Final Expense vs. Traditional Life Insurance

There’s no right or wrong choice regarding final expense and traditional life insurance. There’s only the most appropriate choice, and that depends on your personal goals and circumstances. With either option, you buy a policy now so that your loved ones will receive a death benefit later. However, these two have stark contrasts when it comes to the enrollment process, coverage amounts, and duration of coverage.

How Are The Enrollment Processes Different Between Final Expense And Traditional Life Insurance?

Qualifying for life insurance isn’t one-size-fits-all. Different types of policies have their own degrees of difficulty when it comes to qualifying. This is directly tied to the level of risk the insurer is taking because when an insurer agrees to disburse hundreds of thousands of dollars after one’s death, they’re banking on the insured individual to make a sufficient amount of premium payments to allow the insurer to distribute funds without being at a net loss. 

To determine risk, insurers often require medical exams and inquire about lifestyle choices (e.g., alcohol and tobacco use).

Final expense insurance is much easier to qualify for, partly due to its lack of the standard intensive medical underwriting process. Here, medical underwriting goes no further than a short questionnaire. This is part of what makes final expense highly inclusive and sought after.

Traditional life insurance policies commonly mandate medical exams as part of enrollment. This is true for both term policies and whole life policies.

What Are The Differences In Coverage?

Final expense has a much smaller death benefit than traditional life insurance. Coverage ranges between $2,000 and $50,000, depending on the insurer and how much they will assign to you. In most cases, individuals buy just enough to cover funeral expenses, which can be as high as $12,000. For this reason, final expense is sometimes referred to as burial insurance.

Traditional life insurance coverage is usually in the six-figure range but can be up to $1 million for some policies. With term life, choosing a policy with decreasing coverage is an option. The common motive for purchasing decreasing coverage is to cover any outstanding mortgage balance an individual may have upon an early death.

How Long Does Coverage For Final Expense And Traditional Life Insurance Last?

Final expense is yours forever. The policy doesn’t expire. It stays active as long as you’re consistently making premium payments.

Traditional life insurance policies vary in length. Term life, for instance, doesn’t last beyond a set number of years (generally 30), but other forms, such as whole life, are permanent policies like final expense.

Find Your Policy Today

At All Things Insurance, we will help you weigh out your options so that you will not have to worry about whether you’re making the best choice. With us, we will get you the best policy, whether that be final expense or traditional life insurance. Call us today at (763) 645-5450 to learn more.