Types of Final Expense Insurance
Dignity Memorial- MSC Locations
For more information about the author, click to view their website: Dignity Memorial
Aug 10, 2024
Florida - Sarasota, Bradenton & Charlotte Counties
Email US
Click to Email Us
Though many of us make plans for various stages of our lives—we save for a wedding, we set aside investments for our children's education, we contribute regularly to retirement accounts—funding for end-of-life details often goes neglected.
That's not hard to understand. After all, it can be fun to think about traveling around after retirement years, but it’s difficult to consider what happens to our family when we’re gone.
Final expense insurance is one way to protect your loved ones against the financial concerns of funeral planning.
Known by many other names—burial insurance, pre-need insurance or funeral insurance—final expense insurance is a type of permanent life insurance that collects a regular premium in exchange for a fixed amount of coverage paid to a named beneficiary or beneficiaries at the time of your death. That money is intended to be used to cover the cost of medical care and other end-of-life expenses, most often funeral costs.
Though it’s common to assume life insurance will cover these expenses, that’s not always the case. If you want a way to guarantee coverage for your funeral arrangements, and leave your family to sort out the details of your final disposition and funeral service, final expense insurance may help. But if you want to relieve your loved ones of both financial and emotional burdens associated with your passing, prepaid funeral plans are the way to go.
This article will help to answer:
- What's the difference between a prepaid funeral plan and funeral insurance?
- Can I get a payable on death account for funeral expenses?
- How does life insurance pay for funeral costs?
- What is a final expense life insurance policy?
- What are the types of final expense insurance?
- What's the difference between a guaranteed issue and a simplified issue life insurance policy?
What’s the difference between a prepaid funeral plan and funeral insurance?
When you plan and prepay for your funeral, you outline your wishes. You meet with a funeral planning professional and walk through the details, from choosing your disposition (burial or a cremation), type of service (like a chapel service or an outdoor celebration of life), flowers, mementos, and more. You can get as specific as you'd like—right down to your clothes, the music and the menu.
Funeral (or final expense) insurance, on the other hand, doesn’t include a plan. It’s simply a way to fund a funeral, cremation, memorial and more.
When you want the comfort of knowing that your family won’t have to make arrangement decisions in the difficult days immediately following your death—and you want to ensure that your final wishes are honored—a prepaid funeral plan is for you.
On the other hand, final expense insurance does not pay for the specifics of the funeral itself, but rather it is used to cover funeral costs. If your main goal is to ensure that expenses for a funeral or cremation are covered, then funeral insurance can be a good choice. But unlike a prepaid funeral plan, there's no guarantee that they amount you pay will cover the costs of your funeral.
Learn about prepaid cremation options.
Can I get a payable on death account for funeral expenses?
A payable on death account, or POD, is an account that you establish with your bank. The person you name as the beneficiary can access funds in the account after after your death without having to wait for your will to be probated. The beneficiary can then use the funds to pay for your funeral expenses.
There is, however, a downside. In order for your beneficiary to access the POD account, he or she will need to provide the bank with a death certificate, which can take up to a month to receive. Since most funeral homes require payment for services at the time of the funeral or cremation, the beneficiary ends up paying for funeral expenses out of pocket and then reimbursing himself or herself once funds from the POD account are released.
It’s definitely a good idea to name a beneficiary for all your bank accounts, but if your goal is to have funeral expenses covered at the time of need, funeral insurance or a prepaid funeral plan is a better option.
How does life insurance pay for funeral costs?
It’s common to assume your family will use your life insurance benefits to pay for your funeral costs—and they might. But those benefits are meant to replace lost income and help your family pay off debt—so they may or may not be used for your funeral—and there can be other complications, too.
First, it can take weeks or even months for a life insurance company to pay out a claim, and the funeral home will require payment at the time of the funeral. This may be surprising, frustrating and financially burdensome for your loved ones during an already difficult time. Learn more about paying for a funeral in installments.
What's more, even if your family opts to pay the expenses at the time of need and reimburse themselves, the policy may not pay out enough to cover all of the funeral or cremation costs. Your family may still incur unexpected out-of-pocket expenses.
Learn why prepaid funeral plans are the best gift you can give your children.
What is a final expense life insurance policy?
