
Why buy final expense whole life insurance? Let’s cover 4 primary reasons why people like you purchase a burial insurance plan.
1. Funeral Costs
The top reason to purchase final expense whole life insurance is to eliminate the fear of not having sufficient money to pay for funeral expenses. This accounts for 80 to 90% of the reasons why people purchase a final expense plan.
Let me put it plainly. Are you worried that when you die, your spouse or kids won’t have enough money on-hand to pay your burial? If so, a final expense whole life insurance plan is worth considering.
Many people who purchase a final expense whole life insurance plan are on a fixed income. They have reached retirement. And guess what? They’re not rich!
And while they may have a pension, it’s not substantial. And what they have in savings isn’t great, either.
Considering the above, people who buy final expense whole life insurance understand that death is unpredictable. It’s something that often happens suddenly. And there just isn’t enough time to save up enough money to pay for funeral expenses.
2. Income Replacement
A second reason to buy whole life final expense insurance is the fear of a spouse living with less. Simply put, you’re worried your spouse’s income will reduce his or her lifestyle.
As an insurance agent that sell final expense whole life insurance, I help people with these concerns regularly. Picture your loved ones having less money to live on. Would it dramatically alter her lifestyle?
Maybe she doesn’t get to do the normal things she’s accustomed to. Maybe she’s forced to change health insurance. Or maybe she can’t get the medications she needs because the money isn’t just there.
If you’re concerned that your death may dramatically affect your survivors living, then a final expense plan is a perfect solution.
Case in point, I have a gentleman who was 85 when he purchased $125,000 in coverage. While this was an unusually large sum, he wanted to leave money behind to supplement his income for his wife.
He passed away six months later. And all the policies paid! It made a dramatic difference in his wife’s life because of how important he felt owning final expense whole life insurance was.
3. Non-Funeral Related Costs
The third reason people own final expense whole life insurance is to relieve the financial burden from the “what-ifs” from spouse and family.
When it comes to non-funeral related final expenses, things happen. You may have savings today. But something may happen where the savings must be used.
Here’s a perfect example. I met a retired police officer in Alabama a few years back. He had a great pension and a lot of money saved up. His wife was retired as a teacher.
Unfortunately, his daughter got into the wrong crowd, and became addicted to drugs. And if you know anything about addiction, it is a costly endeavor to deal with.
His daughter was in her 20s when this happened, right at the peak of his retirement from the police force. He drained all of his savings to bail her out of jail and pay for her rehab several times.
This unforeseen tragedy altered his lifestyle for the worse. And if you had asked him when his daughter was born if this was going to happen, he would have never expected it.
And that’s the reason he has final expense whole life insurance. Because he wanted to have a plan set aside to cover those expenses that may arise.
People buy these plans to play it safe. And that’s a legitimate reason to own a final expense whole life insurance policy. Why? Because no one knows what’s going to happen day-to-day. Things happen unexpectedly, and requirements for money usually never go away. They intensify and increase as you get older.
4. Leaving a Legacy
The last reason to own a final expense whole life insurance plan is to leave a legacy.
Like I mentioned about my mom earlier, she had a new roof put on with the $7,000 policy my grandfather left. These gifts of life insurance always help loved ones at the perfect time.
So iif you’re compassionate, loving, and you feel a tug on your heart to do this, a final expense whole life policy is perfect as a solution to make this work,
“Fun” Facts Of Final Expenses
Let’s talk about some funeral expense “fun” facts. I put “fun” in quotes because there’s no fun in funeral! Well, I guess there is fun in funeral but not the kind of fun I want!
Again, one of the main reasons people buy final expense whole life insurance is to fund their funeral so their family doesn’t.
1. Average National Cost Of Burial Expenses
In 2014, the National Funeral Directors Association estimated the average burial funeral in 2014 cost approximately $8,500. And based off of my real-world experience, I would say that is an accurate average.
In the survey, the NFDA broke down all the component costs of a burial and a cremation (we’ll get to cremation in a minute). They looked at the transportation cost, the flowers, the casket, and everything associated with a funeral.
