Final expense life insurance is designed to solely cover your final expenses. This means that the funds are specifically for burial expenses, final personal bills and for medical expenses. If there are any funds left after that, the family can disperse the funds as they see fit, with approval from the life insurance company of course. When you worry about how your life insurance funds will be spent, this is the ideal option to consider since it is structured by most insurance companies.
The average funeral in 2014 costs $10,000 for a simple burial. This expense alone takes up a big chunk of the final expense insurance. From the embalming procedures to obtaining the death certificate, there are a lot of expenses incurred with a funeral. There are fees for gas for the vehicles driving to the cemetery, fees for using the facility for holding the service, fees for storing the deceased and many others. It is important to have enough final expense insurance to cover these costs.
Burial expenses include:
- Publishing the obituary
- Printing of memorial cards
- Embellishments to the casket
- Guest books
- General funeral director fees
- Assistance from funeral home staff to set up the wake and funeral service
This is just a list of the most common expenses. Some funeral homes have additional fees for their time, use of funeral home pall bearers and fees for more than one showing.
Final Personal Bills
This type of insurance can be used to pay your final medical and personal bills as well. In many cases, final medical bills are tens of thousands of dollars to a million dollars. Final expense insurance is not likely to cover these amounts so you would need to speak with the hospital’s billing department for financial assistance or to see if the bills can be written off for financial hardship purposes.
Your other bills such as car payments, credit cards, mortgages and utilities also need to be paid. That is one of the main things this type of insurance is for. Some insurance companies require that these bills be submitted to them so that the funds can be released. I this case, the creditor would have to be contacted to explain the situation to them and most will be accommodating given the circumstances.
Protect your Family
It is likely that a few bills will come in later than others. The insurance coverage is to help your family have the monies available to pay them. The specifics of final expense life insurance prevents family members from misappropriating the funds.
While this insurance is not for everyone, for those that worry about their final bills and expenses not being paid for properly it is ideal. This type of insurance is heavily structured and specifically states what it can be used for. A big check is not sent to your family members upon your passing in most cases. This is a good thing as it ensures that your funeral, medical bills and other financial responsibilities are handled in the most appropriate way.