Pros and Cons of Final Expense Insurance: Is It the Right Choice for You?
Ensuring your family is financially protected after your passing requires careful planning. Final expense insurance is often marketed as an accessible and affordable solution for covering funeral costs and other end-of-life expenses. However, with smaller benefit amounts and higher premiums per dollar of coverage, it’s important to assess whether this option truly meets your needs. In this guide, we’ll provide a clear analysis of final expense insurance, its advantages and drawbacks, and potential alternatives to consider.
What Is Final Expense Insurance?
Final expense insurance, also known as burial insurance or funeral insurance, is a type of whole life insurance designed to cover the costs associated with end-of-life expenses. It provides a small death benefit, typically ranging from $5,000 to $50,000, which is intended to cover funeral costs, medical bills, and minor outstanding debts. Unlike larger whole life or term life insurance policies that focus on income replacement and long-term financial planning, final expense insurance is specifically structured to provide immediate financial relief to beneficiaries.
How It Differs from Traditional Life Insurance
Final expense insurance shares some similarities with whole life insurance, but it has key differences:
| Feature | Final Expense Insurance | Traditional Life Insurance (Term & Whole) |
| Coverage Amount | $5,000 – $50,000 | $100,000 – $1 million+ |
| Medical Exam Required? | No | Often required (except for no-exam policies) |
| Premiums | Fixed for life | Fixed for term (term life) or lifelong (whole life) |
| Primary Purpose | Covers funeral and small debts | Covers income replacement, mortgages, estate planning |
| Approval Process | Quick (few days to weeks) | Can take weeks to months |
| Cash Value Accumulation | Yes, small amount | Yes (whole life), No (term life) |
Who Typically Buys Final Expense Insurance?
This type of insurance is designed for individuals who:
- Are between 50 and 85 years old and need a policy to cover funeral expenses.
- Have pre-existing medical conditions that make it difficult to qualify for traditional life insurance.
- Lack savings to pay for end-of-life costs.
- Do not need a large death benefit but want to ease the financial burden on loved ones.
- Want a simple, hassle-free application process without medical exams or long underwriting procedures.
Since final expense insurance is easier to qualify for, it is especially attractive to seniors and individuals with limited financial resources who may not have other life insurance coverage in place.
Types of Final Expense Insurance & Coverage Details
Final expense insurance is available in two primary types: simplified issue and guaranteed issue. While both offer coverage without requiring a medical exam, they differ in eligibility, approval process, and waiting periods.
1. Simplified Issue Final Expense Insurance
A simplified issue policy is a good option for those in moderate to good health who want coverage without a medical exam but are willing to answer a few basic health questions.
Key Features:
- No medical exam required, but applicants must answer health-related questions (e.g., history of major illnesses, smoking status).
- Immediate coverage (no waiting period) if the applicant qualifies.
- Lower premiums compared to guaranteed issue policies.
- Coverage amounts range from $5,000 to $50,000.
Best For:
- Seniors in relatively good health.
- Individuals who do not have serious pre-existing conditions.
- Those who want immediate coverage without delays.
2. Guaranteed Issue Final Expense Insurance
A guaranteed issue policy is available to anyone within the eligible age range (typically 50–85 years old), regardless of health status. It is ideal for individuals who cannot qualify for other life insurance policies due to medical conditions.
Key Features:
- No health questions or medical exams—everyone qualifies.
- Higher premiums due to increased risk to the insurer.
- Includes a graded death benefit (waiting period of 2–3 years before full payout).
- If the insured dies during the waiting period, beneficiaries receive a refund of premiums paid plus interest instead of the full benefit.
Best For:
- Seniors with serious medical conditions (e.g., terminal illness, history of heart disease, cancer).
- Individuals who have been denied traditional life insurance.
- People who are willing to accept a waiting period in exchange for guaranteed approval.
Coverage Amounts & Typical Uses
Final expense insurance policies offer modest death benefits designed to cover specific end-of-life expenses. Here’s what these policies typically cover:
| Coverage Amount | Typical Use Case |
| $5,000 – $10,000 | Basic cremation services, minimal funeral expenses |
| $10,000 – $20,000 | Traditional funeral with burial and headstone |
| $20,000 – $50,000 | Funeral, remaining medical bills, and small debts |
Since funeral and burial costs in the U.S. can range from $7,000 to $12,000, most final expense policies provide just enough coverage to handle these costs without leaving financial burdens on surviving family members.
Pros of Final Expense Insurance
Final expense insurance is designed to provide affordable, accessible coverage for individuals who want to ensure their funeral expenses and minor debts are taken care of. It is particularly beneficial for seniors and those with health conditions who may not qualify for traditional life insurance. Below are the key advantages of this type of policy.
Affordable Compared to Whole Life Insurance
Compared to traditional whole life insurance, final expense insurance is a more budget-friendly option. While whole life policies can cost hundreds of dollars per month, a $10,000 final expense policy for a 65-year-old non-smoker typically ranges between $40 and $70 per month. This makes it an attractive choice for those looking for low-cost coverage to handle funeral expenses. Additionally, final expense insurance offers predictable costs, as premiums do not increase over time, making it easier to budget for long-term financial planning.
Fixed Premiums for Life
One of the significant benefits of final expense insurance is its fixed premiums, which remain consistent throughout the life of the policy. Unlike term life insurance, which may require renewal at higher rates, final expense policies ensure that the insured never faces an increase in premiums. This stability allows beneficiaries to rely on the policy payout, knowing that it will not expire or become unaffordable over time.
No Medical Exam Required
Final expense insurance is particularly accessible because it does not require a medical exam. For simplified issue policies, applicants only need to answer basic health questions, while guaranteed issue policies require no health questions at all. This makes it an excellent option for individuals with pre-existing conditions who may have difficulty qualifying for other types of life insurance. The ability to secure coverage without extensive medical underwriting is one of the main reasons seniors opt for final expense insurance.
