A final expense plan, or burial insurance, is a policy that pays for costs that follow a client’s demise. Final expense plans are purchased to cover events and costs like funerals, remaining debts, and probate charges. Funeral expenses can easily reach upwards of $10,000. Depending on the policy and premiums paid, the death benefit can range from $2,500 to $25,000. The cost of the premium is dependent upon the client’s age. Most plans are available as whole life or term life plans. While whole life plans cover a client for their entire life, term life plans need to be renewed after the term expiration. If a client is in poor health, graded death benefit plans are available. Depending on the plan, if a client dies within the first three years, the beneficiary will receive increasing proportions of the death benefit, with the full benefit being paid if the policyholder dies three to five years after the policy purchase. Either way, a death benefit is paid within 24 hours of the policyholder’s passing. Unless a client leaves documentation stating their preferences of funerary proceedings, the beneficiary is free to use the death benefit how they see fit. If the costs of the funeral and death related expenses are less than the death benefit, the beneficiary is allowed to keep the difference.
It is not uncommon for prospective purchasers of final expense policies to consult with funeral directors about the costs of their ideal funerals in order to estimate their needed expenses. The typical funeral ranges from $1,000 to $10,000.