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Final expense insurance is a type of life insurance that offers lower amounts of coverage to people who are over the age of 45, in poor health, and are not otherwise eligible for traditional life insurance. It’s designed to cover the end-of-life costs, such as funerals, burials, and outstanding medical debts. 

Because final expense insurance is for people who are viewed as higher risk from insurance companies, policy premiums are much higher than traditional life insurance for a much smaller amount of coverage. For example, data shows that a 45-year-old woman buying $10,000 in final expense coverage would pay $295 in average annual premiums. Meanwhile, a 45-year-old woman purchasing $500,000 in coverage for a 10-year term policy would pay $389 in average annual premiums. While at first glance it appears that the final expense policy is a little cheaper, it actually offers 50 times less coverage. 

Key Takeaways

  • Final expense insurance is more expensive than traditional term or whole life insurance
  • Your age, gender, death benefit amount, health status, and type of final expense policy you get determine how much you pay for coverage
  • Final expense insurance rates increase with age

Who should get final expense insurance? 

Final expense insurance is best suited for people who aren’t eligible for traditional life insurance. For example, if insurers find that your profile is too risky because of your age or health, they may reject your application. In this instance, a final expense insurance policy will still provide some coverage to protect the people you love.

If you opt for final expense insurance, simplified issue life insurance provides better rates than guaranteed issue insurance. This is because while simpliifed issue has some knockout conditions, such as a terminal illness. Meanwhile, guaranteed issue life insurance is essentially guaranteed. Because people buying guaranteed issue life insurance tend to pose a higher medical risk, it is more expensive. 

Final expense insurance isn’t suitable for everyone — according to Siwei Gao, Ph.D., professor of insurance studies at Eastern Kentucky University, you shouldn’t get final expense insurance if you are: 

  • A young adult: Those in good health may find term or permanent life insurance to be more cost-effective and comprehensive.
  • Already well covered: Those with ample savings or existing life insurance may not require additional end-of-life coverage.
  • Investment-oriented: If you’re seeking an investment component, final expense insurance, which lacks a cash value feature, may not meet your needs.
  • Someone with complex financial needs: Individuals with intricate estate planning requirements may find the coverage limitations of final expense insurance insufficient.
  • Concerned about your budget: The long-term costs of final expense insurance may be unaffordable for some.

How much does final expense insurance cost for women?

The graph below shows how much women pay for final expense life insurance from age 45 to 65. 

Age $10,000 in coverage $25,000 in coverage

How much does final expense insurance cost for men?

The graph below shows how much men pay for final expense life insurance from age 45 to 65. 

Age $10,000 in coverage $25,000 in coverage

Factors that affect the cost of final expense insurance

Your age: Generally, the younger you are when you purchase a policy, the lower your premiums will be. This is because insurers consider younger individuals to be lower risk of dying at any given age.

How much coverage you buy: The amount of coverage you select will directly impact your how much you pay in life insurance premiums. The higher the death benefit of your policy is the higher the premium you will pay.

Your health status: Applicants in good health typically receive lower premiums, while those with pre-existing medical conditions may face higher costs or even denial of coverage.

Gender: Gender can affect premium rates, with women often paying lower premiums than men of the same age and health status. Insurers give women more favorable rates because data shows that they generally have longer life expectancies, leading to lower risk for insurers.

The type of policy you get: Guaranteed issue policies tend to have higher premiums than simplified issue policies because they accept applicants regardless of health status. Meanwhile, some applicants may be ineligible for simplified issue life insurance.

Why does final expense insurance cost more than term life insurance?

Because insurers are generally taking on more risk of a policyholder dying at any given age when offering a final expense insurance policy, the premiums tend to be higher. 

Gao explains that there are a few other reasons insurers charge more for coverage: 

  • Age: Targeted at older individuals, these policies carry a higher risk due to age-related health conditions.
  • Limited underwriting: Less stringent medical reviews elevate the insurer’s risk.
  • Lower death benefits: Smaller benefits result in higher administrative costs per dollar of coverage.
  • Lifetime coverage: Unlike term insurance that expires, final expense insurance offers lifetime coverage, increasing the insurer’s payout likelihood.

How to get the most affordable final expense insurance policy

The best way to get the most affordable final expense insurance policy is to shop around and compare premiums from multiple insurers. Each insurance company has its own underwriting department, so while one company may give you a very high rate, another may give you a much lower rate.  

Aside from this, there are a few other ways to keep the costs of a final expense insurance policy low. 

Get coverage as soon as possible: The older you are, the more premiums will cost. Buy as soon as possible so that you pay less over the lifetime of your policy. 

Only buy as much coverage as you need: The more coverage you get, the more you’ll be paying in premiums. Only buy as much coverage as you actually need so that you’re not overpaying.

Opt for simplified issue life insurance: Simplified issue life insurance is cheaper than guaranteed issue life insurance. If you are eligible for simplified issue life insurance, it is the best choice in terms of coverage and price. 

Review your coverage often: Once you have a final expense insurance policy, you should review it periodically to ensure it still matches your needs. If you need less coverage or your health improves, you may be able to get a better rate.

Final expense insurance rates go up with age, so the sooner you start to make your end-of-life plans, the better. Talk to an insurance agent or certified financial planner to ensure you get the right coverage for your needs. 

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