2. Cremation Expenses
Nationally, the NFDA found in 2014 the average cremation cost is $6,100. Personally, I feel this number is rather inflated.
Here’s why. The NFDA is accounting for a full funeral service as well as the cremation expense. Probably like you, I’ve seen plenty of cremations in the $3,000 range or less.
So, if you’re a bit surprised at this number, you’re probably right to be suspicious!
I wonder how the NFDA did their math. I’ve never seen but maybe one or two cremations that have been this high. Most are much less expensive. Nevertheless, understand that NFDA says this is the national average.
Many people nowadays end up getting a direct cremation. Perhaps there is only a small service at a church. For my grandfather, we had his wake at the Rotary Club at no cost. If you go all out and do the service, then you’re looking at a price that’s high.
Here’s the kicker. You all have been around long enough to know prices go up as you get older. From 2004 to 2014, a span of 10 years, funeral costs rose 28.6%!
The NFDA shows the average funeral experienced a $2,000 approximate price increase. And what’s crazy is looking at the prior 10 years from 1994 to 2004. There was another 25% or so price increase!
As you can see, the funeral business has experienced massive price increases. And it’s just like everything else. Nothing is getting cheaper. I keep saying that, but it’s true!
What’s the point with this discussion? Hopefully, you can see how important it is to consider the long term. You have to make sure you have enough final expense whole life insurance coverage.
As I said, $8,500 is the average cost today. But, what happens to pricing in 20 or 30 years?
Final Expense Whole Life Insurance – What NOT To Get
Understanding your options for final expense whole life insurance is very important. You do NOT want to make the wrong decision!
I’ve met more than 3,000 people since 2011 to discuss final expense whole life insurance, and work with final expense insurance agents in my agency nationally. Most I see are on a fixed income. And they all drowning in junk mail advertisements about final expense coverage.
I can’t even get through a meeting with many of these people without seeing some advertisement for funeral expense insurance on TV!
And, if you’re like most people, with the ever-increasing flyers and promotions regarding final expense coverage you receive you end up getting confused.
What I want to do is cover what is NOT final expense whole life insurance. It’s very important to know the difference between good and bad coverage. Then, we’ll define the basics of what is final expense whole life insurance.
1. Term Insurance
The first final expense insurance plan to stay away from is called term life insurance.
This is critical! If take away anything from this, it’s that “term” is short for terminates. Literally, when you buy a term policy, you’re betting you’re going to die before the plan expires!
Did you catch that? Term plans expire, they terminate, they cancel! And many of the brand name insurance carriers you see through the mail and on TV offer ONLY term insurance. And in many cases, they are designed to terminate at 80 years old!
So, you could buy term insurance today, live an average length of life, then lose your coverage. That’s crazy!
And it gets worse. Your premium rates go up with many of these plans. There are incremental increases every 5 years. So while it may be affordable at 60, will it be at 65, at 70, and again at 75?
Many times it’s not. And I would say most people end up dropping their coverage! Why? Because they just simply can’t afford it anymore. They’ve paid all these years for it. But Social Security raises simply can’t keep pace with the premium increases.
Sadly, many end up dropping it. It’s a position you don’t want to be in!
Sad Fact – we don’t know when we’re going to die. It could be tomorrow. Or 30 years from now. Therefore, we need to have a final expense plan that’s guaranteed to pay under any circumstance.
It’s important to have a guaranteed plan in place, because without it you are taking a risk. You’re gambling!
The one positive aspect of term insurance is it’s cheaper to start with. But, you get what you pay for.
Simply put, you pay less now for term insurance. BUT you’ll pay a whole lot more later!
If you’re on a fixed income, you get one check a month. Everything has to fit that check. You have to pinch pennies. You must watch every single thing that you buy.
Now imagine getting a price increase on your life insurance that doubles. It started off at $50, and now it’s $100. Could you afford that?
You’re going to have other expenses that go up in price, so why take that risk when you don’t have to? This is why I do not like people who want final expense coverage to take out a term policy.
