No one likes to think about their funeral or memorial service, but planning ahead is a wise financial decision that helps your loved ones and resolves possible disagreements. You can do this with funeral pre-planning, final expense insurance, pre-need insurance and pre-need trusts.

Let's take a look at funeral planning, final expense insurance and what to consider when planning ahead.

Best Life Insurance Offers For You image
Valid zip code required
Get Quotes

What is final expense life insurance?

Final expense insurance is typically a type of whole life insurance policy that helps protect your loved ones from having to pay the last expenses of your lifetime. This might include things like:

  • Funeral costs
  • Leftover medical expenses
  • Legal costs pertaining to your estate

End-of-life costs often are larger than you might think. For example, funeral expenses alone can run $10,000 or more.

Typically, the death benefit with this type of policy ranges from $5,000 to $25,000, according to the Insurance Information Institute. Life insurance companies sell these policies, although, in some states, funeral homes also might be allowed to sell them.

Doing a little homework can help you determine how much funeral insurance coverage you need, says Marjorie Ma, head of product management at AIG.

"You can estimate your household expenses -- such as the cost of the remembrance ceremony of your choice -- and then add in other bills and debts," Ma says.

Key Takeaways

  • Final expense insurance, also called funeral insurance and burial insurance, are smaller policies that help loved ones pay for final expenses.
  • Final expense insurance is often an option for older people and those with health conditions that make it harder to get approved for other life insurance.
  • Final expense insurance is generally guaranteed issue or simplified issue policies, which don’t require medical exams to get coverage.
  • A final expense insurance policy doesn’t expire as long as you pay the premiums.

Why buy final expense insurance?

Final expense insurance, also called burial insurance and funeral insurance, can be a big help, offering "a cost-effective way to cover last wishes and any other expenses you provide for your loved ones," Ma says.

Buying this life insurance means your loved ones won’t have to dig deep to pay for the expenses that inevitably arise at the end of your life.

Final expense insurance is among the least expensive life insurance products. For example, Progressive says a 50-year-old female who wants $5,000 in coverage will pay $20 a month. Coverage amounts of up to $35,000 are available at Progressive.

While you could purchase standard term and whole life policies to cover your final expenses, these policies usually aren’t offered in low face amounts like $5,000. That is why burial insurance policies can be handy if you need insurance money only to cover funeral expenses.

Who needs burial insurance?

Good candidates for final expense insurance include anyone who wants to shield loved ones from costs associated with the policyholder's death. It’s especially valuable if your heirs aren’t wealthy, Ma says.

"If someone has lower financial assets and lower disposable income, they may be more vulnerable to financial burdens from the loss of a beloved one," she says.

Burial insurance also could be a good choice if you can't get a regular term or whole life policy due to factors such as your age or declining health.

How much does a funeral cost?

Funeral costs vary widely, but the average funeral cost can run to thousands of dollars. In 2020, the national median cost of a funeral with viewing and burial was $8,500, according to the National Funeral Directors Association.

When a vault is included -- which most cemeteries require -- the median cost for funeral services jumps to about $10,000. This cost doesn’t include cemetery, monument or grave marker expenses. Nor does it include other funeral home charges, such as for flowers or an obituary.

The national median cost for a funeral with viewing and cremation is more than $5,000. This figure doesn’t include other funeral home costs, such as the price of a cremation casket, rental casket or cremation container, urn, and other charges.

These funeral ceremony costs can quickly escalate, depending on the choices you make. For example, the Federal Trade Commission notes that caskets alone can top $10,000 in some cases.

Types of final expense insurance

Final expense policies are typically whole life (which covers you for the rest of your life), although you may be able to find a term life policy (which covers you for a specific period or until a certain age, such as 75 or 80).

If you get term life, the policy expires if you outlive the policy. However, it's a cheaper alternative to whole life, which has lower death benefits.

Final expense policies are generally either:

  • Simplified issue -- you're asked a handful of medical questions but don't have to take a medical exam
  • Guaranteed issue -- the insurer issues a policy to anyone who applies with no medical questions asked

People who have a serious health problem may receive a policy with a "graded death benefit." This means the coverage amount increases over time and your beneficiaries won't receive the total face value if you die within the first few years of the policy.

One alternative to purchasing a burial expenses policy is to pre-pay your funeral expenses. Under this type of arrangement, you select and pay for the:

  • Funeral home
  • Type of service you desire
  • Casket or cremation
  • Flowers
  • Headstone
  • Burial plot
  • Cost of digging and filling the grave

Pre-paying your funeral home and other costs in this way allows you to lock in the prices and to avoid burdening your loved ones with the expense. And you have the advantage of not having to pay premiums for years.

