You may not have thought about the importance of purchasing final expense life insurance, if you already have traditional life insurance. Nevertheless, you may still need both of them. Although most people find that this type of insurance is not necessary, for some it can be. This additional level of insurance will provide you with protection over the costs associated with funeral expenses, something that may not have coverage by a traditional life insurance policy. There are other things to consider, too.
Final Expenses Discussed
One of the largest differences between final expense life insurance, which is also often burial insurance, and traditional life insurance is that there is a huge difference in the costs. Specifically, the face value of most final expense policies is much lower than that of life insurance. You may purchase a traditional life insurance plan that amounts to the amount of debt you have, including mortgages, and provides for the living expenses for your family over a long period. However, many of the policies for final expenses insurance only have a face value of $10,000 to $25,000, sometimes even less. The goal of these funds is to pay for your actual funeral expenses.
Also note that this also means that the cost of final expense life insurance is much lower than the cost of a traditional policy to you. It does not pay as much and therefore does not cost as much to you.
Another important aspect of this type of policy is how quickly the policy pays out. Unlike a traditional life insurance policy, which can take a few months to pay its death benefit, most of the final expense policies pay the beneficiary within 24 hours of your death. This may or may not matter to your loved ones. If your loved ones will need to have the funds from such a policy to pay for your funeral expenses, waiting months for the policy’s waiting period to expire may not be an option. If they have to wait, they may have to pay excessive fees. There is no waiting period with final expense policies.
Do You Need Both?
The goal of final expenses life insurance is to protect your family from having to pay for the costs associated with burial and those final expenses that they need to have the funds for right away. That is not to say that these funds cannot be in use for other things. For example, it may take three to six months for a traditional life insurance policy to pay out. During that time, there may be three to six months worth of mortgage payments your family needs to make.
Even if you already have life insurance, it may be important to your family’s financial future to have final expense life insurance. Consider how this type of policy could provide the protection your family needs from financial devastation. It’s fast payment may be just what they need in a difficult time like this.
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