Article
9 min read

Do You Need Final Expenses Life Insurance?

Many people worry about how their end of life expenses will burden their family. Resonating with you? A final expense insurance policy might be something to consider. It's specially designed to provide this financial security towards the end of your life; ensuring that your family doesn't have to choose between debt and your wishes, even if your estate is not large enough to cover the costs. From burial expenses, a funeral director or chapel fees, to obtaining a death certificate, care from health professionals or unexpected terminal illness, this insurance will have you, and your families back. Read on to deepen your understanding, inform your decision, and consider other options to help you plan for the future.

Life insurance

What is Final Expense Insurance?

It's a form of life insurance which you pay a monthly premium for. The difference to usual life insurance? Its eventual payout is specifically designed to cover end of life expenses. With this death benefit, premiums and accessibility consequently targeted towards an older population, sometimes excluded from other insurance policies.

Is final expense insurance just for funeral costs?

Final expense insurance policies are not just to cover funeral expenses. They cover a wide range of costs, otherwise left entirely for your family to cover. In a time of immense grief and stress, this cover can provide immense emotional and financial support to your family. Additionally, it can grant peace of mind for you by safeguarding your loved ones against the financial burden, stress or guilt of not being able to cover your death related expenses when you pass away.

Whilst this policy typically has lower death benefits than traditional life insurance or a funeral insurance policy, this makes what your monthly premium payments a lot more affordable.

Meaning that even if if the lump sum payment from a final expense policy does not cover all funeral expenses, memorial service and medical costs, this cover will at least provide some assistance. Ensuring your family are not left with a huge lump sum to cover everything themselves.

So, do you need final expenses insurance?

The answer depends on your individual financial situation and personal preferences. Here are some factors to consider when making this decision:

  1. Age:
    If you're in your 40s or 50s, you may not see the immediate need for final expenses insurance. We get it, death it hopefully a far, far away problem at this age. But with an uncertain future and no knowledge of what's round the corner, t's never too early to start thinking ahead when it comes to protecting and providing for your family in the future.

  2. Estate size:
    If you have a significant estate, you may not need final expenses insurance. Your estate may be large enough to cover these costs without additional insurance. On the other hand, if you plan to splash out all your remaining cash in life, it might be worthwhile investing a portion of your splurges into an insurance which won't leave your family burdened in your death.

  3. Family support:
    If you have a close-knit family that is willing and able to cover your final expenses, you may not need final expenses insurance. However, regardless of you relationships, it's important to have these conversations. Even if your close, it might put a strain on your family members to cover your end of life expenses. Similarly, this provides a good opportunity to communicate the specific details of your end of life wishes, and offer support for them as well.

  4. Personal preference:
    Ultimately, the decision to purchase final expenses insurance comes down to you. If your risk averse, you might feel more secure knowing that your final expenses will be covered. It allows you to enjoy the rest of your funds on life, knowing you've portioned away some cover for when your time is up.

If you're considering purchasing final expenses insurance, it's important to do your research and compare different policies to find the one that's right for you. Make sure you understand the average coverage amount, any early payout option and benefits offered by each policy. Additionally, you might want to consider any exclusions or limitations before taking the plunge.

Talking to a financial advisor or insurance agent to get professional advice might also be a good idea at this stage. They can help you determine if final expenses insurance is right for you if you have any existing insurance policy, and assist you in finding a policy that meets your average cover amount needs.

Deciding whether to get final expense life insurance?

The benefits

Final Expense Insurance offers numerous benefits for individuals who are looking for a way to secure their end-of-life expenses. Here are some of the key benefits of this type of insurance:

  1. Financial security for loved ones: One of the primary benefits of final expenses insurance is that it provides financial security for your loved ones. With this type of insurance in place and your premiums paid, you can be confident that your final expenses will be taken care of, even if your estate is not large enough to cover these costs. You won't need to stress about who will pay for your funeral, and you'll receive bonus cover on any unexpected final expenses. Assuming you pay premiums, there are also favourable income tax implications, as your family will not be taxed on death payouts.

  2. Peace of mind: Knowing that any unexpected costs towards your end of life will be taken care of, can give you peace of mind during what can be a difficult and stressful time for your loved ones.

  3. Simplified application process: Unlike traditional life insurance policies, final expenses insurance has a simplified application process, making it easier for older individuals to obtain.

  4. Affordable coverage: Final expenses insurance policies typically have lower death benefits than traditional life insurance policies, making them more affordable.