Provides Peace of Mind for Beneficiaries
One of the biggest advantages of final expense insurance is the financial relief it provides to loved ones. Funerals, medical bills, and outstanding debts can place a significant burden on surviving family members. A final expense policy ensures that funeral and burial costs are covered, helping families avoid unnecessary financial stress. Additionally, beneficiaries can use the payout to settle medical bills, credit card debts, or other minor financial obligations, ensuring that these expenses do not become a hardship after the policyholder’s passing.
Quick & Simple Application Process
Unlike traditional life insurance, which often takes weeks or even months for approval, final expense policies are approved quickly, sometimes within a few days. This fast turnaround makes it a practical choice for individuals who need immediate coverage without lengthy waiting periods. Guaranteed issue policies, in particular, offer almost instant approval, ensuring that applicants who might otherwise be denied coverage can still secure a policy with minimal effort.
Potential for Cash Value Accumulation
Because final expense insurance is a type of whole life insurance, it accumulates cash value over time. This feature allows policyholders to borrow against the cash value if they need access to funds during their lifetime. While this is not the primary purpose of the policy, it provides some financial flexibility, making final expense insurance a more versatile option than simply setting aside money in a savings account.
Cons of Final Expense Insurance
While final expense insurance offers affordability and accessibility, it has several limitations that may make it less suitable for certain individuals. Understanding these drawbacks can help determine whether this type of insurance aligns with your financial needs.
Lower Coverage Amounts
One of the most significant limitations of final expense insurance is its low coverage amounts, which typically range between $5,000 and $50,000. While this is sufficient to cover funeral costs, minor medical bills, and small debts, it may not be adequate for individuals who have larger financial responsibilities, such as mortgages, car loans, or dependents relying on their income.
For those who require income replacement or substantial financial support for their family, a term life or whole life policy would be a better alternative, as these options offer higher coverage amounts.
Higher Cost Per Dollar of Coverage
Compared to term life insurance, final expense insurance has a higher cost per dollar of coverage. Because it is designed for seniors and individuals with health conditions, insurers charge higher premiums to offset the increased risk.
For example, a 65-year-old non-smoker might pay $50–$70 per month for a $10,000 final expense policy, while a 20-year term life policy offering $100,000 in coverage could cost the same amount. This means that individuals looking for more substantial life insurance coverage may find term life insurance to be a more cost-effective option.
Waiting Periods on Some Policies
While simplified issue policies offer immediate coverage, guaranteed issue final expense insurance often includes a waiting period of 2–3 years before the full death benefit is paid.
If the insured passes away during this waiting period, beneficiaries will only receive a refund of the premiums paid plus interest, rather than the full policy payout. This limitation makes guaranteed issue policies less ideal for individuals seeking immediate full coverage. Those who are relatively healthy may benefit from choosing a simplified issue policy to avoid this waiting period.
Limited Value for Younger, Healthier Individuals
Final expense insurance is primarily designed for seniors and those with health conditions who may not qualify for traditional life insurance. However, for younger individuals under 50 who are in good health, this type of policy offers limited value.
Since final expense insurance does not provide large death benefits, younger applicants may find better financial value in term or whole life insurance, which offers higher coverage amounts at lower premiums. If a person is young and in good health, it is typically more cost-effective to secure a term life policy rather than investing in final expense insurance.
Who Should Consider Final Expense Insurance?
Final expense insurance is a good fit for:
- Seniors (50–85) with no savings for funeral expenses.
- People with pre-existing conditions who don’t qualify for traditional life insurance.
- Low-income families looking for affordable burial coverage.
- Individuals without dependents who only need funeral expense coverage.
It is not ideal for individuals who need high-value life insurance for income replacement or long-term financial planning.
Alternatives to Final Expense Insurance
While final expense insurance is a good option for covering end-of-life costs, it is not the only choice. Depending on individual circumstances, other financial strategies may offer better value. Below are three main alternatives to consider.
1. Term Life Insurance
- Lower cost per dollar of coverage than final expense insurance.
- Can provide $100,000+ in coverage for similar premiums.
- Expires after 10–30 years with no payout if the insured outlives the term.
2. Whole Life Insurance
- Lifelong coverage with higher death benefits.
- Builds cash value over time.
- More expensive than final expense insurance.
3. Personal Savings & Investments
- No premiums—funds remain under personal control.
- Immediate access to funds when needed.
- Requires financial discipline and may not grow fast enough.
| Coverage Needs | Best Option |
| $5,000–$50,000 (funeral costs only) | Final Expense Insurance |
| $100,000+ (income replacement, mortgage, dependents) | Term or Whole Life Insurance |
| Self-funded funeral expenses | Savings or Investments |
How to Choose the Right Option
Selecting the right policy or alternative depends on financial needs, health status, and long-term goals. Below are key factors to consider when deciding whether final expense insurance or an alternative option is the best fit.
When selecting a policy, consider:
- Financial situation – Do you have savings to cover funeral expenses?
- Coverage needs – Do you only need funds for a funeral, or do you need income replacement?
- Health status – Can you qualify for affordable term or whole life insurance?
- Urgency of coverage – Do you need immediate approval or can you wait for traditional policy underwriting?
Final expense insurance is best for those who cannot qualify for traditional policies or who only need funds to cover funeral costs.
Conclusion
Final expense insurance is a reliable and accessible option for covering funeral expenses and minor debts, particularly for seniors and those with health conditions. While it provides fixed premiums, lifelong coverage, and no medical exam requirements, it may not be the best choice for younger individuals or those needing higher coverage amounts.