Final expense insurance
Also called: burial insurance, funeral insurance policy
A small whole-life policy, usually $5,000–$25,000, marketed to cover funeral costs. Easy to qualify for, but expensive per dollar of coverage.
Final expense insurance is permanent life insurance in a small face amount, sold specifically as a way to leave money for a funeral. It is easy to get — often with few or no health questions — and the payout goes to a named beneficiary, not locked to any funeral home, so the family keeps whatever is left over.
The trade-off is cost. Premiums are high relative to the benefit, and “guaranteed issue” policies usually carry a graded death benefit: if you die within the first two to three years, the policy pays back only your premiums plus interest, not the full amount.
If you live long enough, you can pay more in premiums than the policy ever pays out. For many people a payable-on-death savings account earmarked for the funeral is cheaper and more flexible.
- Funeral insurance— A small whole-life insurance policy ($5,000–$25,000) marketed to cover funeral costs. Often expensive relative to the payout. A separate savings account usually outperforms it.
- Payable on death (POD) / Transfer on death (TOD)— A simple way to pass a bank account, brokerage account, or vehicle title to a named person at death without going through probate. Set with the institution on a form.
- Pre-need— Arrangements made before death — picking services, choosing a casket or urn, sometimes paying in advance. Done by the person who will die or by family on their behalf.
This definition is general consumer information, not legal, medical, or financial advice. Industry practices and regulations change occasionally; verify before relying on anything here for a specific decision.
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