It’s not that I’m against term insurance. It just depends on the circumstances. And the vast majority of people who want a guaranteed whole life insurance policy don’t need to get a term policy.
2. Universal Life
Also included in insurance plans not to buy is Universal Life coverage.
Now, here’s the deal. It’s not always the case that Universal Life is a bad final expense policy. It’s just something you should be wary of. You need to do your due diligence before you decide to buy it.
Sometimes, universal life insurance is really good. Sometimes it’s the best choice! But, sometimes it’s not. Let me explain.
Universal life insurance is not necessarily final expense whole life insurance. Sometimes Universal Life plans can be designed to last only to a particular age.
Many times, they’ll last until 80, 85, or 90 years of age. So, in essence, universal life plans can operate as a term insurance policy. They have a limit of coverage. So, if you outlive that plan, then you lose your coverage, or the price substantially increases.
You have to ask yourself, what if you live to 100? You’re still going to have final expenses after all! And you must seriously consider you’re not really getting something that gives you a full lifetime guarantee.
Universal life insurance may not have guaranteed level premiums. You can get Universal Life programs with guaranteed premiums, and that’s what you should do, assuming you find universal life insurance appropriate for your life insurance goals.
However, some agents will design these plans so there will be a price increase. We’ve seen it out in the field working with people face to face. Agents have come in and offered these Universal Life plans, and the client has kept it for decades.
Then, when they’re in their 70s, they get this massive price increase letter. Sadly, they can’t afford it anymore. They are understandably livid! And it’s because the agent designed the plan from the outset in a way that was destined to fail.
It was going to be a long time before it did, but eventually it did. I’m not saying that Universal Life is not an option under any circumstances. But, it’s a risk under certain circumstances.
You want to make sure you’re working with an agent that fully understands Universal Life plans, how they work, and what they’re doing for you. Have them explain to you what the guarantees are before you buy one of those plans.
What Type Of Final Expense Whole Life Insurance You SHOULD Get
We’ve talked about what not to get. Now let’s cover what you should absolutely have in a whole life final expense program.
The following are the basics that should be included with every single final expense whole life insurance program. Maybe you’re looking at something that looks like whole life called permanent insurance. Sometimes it’s interchangeable terminology. But, you want to make sure you have these particular elements in your plan to ensure you’re getting the best overall value.
1. Guaranteed Fixed Premium
First, make sure you have a guaranteed fixed premium for life.
One of the biggest advantages of a final expense whole life plan is that the premium stays the same. You do not have to worry about getting that dreaded price increase letter 5 years down the road.
Additionally, what you pay today is what you pay until you die. And that’s great for someone on a fixed income.
There’s no risk about not being able to afford a price increase. You can depend upon the price staying the same. It is a guaranteed must-have with any final expense whole life insurance plan.
2. Will Not Cancel
The second element of a final expense whole life insurance plan is it is guaranteed not to cancel due to health or age.
This is very important! I teach my clients to match the life insurance product with the particular problem she’s trying to solve. Remember, all life insurance does is solves problems. And there are different problems for different people.
If you’re a young man working hard, and you suddenly die, your wife is now in a perilous position to replace your income. It’s really important to own a plan that covers in that circumstance.
For this situation, the perfect plan for that situation is term insurance. Why? ecause it’s the cheapest way to get coverage. If the man dies before the plan expires, his wife has all this money I would have earned if I had lived.
We’re all going to die. And unfortunately, it can happen at any age. There are guaranteed expenses that will occur. And we don’t want a plan that will expire before we do.
Think about it. Where is the logic in that? Why would I pay for a plan I might outlive it?
This is why your final expense whole life policy should be guaranteed not to cancel because of age or health.
3. Death Benefits Do Not Decrease
Third, you want to have a level death benefit that does not decrease.
I’ve seen decreasing death benefit life insurance plans. And when they hit a certain age, they decrease in coverage. But stay the same in price!
When it comes to final expense whole life insurance, what you see is what you get. You want a plan that covers you. Also, you want a plan that doesn’t cancel because you’re too old or because your health is bad. Plus you want your plan to stay the same price from start to finish.