  5. Easy to understand: Final expenses insurance is a straightforward and easy-to-understand type of insurance, making it a great option for individuals who are looking for a simple solution for their end-of-life expenses.

The downsides of final expenses life insurance?

  1. Coverage limitations:
    Final expenses insurance policies typically have lower death benefits than traditional life insurance policies, meaning that they may not cover all of your end-of-life expenses. It's important to carefully consider the amount of coverage you need before purchasing a policy. As, especially if you live longer, you may end up paying more in high premiums than the final lump sum benefit.

  2. Age restrictions:
    Some final expenses insurance policies may have age restrictions, making them unavailable to individuals who are over a certain age.

  3. Health restrictions:
    Depending on the type of policy you choose, you may need to pass a medical exam before being approved for coverage. This can be a disadvantage for individuals who have pre-existing medical conditions.

Is final expense insurance the same as a funeral insurance policy?

Funeral insurance and final expenses insurance are often used interchangeably. The serve the same function; to protect a surviving family member having to cover all funeral expenses and related services of your death. However, there are some important differences between the two.

  • Breadth of coverage: final expenses insurance covers all end-of-life expenses; including funeral costs, medical bills, and any other outstanding debts. Unlike with a funeral policy, your family can use the payouts for a wide range of final expenses, rather than just to specifically cover funeral costs.

  • Death benefit: another difference is the death benefit amount, as funeral insurance policies typically have a lower death benefit than final expenses insurance policies. The flip side is that funeral insurance premiums increase or can be unaffordable, whereas with final expense life insurance comes with annual premium discount, given the lower end of life and funeral cover benefit.

What about pre-paid funeral plans?

Prepaid funeral plans are another form of ‘funeral insurance’ to help you account for funeral expenses ahead of time. With prepaid funerals, you pay directly for your funeral in advance. Choosing for the specific funeral services and merchandise you want, and locking in the cost at today's prices.

This type of plan offers peace of mind, as you know that your loved ones won't be burdened with the financial stress of paying for, or choosing, your final funeral wishes. Prepaid funeral plans are also easy to manage, with flexible payment options and customizable options to meet your specific needs. They also don’t not have age restrictions, making them an option for individuals of all ages.

Similar to funeral insurance, this is a narrower form of insurance which doesn’t extend to covering your other expenses at the end of life, and could leave your family vulnerable to mounting costs in other areas.

Choosing how to cover your end of life and funeral expenses ahead of time

Planning ahead for your end of life expenses is a considerate act of love, which helps your family in the future. Ultimately, the choice between funeral insurance, prepaid funerals and final expenses insurance will depend on your individual needs and financial situation.

If you're looking for a comprehensive solution that covers a wide range of end-of-life expenses, final expenses insurance may be the right choice for you. On the other hand, if you're only concerned about funeral cover, funeral insurance cover or a pre-paid funeral plan may be a more appropriate option.

To Wrap Up

In conclusion, whether or not you need final expenses insurance depends on your individual circumstances. Consider your age, estate size, family support, and personal preferences when making this decision.

Remember to do your research, compare policies, and talk to a professional for guidance. Keeping in mind that a life insured, is a life's worth of wishes protected. Whether that safety net comes from a larger estate, final expenses insurance, the decision to buy funeral insurance or pay for your funeral in advance, planning ahead for your end of life will help grant you peace of mind, and help your family when you pass away.

Safewill can help you plan ahead

To protect your assets, family members and final wishes, get started on writing your will today. Incorporating a lump sum payment to cover any funeral costs, assigning an executor and outlining your wishes on how to use insurance funds when you pass away. It's easy, affordable and flexible- so you've really no excuse not to.

Start by giving us a call on1800 103 310 , or via livechat now.

Last updated 07th February 2023
1 D69 B666 12 C4 4 E1 A B9 D0 A98325 C7 A6 B9 4 5005 c
Hannah Comiskey
Content Writer
Charities
For Charities
Resources
FAQs Blog
The best way to contact our Customer Care team is via our
Call us at
1800 10 33 10
Safewill acknowledges all Aboriginal and Torres Strait Islander Traditional Custodians of Country and recognises their continuing connection to land, sea, culture and community. We pay our respects to Elders past and present.
Safewill is an online service providing streamlined forms and information. Safewill is not a law firm or a substitute for a lawyer’s advice about complex estate planning issues.