The loss of a loved one is incredibly difficult for families, and unfortunately the high cost of funerals may increase this strain. According to a 2015 report from the National Funeral Directors Association, the median cost of a funeral with a viewing and burial was more than $7,000. For families that are unprepared for this expense, covering that sum could create financial hardship.
While death is an inevitable part of life for all of us, leaving our loved ones with costly expenses is not. Final expense insurance is a way to help cover the bills you leave behind, from medical expenses to funeral costs. While this coverage can be a desirable option for people concerned with end-of-life expenses, there is still a lot of confusion about these policies, including how eligibility is determined.
Your age is likely not a factor
As NerdWallet reported, there are many myths surrounding the eligibility of final expense insurance. For one, many seniors believe they cannot purchase life insurance policies, including final expense insurance, because of their age. However, NerdWallet found most healthy people are eligible to buy final expense insurance, even if they are over 60.
In fact, given that your financial responsibilities change as you age, many seniors find final expense insurance is the best form of life insurance for them. While you have likely settled many of your other financial arrears, such as mortgage payments and student loans, by this stage of your life, final expense insurance will protect your loved ones from the high costs of burial, medical expenses and other final debts you did not have the opportunity to settle.
Medical exams are not required
Unlike other types of insurance, you are rarely required to take a medical exam to be eligible for final expense insurance. According to Bankrate, policy applicants will typically be asked to answer a few questions about their health, but a medical exam is not a standard requirement. Depending on the insurer you’re applying with, you may only need to fill out a basic medical questionnaire and meet specific qualifications. Or, in instances of a guaranteed issue plan, there may be no questionnaire or medical exam at all, and you will be guaranteed approval.
However, since most insurers allow almost all applicants to purchase a final expense policy, this coverage may come with higher premiums than other forms of term life insurance. Bankrate noted for younger people, who may be paying into the policy for a greater number of years, other forms of life insurance may be preferable. However, many seniors may still find the cost of a final expense policy is lower than the funeral or medical bills their loved ones would otherwise be financing out-of-pocket.
It’s also important to note, waiving a medical exam is not the same thing as guaranteeing a policy. You will need to check with your insurer to determine your exact eligibility.
Know your provider’s specifics – and compare
While the above information is generally true for final expense insurance eligibility, your best course of action is to speak with your specific insurance provider or – better yet – multiple providers. There are many different offering for this type of coverage, and comparing among different insurers will show you the differences in eligibility and pricing that affect you.
For example, some insurers may only offer these policies to applicants under age 85, but others will have policies for seniors up to age 100. Payment structures may also vary between monthly or annual premium payments and some policies will be eligible to earn dividends while some others will not. Before signing onto a policy, be sure to compare quotes from several providers and even consider whether other forms of term life insurance are more suitable for your situation.