It’s pretty simple. You don’t want anything more complicated than that!
4. First-Day 100% Coverage
Lastly, you want to try to get first-day 100% full coverage.
As I mentioned earlier, you’re swimming through a boatload of junk mail and TV ads for final expense whole life insurance advertisements. Unfortunately, most of them make you wait 2 years before you’re fully covered for natural death!
While you may get a brand-name company, what does it matter if you die from a natural cause like a stroke or cancer? If you die within those first 2 years on any of these plans, you’re out of luck!
You don’t want to get any of those plans if you don’t have to.
Here’s A Secret: work with an independent agent.
I’m an independent final expense whole life insurance agent. And I have since starting because I felt it was critical for me to shop the different carriers for the best insurance for my clients like you.
Many agents work for only one company. They only offer one product and one choice. And in many cases, it’s just not the best choice for you. You’re going to be overcharged and get inferior coverage. The short of it is it’s not going to give you the best value that you deserve.
An independent agent works with many companies. For each of my clients, I figure out which company is going to be the best price and the best value of coverage. My goal is to get you 100% coverage for natural and accidental death from the first payment date.
That’s my goal when I go out in the field and work with my clients. And that’s what you deserve.
Agents that only offer products from one company have a limitation on underwriting. They won’t be able to give you the best price. And in many cases, your health issues may completely disqualify you.
Therefore, it’s critical you work with a final expense whole life insurance agent who is independent. They shop a variety of carriers and typically offer better underwriting, better pricing, and the outcome typically is better for you.
At the end of the day, you have to live with this plan. And if you’re on a fixed income, you have to use every single dollar to the best of your ability. As you know, this means making sure you’re not paying more than you have to. An independent agent is much more likely be able to do that.
Does Your Health Disqualify You For Final Expense Whole Life Insurance?
You may be thinking, “I’ve already been declined.” This is a concern for everyone interested in a final expense whole life policy.
Luckily, health is usually not usually an obstacle to being qualified. Now, it does have an effect on what you qualify for. But it’s not something that will just fully disqualify you even if you’ve been turned down before.
There are companies that will take you at preferred rates, even if you’ve been turned down by others. You may doubt this, but that’s how this business is.
If you’ve been in this business long enough as an agent, you understand what I mean. And that’s why you’ve got to represent multiple carriers. Why? Because certain carriers take health issues that others won’t.
The key here is working with an independent agent to get better price, better underwriting, better value, and better for you.
Let’s talk about some common conditions you can get quality coverage for from an independent agent. I’m going to run through a list of what I usually see and give you some perspective on what’s possible.
First is diabetes. A lot of people have diabetes. They wonder what kind of coverage they can get, if any at all.
I have plenty of people who have basic type-2 diabetes that they were diagnosed with as adults. I can get them preferred coverage, even if they use insulin or have diabetic complications.
Also, I’ve had a lot of people with diabetic neuropathy get coverage. In most cases, that’s no big deal. You just have to know which companies work and which ones don’t. Even those with type-1 diabetes that started very early in life can get coverage.
Lung Disease Like COPD Or Asthma
I also work with the companies that will provide first day full coverage for lung disease. A lot of people smoke their whole lives, like my mom. She would tell me when I was a kid, as she took a drag on her 20th cigarette of the day, “Dave, don’t ever, ever start this horrible habit.” She’s quit since then, but it’s tough.
If you have COPD or asthma or some other respiratory problem, you may be thinking no insurance company is going to touch you. There are companies that will give you first-day 100% coverage for lung disease under most circumstances. And that’s something I can help you with.
If you have a history of heart disease, you may be leery of what you can qualify for. Maybe you had a heart attack, a stroke, a stent, bypass, seizures, aneurysms, a pacemaker, or other conditions.
I’m here to tell you that, if you work with the right independent agent, as long as it has been a certain length of time since your diagnosis, you can get covered. I can tell you within a minute or two what your options are.
Liver And Kidney Problems
Some kidney and liver problems can qualify depending on the time since the original diagnosis and treatment. There are also options for full first-day coverage for neurological problems such as lupus, multiple sclerosis, and Parkinson’s.