A final expense life insurance policy is life insurance that specifically directs the beneficiary to use the pay out to cover medical costs and other end-of-life expenses, including funeral, cremation or cemetery costs. The beneficiary decides how the money is spent.
Unlike traditional life insurance policies, which require a medical exam to help set the cost of your policy, final expense insurance policies don’t require an exam, and applicants are often insured after answering only a few questions.
Once a final expense insurance policy is in effect, as long as premiums are kept up to date, it remains in effect until your death, when your beneficiary will receive the benefit.
Types of final expense insurance
There are three categories to consider when purchasing a funeral insurance plan:
- term or whole life
- medically underwritten or guaranteed issue
- guaranteed or nonguaranteed expense lock
Term funeral insurance. May be less expensive than other types, but it has a limited time for which a benefit will be paid and for which the premium payment will remain unchanged. Term choices usually include 10 or 20 years. If the insurance has not been used and a benefit has not been paid during that time, you may have an option to renew it, but often at a higher premium rate. This type of policy does not protect against rising funeral costs.
Whole life funeral insurance. Sometimes called permanent insurance, this has a higher premium because the benefit does not expire in a certain time frame. In other words, a term plan might pay out a claim; a whole plan will pay out a claim. These plans remain in force until the time of death, at which point the benefit is paid in full to the designated beneficiary (funeral home or individual).
Medically underwritten policy. If you are in good health or have only minor health issues, you could consider a medically underwritten policy. There is usually a detailed medical history associated with these policies, but they offer the opportunity for a higher maximum benefit.
Guaranteed issue policy. If you have high-risk health problems but not a terminal illness, this type of policy could be for you. It is more expensive than a medically underwritten police or even a simplified issue life insurance (see below) and offers lower maximum coverage amounts, but it's an option.
Guaranteed expense lock. This policy type locks in prices for funeral goods and services selected in advance. Once the policy is paid, there are no surprises and no additional charges or expenses. If purchased through a Dignity Memorial® provider, whole life, guarantee issue and medically underwritten policies fall under this category.
Nonguaranteed expense lock. This policy type does not lock in prices for goods and services. If costs increase and become greater than the policy’s death benefit, your family will need to pay the difference.
A policy may have a combination of these components.
If you're confused, you're not alone. Contact us and a pre-planning advisor will reach out to answer all your questions.
What’s the difference between a guaranteed issue and a simplified issue whole life policy?
For some people, a medical exam is a great obstacle to obtaining whole life insurance. However, there are two types of whole life insurance polices that do not require a medical exam.
- Guaranteed issue life insurance policies ask applicants just a few questions to rule out terminal illnesses, but they otherwise cover individuals with major health problems.
- Simplified issue life insurance policies are for those who may not qualify for a fully underwritten life insurance policy but are considered only moderate health risks. Applicants answer detailed medical questionnaires but do not need medical exams to qualify.
- To view the original version of this article visit www.dignitymemorial.com/pre-planning/funeral-costs/types-of-final-expense-insurance
- Seniors Blue Book was not involved in the creation of this content.