What does a burial policy cover?

Final expense insurance covers the costs you incur at your death. These might include:

  • Funeral costs, such as embalming, your casket and even flowers. Other services also are covered.
  • Burial costs, such as a burial plot, headstone and interment. Cremation also is covered.
  • Other costs that remain after your death, including medical and legal bills, and even credit card bills.

In the end, the amount of burial insurance coverage determines how many of your bills your loved ones can pay with the insurance money.

Of course, the beneficiaries legally could decide to use the money for anything, so make sure you trust them. Also, if your benefit amount exceeds the cost of your funeral service, the beneficiaries keep the difference.

For example, if you have a final expense policy for $15,000 and your services and burial end up costing $12,000, your beneficiary would pay the bill and keep the extra $3,000.

Cremation vs. burial

When deciding on final expense insurance, you should consider whether you want a burial or cremation. Your decision influences how much final expense coverage you need.

The average funeral costs are high. But you can save quite a bit of money by deciding upon cremation over burial. In fact, taking national median figures into account, deciding on burial can increase your costs by nearly 50% over the cost of cremation.

But whatever choice you make for burial insurance, your final expenses still are likely to run into thousands of dollars.

Best final expense insurance companies

Getting final expense insurance is usually easier than getting a different type of life insurance policy. Some insurance companies offering this coverage include:

  • AIG
  • Gerber Life Insurance
  • Mutual of Omaha
  • Progressive
  • State Farm
  • Transamerica

Policy costs and coverage details vary from insurer to insurer.

Here are final expense insurance details for three life insurance companies:

  • Progressive offers a RAPIDecision Final Expense policy through eFinancial that begins at $20 per month. Once your beneficiaries receive the death benefit, they can spend it any way they like.
  • AIG Direct offers its own guaranteed issue whole life insurance coverage that can be used to pay for final expenses. Coverages range between $5,000 and $25,000, and rates start for 50-year-olds at $20 for females and $29 a month for males. Living benefits for chronic illness and terminal illness are included.
  • Transamerica's final expense coverage amounts range from $1,000 to $50,000.

Looking for the right life insurance company to meet your needs? Check out Insure.com's Best Life Insurance Companies for 2021.

Frequently Asked Questions

Does the final expense policy expire?

Most burial insurance is whole life insurance, which is permanent. It provides lifelong coverage.

The policy remains in force as long as you pay your premiums and the policy has a net cash value.

Do I have to take a medical exam for final expense insurance?

Typically, you don’t take a medical exam for final expense insurance. In fact, the Insurance Information Institute says you often can qualify for this type of coverage simply by answering a few questions on an application form.

However, an insurer might decline to sell you a policy if you have a pre-existing condition.

Usually, you can get a burial insurance policy that falls under a simplified issue. In that case, you answer medical questions but don't have to take a medical exam. You may also find a guaranteed issue policy, which doesn't require any questions or a medical exam.

If you have a serious health problem, you may get a "graded death benefit," which increases the coverage amount over time.

Is final expense life insurance worth it?

Final expense insurance is relatively inexpensive. Premiums for burial insurance can be as low as $2 or $3 per week, according to the Insurance Information Institute.

The actual death benefit available to the insured for that amount depends on the insured's age. For example, the III says a $3 per week premium might buy a $6,000 death benefit for a man who is 36. By comparison, a 9-year-old boy would get an $18,000 death benefit for the same premium.

Because it’s so affordable, the coverage can be a good purchase. But it’s not for everyone.

"Coverage for final expense products is typically small," Ma says. "So, it may not be a good option for those who have life insurance needs of a higher face amount."

For example, other traditional forms of life insurance can be a better choice if you need to cover a large amount of debt, a mortgage or a major loss of income, she says.

Remember that any life insurance policy can be used to pay for a funeral. You can buy any term or whole life policy and instruct your beneficiary to use a portion or all of the death benefit for your funeral.

How long do you pay for final expense insurance?

You pay for final expense insurance for as long as you wish the policy to remain in place. Once you stop making payments, your policy ends, and you no longer have coverage.

As long as you pay your burial insurance, you’re family members will receive the death benefit when you die.

What are average funeral costs?

The median price for a traditional funeral is more than $8,500, according to the National Funeral Directors Association, but costs can run into the tens of thousands if the funeral goes beyond the basic services.

The median cost for a funeral with viewing and cremation is more than $5,000.