Final Expense Insurance vs Saving

Final expense insurance is a type of whole life insurance that is meant to cover your end-of-life costs after you pass. These policies have become increasingly popular with senior citizens who are concerned about burdening their loved ones with a large out-of-pocket expense when their life ends.

Final expense insurance is considered whole life insurance, meaning that it will not expire. Because these policies do not require a medical exam to provide coverage, almost everyone is approved, making them a particularly attractive alternative to traditional life insurance.

The majority of final expense policies available offer death benefits between $30,000 and $50,000. These benefits are primarily used to cover expenses such as funeral costs, burial/cremation expenses, and medical bills, but there are no constraints on how these funds can be utilized after you pass. Some even use these funds as an inheritance.

Although saving accounts can be a great financial investment, the benefits of final expense insurance greatly outweigh those of a basic savings account.

Pros of a Final Expense Insurance Policy

The one real disadvantage of final expense insurance is the monthly premium that comes with your policy. Nevertheless, this premium could make an enormous difference in the amount of financial support your family receives when you pass.

Budget-Friendly

Most people become eligible for final expense insurance between the ages of 50 and 80, meaning that those policyholders are often on strict budgets and fixed incomes. Final expense insurance offers a variety of policies for lower budgets. These policies come with fixed premiums that won’t increase over time.

Peace-of-Mind

Worrying about how your loved ones will afford to pay for end-of-life expenses can be enough to keep anyone up at night. By investing in final expense insurance, you are able to protect your family from potential debt and additional stress while they are grieving.

Accrue a Cash Value Tax Free

Whole life insurance policies accrue a cash value, meaning that they can be used as collateral if you find yourself in a financial emergency. How and when you return the money to your policy can affect how much your beneficiaries will receive when you pass. It is recommended that you only use this in a true financial crisis.

Cons of a Savings Account

While most saving accounts offer the benefit of not charging a fee, there are several drawbacks that can make final expense insurance better than saving accounts.

You Won’t Save Enough

The unfortunate reality is that it will cost your family a minimum of $7,000 (1) to pay for your funeral expenses. It can be difficult for anyone to save this amount of money, especially a senior on a fixed income. Placing a large and unexpected expense like this on your family could send them into real financial trouble.

A Hold May Be Placed on Your Savings

In some cases, your savings can be held until your estate is completely settled. This means that by the time the money in your savings account is actually available, you will not be able to use it towards your funeral and burial expenses anyways.

_{1) Retrieved on 12/30/21, from: https://nfda.org/news/media-center/nfda-news-releases/articletype/articleview/articleid/6182}

Final expense insurance was created specifically to cover your end of life expenses and can be the best alternative to a savings account to cover end of life expenses. It can help to keep your family and friends from struggling with this additional financial burden while mourning your loss.

We know that planning for your own funeral can be a difficult and uncomfortable task. By filling out this simple, online form, one of our highly-trained staff at SAO will reach out and assist you with some of your difficult final expense questions.