Although individual situations vary greatly, many people find themselves needing a Final Expense Plan as they move into their retirement years. The need for life insurance is generally greatest when financial obligations are at their peak. The largest obligations are typically mortgages and dependent children and many young families address these needs with term life insurance policies. These policies often have limits of twenty or thirty years, designed to coincide with the payoff of the mortgage and the exit of the children from the home. Many seniors, however, find that they still need a modest amount of insurance to provide for the final expenses in life such as funeral costs. This is where the Final Expense Plans come into use.
There are many companies that offer these plans but there are some common elements to all of them. First, they are usually Whole Life policies with the amount of coverage not exceeding $30,000 to $50,000. The premiums typically remain the same for the life of the policy. In order to address the needs of this particular age group, the plans are usually offered in three classes.
For those folks who are in excellent health, there is a medically underwritten Level plan that offers the lowest rates. It is just like any other life insurance policy in that you have to medically qualify for the plan. Next, there is a Graded plan designed for people with some issues like diabetes, blood pressure or weight. These plans have a slightly higher rate and a modified death benefit. If a death occurs within two years of purchasing a Graded plan, the beneficiaries normally would receive only a return of the premiums paid to that point plus 10%. Some plans instead offer a percentage of the face amount, such as 30% in the first year of the policy, 70% in the second year and then 100% from that point on.
Finally, there is the Guaranteed Issue plan. These are the ones you often see advertised on television as “You can’t be turned down”. And, that is correct. These plans will accept everyone regardless of health or medical condition. Their rate is a little higher and they pay out similar to the graded plan mentioned above. If death occurs within two years after the policy is issued, then the beneficiaries receive only the premiums paid plus 10%. After the initial two-year period, the plan pays the full face amount.
With both the Graded or Guaranteed Issue plans, most companies will pay out 100% of the face amount in the first two years if the death occurs in an accident such as an automobile collision.
The Final Expense Plans are designed to address the specific needs of seniors who still need a modest amount of life insurance. They offer lower amounts of coverage, level premiums and plans for people who may have some health or medical issues. If you would like more information about Final Expense Plans, please contact me at (208) 263-2194 or by submitting the email contact form.