Other Articles You May Like
Some Sedentary Activities Are Good For Brain Health
Physical activity helps your brain, but did you know even some sedentary activities can ward off cognitive decline? Creative crafts, reading, and puzzles such as Sudoku or Scrabble keep your brain mentally stimulated. Try word and number games rather than TV or gaming. So, when you rest your body, make sure you're still engaging your brain. Summary: New research highlights that some sedentary activities, like reading or crafting, are better for brain health than others, such as watching TV or gaming. A study of 397 older adults found that mentally stimulating and socially engaging activities support memory and thinking abilities, while passive screen time is linked to cognitive decline.This insight is crucial, as 45% of dementia cases are linked to modifiable lifestyle factors. Researchers suggest swapping passive activities for more engaging ones to protect brain health, even during indulgent holiday marathons.Key FactsCognitive Benefits: Reading and social engagement improve brain function, unlike passive screen time.Preventable Risk: 45% of dementia cases could be reduced through lifestyle changes.Healthy Swaps: Small activity changes, like breaking up TV time with reading or movement, benefit the brain.Source: University of South AustraliaIts that time of the year when most of us get the chance to sit back and enjoy some well-deserved down time. But whether you reach for the TV controller, or a favourite book, your choice could have implications for your long-term brain health, say researchers at the University of South Australia.Assessing the 24-hour activity patterns of 397 older adults (aged 60+), researchers found that the context or type of activity that you engage in, matters when it comes to brain health. And specifically, that some sedentary (or sitting) behaviours are better for cognitive function than others.When looking at different sedentary behaviours, they found that social or mentally stimulating activities such as reading, listening to music, praying, crafting, playing a musical instrument, or chatting with others are beneficial for memory and thinking abilities. Yet watching TV or playing video games are detrimental.Researchers believe that there is likely a hierarchy of how sedentary behaviours relate to cognitive function, in that some have positive effects while others have negative effects.Its a valuable insight that could help reduce risks of cognitive impairment, particularly when at least 45% of dementia cases could be prevented through modifiable lifestyle factors.In Australia, about 411,100 people (or one in every 1000 people) are living with dementia. Nearly two-thirds are women. Globally, the World Health Organization estimates that more than 55 million people have dementia with nearly 10 million new cases each year.UniSA researcher Dr Maddison Mellow says that not all sedentary behaviours are equal when it comes to memory and thinking ability.In this research, we found that the context of an activity alters how it relates to cognitive function, with different activities providing varying levels of cognitive stimulation and social engagement, Dr Mellow says.We already know that physical activity is a strong protector against dementia risk, and this should certainly be prioritised if you are trying to improve your brain health. But until now, we hadnt directly explored whether we can benefit our brain health by swapping one sedentary behaviour for another.We found that sedentary behaviours which promote mental stimulation or social engagement such as reading or talking with friends are beneficial for cognitive function, whereas others like watching TV or gaming have a negative effect. So, the type of activity is important.And, while the move more, sit less message certainly holds true for cardiometabolic and brain health, our research shows that a more nuanced approach is needed when it comes to thinking about the link between sedentary behaviours and cognitive function.Now, as the Christmas holidays roll around, what advice do researchers have for those who really want to indulge in a myriad of Christmas movies or a marathon of Modern Family?To achieve the best brain health and physical health benefits, you should prioritise movement thats enjoyable and gets the heart rate up, as this has benefits for all aspects of health, Dr Mellow says.But even small five-minute time swaps can have benefits. So, if youre dead set on having a Christmas movie marathon, try to break up that time with some physical activity or a more cognitively engaged seated activity, like reading, at some point. That way you can slowly build up healthier habits.This research was conducted by a team of UniSA researchers including: Dr Maddison Mellow, Prof Dot Dumuid, Dr Alexandra Wade, Prof Tim Olds, Dr Ty Stanford, Prof Hannah Keage, and Assoc Prof Ashleigh Smith; with researchers from the University of Leicester, and the University of Newcastle.Author: Annabel MansfieldSource: University of South AustraliaContact: Annabel Mansfield University of South AustraliaImage: The image is credited to Neuroscience NewsOriginal Research: Open access.Should We Work Smarter or Harder for Our Health? A Comparison of Intensity and Domain-Based Time-Use Compositions and Their Associations With Cognitive and Cardiometabolic Health by Maddison Mellow et al. Journals of Gerontology Series A
Coldwell Banker Reaffirms Partnership with St. Jude Childrens Research Hospital for Fourth Consecutive Year
