What is Final Expense Insurance?

Final Expense Insurance, also known as funeral insurance, burial insurance, simplified issue whole life insurance, or modified whole life insurance, is a type of whole life policy designed to provide a small death benefit. These policies are typically easier to get approved for compared to traditional life insurance policies.

Final expense insurance policies offer a face value (or death benefit) ranging from $2,000 to $50,000. Despite being labeled differently, final expense insurance is essentially a form of life insurance. Insurers market these smaller policies specifically to make life insurance more affordable for individuals.

The primary purpose of final expense insurance is to cover end-of-life expenses such as funeral or memorial services, embalming, casket costs, or cremation. However, beneficiaries are free to use the death benefit for any purpose, whether it's settling property taxes or funding a vacation.

How Does It Work?

Imagine you're retired, no longer covered by life insurance through your employer, and don't have an individual life insurance policy. You also lack a sizable nest egg to ease the financial burden on your loved ones when you pass away.

In this scenario, you may consider a new life insurance policy. You reach out to a life insurance agent and begin the application process, which involves answering some basic health questions. However, due to your age and health, the premiums for the death benefit you seek are prohibitively expensive.

Faced with this challenge, you might think that life insurance is beyond your budget. This is where final expense life insurance comes in.

Final expense life insurance is specifically designed to address this issue. These policies offer a smaller death benefit, making the premiums more affordable for individuals who might otherwise struggle to obtain life insurance coverage. Additionally, these policies can be assigned to funeral homes in advance, ensuring that future funeral costs are taken care of.

Key Features

Easy Qualifications

Final expense insurance is a type of small whole life insurance policy that is designed to be easy to qualify for, making it accessible to a wide range of individuals.

Flexible Usage

The beneficiaries of a final expense life insurance policy have flexibility in using the policy's payout. They can use it to cover various end-of-life expenses such as funeral services, caskets or cremation, medical bills, nursing home bills, obituaries, flowers, and more.

Manageable Death benefit

The death benefit of a final expense policy typically ranges from $2,000 to $50,000, providing a manageable payout for families to handle final expenses without a significant financial burden.

Targeted Demographic

Final expense insurance is particularly suitable for individuals aged 60 and above or those in poor health, as it offers a practical solution for obtaining life insurance coverage when traditional policies may be too expensive or difficult to qualify for.

Final Expense Insurance vs. Out-of-Pocket Expenses

When planning for end-of-life costs, you have two main options: covering expenses out of pocket or using final expense insurance. While paying out of pocket means handling these costs directly from your savings, final expense insurance offers a dedicated solution specifically designed to alleviate the financial burden on your loved ones.

Financial Security

Final expense insurance guarantees a death benefit that covers end-of-life costs without impacting your personal savings, while out-of-pocket payments depend on your available funds, which can be unpredictable and may not suffice.


With final expense insurance, you have a fixed benefit amount, making it easy to plan for expenses, whereas personal funds can fluctuate, making it challenging to save the right amount.

Ease of Planning

Final expense insurance offers a straightforward policy and a defined payout, simplifying financial planning, unlike out-of-pocket expenses, which require careful estimation and allocation of funds, adding complexity and stress.

Immediate Availability

Funds from final expense insurance are available quickly after death, ensuring timely payment of expenses, while accessing personal funds may be delayed if they are tied up in assets or other investments.

Peace of Mind

Having final expense insurance provides assurance that end-of-life costs are covered, reducing anxiety for you and your family, in contrast to the uncertainty and potential stress of relying solely on out-of-pocket savings.

The Bottom Line

Final expense insurance plays a crucial role in financial planning by providing a dedicated, reliable solution for covering end-of-life expenses. Unlike relying on savings, which can be unpredictable and may not adequately cover costs, final expense insurance guarantees a fixed death benefit. This ensures that funeral services, medical bills, and other related expenses are managed without creating a financial burden for your loved ones. With its ease of qualification, predictable payouts, and immediate availability of funds, final expense insurance offers peace of mind and simplifies the process of handling end-of-life financial responsibilities, making it a vital component of a well-rounded financial strategy.