Many people think if they can get any coverage it will be a 2-year wait guaranteed issue policy, and in most circumstances, that’s not the case.
Mental Health Issues Like Depression, Bi-Polar, Schizophrenia
There are also carriers that will cover mental health issues such as depression, bipolar, and schizophrenia. There are other major health issues that can be covered that I didn’t mention. I just wanted to use a broad brush here for the most common issues.
Now, I’m not trying to pull the wool over your eyes. Sometimes the only option people have is guaranteed acceptance policies. These policies don’t ask any health questions. Additionally, you only get full coverage after paying in for 2 years.
But I want to stress that this is the minority when dealing with me. I can get full first-day coverage for many different conditions. That is not a promise, however, and if I can’t, I’ll tell you that too.
Keep in mind, it’s still good to get some kind of policy because you could very well live longer than 2 years. So you don’t want to be stuck in a situation where you don’t have anything!
If you’ve stuck with me this far, you’re obviously concerned about getting coverage on yourself, your spouse or maybe your parents or children. Don’t wait any longer!
Once you’ve found a person to work with and can trust, don’t wait! Many people I see are “world-class procrastinators.” Don’t be that guy! All it takes is one health event to totally disqualify you from ever getting full coverage at a preferred rate.
Your health is at its best today. Age has a way of making things worse, after all, and you can get better coverage if you’re healthy. Lock in the price now at a low rate and get your full coverage.
One of the first people I ever wrote a policy on got full preferred coverage. She called me a month or two after her first payment to tell me she had a heart attack. As you can imagine, she was worried about whether she would be able to keep her coverage. I was able to tell her that her coverage would be fine. We always think bad things happen to other people, but they happen to us too. That’s why we have final expense whole life insurance.
Make Sure Your Final Expense Whole Life Insurance Stays Within Your Budget
Some coverage is better than no coverage! A lot of loving parents and especially grandparents would love to get enormous policies to leave behind for their kids or grandkids, but sometimes our budget just won’t allow it.
Make sure that you’re shopping for a plan that is actually going to accomplish your primary goal. Anything left over can be given to your family. Just be okay with not getting everything that you want, but getting what you need.
Make sure the policy you buy is easily affordable. There’s nothing worse, as an agent, to sell a policy to somebody and then see them cancel it 6 months down the road.. That’s a waste of your money.
I would much rather you not buy it and spend it on something fun, instead of buying it and dropping it in 6 months because you bought too much. Buying too much is just setting a landmine for later down the road when you can no longer afford it. Then you’re back where you started with no coverage.
I work with my clients to make sure their policy is easily affordable. I’ve even talked people out of buying too much just because I don’t want to see them potentially drop it. I certainly want to help people to the extent they want to be helped, and if it’s affordable, it’s that much easier to keep.
Use An Independent Agent When Shopping For Final Expense Whole Life Insurance
Finally, make sure your agent is independent. Always ask whoever you’re dealing with if they’re an independent agent and to let you see what companies they represent.
You want them to actually show you the applications and brochures to prove they work with multiple carriers. For example, if someone asked me for a brochure, I’ll throw out all the brochures. I’ll show them where I’m appointed, and I’ll tell them about the companies. I’ll go into detail about everything to give them the assurance that I’m independent and can shop around to get my client the best value.
I would be remiss if I didn’t offer you my services if you’re interested in qualifying for final expense whole life insurance.
If you are interested, I implore you to give me a call at 888-626-0439 or contact me from my website at buylifeinsuranceforburial.com for a free, no-obligation quote.
I am a very low-key, relaxed agent, and I only want to help you if you want help. I’ve been doing this since 2011, and I really care about my clients and making sure they get the best price and value.
If you decide to contact me, I’ll ask you some health questions, figure out exactly where things stand, give you a couple prices within your budget, and then you decide if it makes sense for you.
If you just want to think about it, that’s fine too. I’m not a high-pressure guy; I never have been. To be in this business, you have to have a servant’s heart to help people.