Having donated nearly two million dollars since the start of the partnership, the Coldwell Banker brand continues its commitment to fostering hopeColdwell Banker Real Estate LLC, a subsidiary of Anywhere Real Estate Inc. (NYSE: HOUS), extends its impactful partnership with St. Jude Childrens Research Hospital into 2025. The CB Supports St. Jude partnership has raised $1.97 million since its establishment in 2020.The inspiring story of David DiGregorio, an affiliated agent with Coldwell Banker Realty in Waltham, Massachusetts, truly reflects the spirit of the Coldwell Banker network. Recognized this year as the Stars of Hope top donor, a title he earned last year and in 2021, DiGregorios efforts serve as a powerful example of dedication, commitment and philanthropy. His generous contributions have not only significantly enhanced the overall impact made by the Coldwell Banker brand, but also have been instrumental in helping St. Jude give vital support to many families in need. The Stars of Hope recognition is honored annually to the top 15 percent of all participating agents who made donations in the CB Supports St. Jude program.The renewal of this program allows Coldwell Banker brand affiliated agents to keep donating a portion of every home sale or purchase to this worthy cause. This dedication guarantees that no family will face the financial burdens of treatment, travel, housing or food expenses while they work to bring their children home.QUOTES:We are deeply committed to the power of community and the profound importance of giving back. Our partnership with St. Jude Childrens Research Hospital exemplifies our unwavering dedication to making a tangible difference in the lives of families confronting unimaginable challenges. As we look ahead to 2025, we take immense pride in the collective impact we continue to achieve, knowing that every contribution brings hope and healing to children in need.Jason Waugh, President of Coldwell Banker Affiliates I am incredibly grateful to be part of a network that is truly committed to making a difference. Contributing to this cause has been one of the most rewarding experiences of my career and seeing the tangible impact of our donations on the lives of these children reinforces the importance of our partnership with St. Jude.David DiGregorio, agent with Coldwell Banker Realty Waltham, Mass About Coldwell Banker Real Estate LLCPowered by its network of over 98,000 affiliated sales professionals in approximately 2,700 offices across 40 countries and territories, the Coldwell Banker system is a leading provider of full-service residential and commercial real estate brokerage services. The Coldwell Banker brand prides itself on its history of expertise, honesty and an empowering culture of excellence since its beginnings in 1906. The Coldwell Banker brand is committed to providing its network of affiliated sales agents with the tools and insights needed to excel in todays marketplace and is known for its bold leadership and dedication to driving the industry forward. The brand was named among the 2024 Womens Choice Award 9 out of 10 Customer Recommended Real Estate Agency. Blue is bold and the integrity and values of the Coldwell Banker brand give the Gen Blue network an unbeatable edge. Coldwell Banker Real Estate LLC fully supports the principles of the Fair Housing Act and the Equal Opportunity Act. Each office is independently owned and operated.
Affluent Appetite for Luxury Homes Drives Market Optimism for Many Consumers, According to New Coldwell Banker Global Luxury Report
Report features fresh insights from U.S. luxury consumers and identifies the top trends dominating the global luxury real estate landscapeColdwell Banker Real Estate LLC, an AnywhereSM (NYSE: HOUS) brand, and the Coldwell Banker Global Luxury program, today released The Trend Report, showcasing increased consumer optimism in luxury real estate as the fourth quarter of 2023 welcomed fresh energy from luxury homebuyers.Over one-third of surveyed luxury consumers feel that 2024 will be a better time to buy or sell a home compared to 2023 indicating enthusiasm for luxury real estate as they pursue their dream home, according to the Coldwell Banker Global Luxury Consumer Survey.Furthermore, the luxury market saw sales during the last quarter of 2023 increase nearly 4.2% for single-family homes and 14.2% for attached properties compared to the previous year, while new listings also increased by 14.2% for single-family homes and 7.2% for attached properties during the same period.[1] On average, luxury consumers surveyed plan on selling their home within the next 10 months.Alongside the luxury consumer survey, The Trend Report explores top trends leading todays luxury homebuying landscape, backed by additional insight and data from Coldwell Banker Global Luxury Property Specialists, the Institute for Luxury Home Marketing and Wealth-X.The top six themes shaping the 2024 luxury real estate market identified by The Trend Report are:Shifting out of Neutral: Influences on the Luxury MarketHave-It-All PropertiesThe Influence of AIThe High Earners, Not Rich Yet (HENRY) FactorForeign BuyersSmart HomesIn addition to the trends and consistent theme that wealthy Americans have a more positive outlook on the real estate market heading into 2024, key findings from the Coldwell Banker Global Luxury Consumer survey include:Continued desire for affluent consumers to purchase a home abroadSocial medias tremendous role in homebuying decisionsLocation being the most important factor to consider when searching for a homeInternational InvestmentsAmerica continues to be a real estate safe haven for many of the worlds wealthiest and influential consumers. According to The Trend Report, international buyers purchasing real estate in the top 5% of the market in 2023 saw 25% growth, indicating that international high-net-worth consumers continue to see to value of investing in the U.S. luxury real estate market. The top international buyers include China, Canada and the United Kingdom, and the most favored cities to purchase within the U.S. are New York, Los Angeles, Miami, San Francisco and Washington, D.C.While international buyers look to America for their next property, wealthy Americans are also exploring opportunities abroad, with nearly 40% of survey respondents planning to buy a home in a foreign location within the next year and two-thirds of affluent consumers saying they plan to purchase a home abroad within the next five years. Europe is the top destination among luxury consumers (29%), followed by North America outside the U.S. (28%) and the Caribbean (23%).Social Media Influences Luxury BuyersSocial media is overwhelmingly influencing luxury consumers to purchase their dream home. A whopping 73% of affluent consumers say they have been influenced by social media to purchase a particular home they desire. Instagram (45%), YouTube (45%) and TikTok (44%) are the top social media platforms that have influenced luxury consumers to purchase their dream home.For the younger generations of luxury homebuyers like millennials and Gen Z, TikTok has especially become an enormously popular platform to connect with real estate agents to become more knowledgeable of the housing market through comprehensive yet digestible, bite-sized videos and virtual walkthroughs of homes. 64% of consumers aged 18-24 have been influenced by social media in their desire to purchase a particular type of home. In addition, 68% of consumers in this age bracket are most likely to have been influenced by TikTok in their decision to purchase their desired home.Discerning Tastes in Luxury LivingWhile high interest rates and low inventory may cause some consumers to settle or pause their home search altogether, luxury consumers have only become more selective when purchasing their newest property. Todays affluent buyers are more discerning than ever, prioritizing location, privacy, wellness amenities, lifestyle experiences and the latest technology.Notably, the top three amenities desired by luxury consumers according to the survey findings are privacy, breathtaking views and garage space. Location is top-of-mind for luxury consumers when choosing a home (45%), followed by price (39%). Wealthy Americans prefer mid-sized to large modern contemporary styled homes, ideally located on the West Coast.High-tech security systems, smart lighting and energy-saving solutions stand out as the top three preferred technologies among luxury consumers. Notably, the preferences in smart home technologies vary across age groups. Older generations (45+) lean towards prioritizing convenience, while the younger demographics (1834) express a preference for privacy and security. Individuals aged 3544 prioritize health tech systems, such as air quality control and water analysis sensors.To explore the Trend Report and full survey results, visit https://www.coldwellbankerluxury.com/.QUOTES:After a year of high interest rates, housing shortages and conflicted consumer sentiment, its encouraging to see such a positive outlook on the luxury real estate market for 2024. If lower mortgage rate trends combined with the new inventory momentum continues, luxury homebuyers could be inspired to move forward with their next home purchase. As they prioritize new amenities, features and even explore overseas options for their next property, Im excited to see our Coldwell Banker Global Luxury Property Specialists guide both buyers and sellers to achieve their dream homes.Michael Altneu, vice president, Coldwell Banker Global LuxuryIn contrast to the pandemic homebuying boom, were seeing luxury homebuyers more than willing to wait to find the perfect house in 2024 that meets every single one of their needs whether its privacy, wellness amenities, lifestyle experiences, latest technology or a combination of all those factors. Specifically, turn-key, move-in ready homes with easy access to the best luxury amenities provide buyers with instant gratification in attaining their desired lifestyle. Whether its purchasing the home that has it all or upgrading their current home with trending features, Im looking forward to seeing both buyers and sellers enjoying the decisions they make for their home this year.Jade Mills, president, Jade Mills Estates and International Ambassador of Coldwell Banker Global Luxury programMethodologyThe Coldwell Banker Global Luxury program collaborated with Censuswide, the Institute for Luxury Home Marketing and Wealth-X to provide insights into real estate trends, market sentiment, property investment and luxury spending preferences. Censuswide surveyed 4,213 U.S. consumers, 25% of which were luxury (1,053 respondents in total). Research was conducted between Nov. 27, 2023 and December 11, 2023. Luxury respondents were classified as those aged 18+ with a household income of $1M+, or who have bought a home in the U.S. worth $1M+ or are planning to purchase a home in the near future worth $1M+. Censuswide abides by and employs members of the Market Research Society which is based on ESOMAR guidelines and principles. For more information on how data was collected and defined, please refer to the full methodology on page 4 of The Trend Report.[1] This data is sourced from an analysis of 130 U.S. markets by the Institute for Luxury Home Marketing. For more information, please reference the methodology section on page 4 in The Trend Report.