Written by Kim Wilhelm
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Last Updated 25 Apr 2024
Are There Final Expense Plans For Families?
While there are no final expense policies available for families, people most often take out final expense plans for themselves so that their loved ones will have an easier time paying for their funeral expenses. It’s also possible to get a final expense policy for a family member with their permission if they currently have no plan of action to help cover their funeral insurance expenses, medical bills, etc.
Why get a final expense policy for others?
Once a loved one passes away, you will be in charge of paying funeral costs. Not everyone has enough in savings to cover a funeral, and thankfully, final expense insurance costs are low.
It is common for individuals to take out final expense insurance policies on their aging parents, who may not have an insurance policy of their own. Final expense insurance is a great route here because even though this policy may not be for your own funeral, it offers an affordable option for you to provide assistance.
How is this possible?
Getting a final expense policy on the behalf of another person like a parent or grandparent is only possible if there is insurable interest. Insurable interest is when that person’s death results in a financial loss for you. Hence why your options for purchasing a policy are limited to yourself and your loved ones.
Your loved ones may be an insurable interest for a variety of reasons. If you are getting final expense insurance for your children or parents, their deaths will result in a financial loss by virtue of you having to pay funeral costs. If your spouse passes away and he or she had previously helped pay household expenses, then you incur a financial hardship for bills and funeral costs.
The next is that your loved ones have to consent to you getting the policy for them. Not only do they have to provide a signature approving the policy, but they also have to provide the insurance company access to medical records. Providing medical records makes the process easier, as well as allowing for policies with lower premiums. If they refuse to allow the company to access medical records, then your only option would be to get a more expensive policy in which there is a 2-3 year waiting period in place.
What other benefits does this provide?
Since you are paying for everything, you can name yourself as the beneficiary. This goes back to insurable interest – naming yourself as the beneficiary absolves you of the financial hardship that you will go through if your loved one dies. You can also name other beneficiaries. Overall, final expense insurance is relatively low in cost, so this is an affordable way to ensure that your finances will be protected once your loved ones pass.
How Can I Buy Final Expense for My Parents?
Buying final expense insurance for your parents is a serious decision that requires careful planning and helpful insight. To get you on the right track, here are 6 steps you can follow.
Step 1: Have a Heart-To-Heart with Them
It is incredibly important to be fully upfront with your parents. Even if they are suffering from a mental condition like dementia or Alzheimer’s, taking the time to sit down and talk things over can relieve a lot of tension on both ends.
And, for step 5, you will need them to sign off on the policy before you can officially purchase it. So, you’re going to need to let them know one way or another. Doing it early on can tremendously help through every step, and make difficult discussions a lot easier.
Step 2: Determine the Coverage They Will Need
When you purchase a final expense policy, you are purchasing a death benefit. This is a sum of money that is issued upon the policyholder’s death. This benefit ranges anywhere from $2,000 to $50,000.
Decide on either you or your parents’ budget. The more coverage you purchase, the more your plan will cost. Their age and health will affect the cost as well. Just make sure to establish a clear budget that works for all parties involved.
Step 3: Make Funeral and Other Arrangements
Deciding on the amount of coverage also means you should decide on what they want covered. Most people, for instance, use their final expense policies to pay for funeral arrangements. To better determine the amount of necessary coverage, plan out these expenses with them ahead of time—that way, you know exactly how much you need when looking for a policy.
Step 4: Decide Who Will Pay For the Policy
This step varies greatly depending on the situation. If you are planning to purchase final expense insurance for your parents, you may have likely already made plans to pay for it yourself and are likely the recipient beneficiary as well. This is not always the case, so be sure to talk to potential insurers about whether or not you intend to pay for the policy.
On the other hand, perhaps you are purchasing final expense insurance on behalf of your parents. In other words, they have already made plans to pay for it, but you are just going through the process of finding the right policy. Whatever the case may be, make sure to have discussed it with your parents ahead of time.
Step 5: Get Their Consent and Sign Up
Finally, after you’ve found the perfect policy, all that’s left to do is officially sign up. You will have to have your parents’ full consent before doing so. More often than not, all this takes is a simple signature. Do not attempt to forge their consent, however, because doing so may disqualify you and them from the policy.
Can You Buy Final Expense Insurance For Children?
Final expense insurance is commonly associated with older individuals contemplating how their loved ones will be able to afford the funeral costs. And final expense insurance policies are usually purchased by the one who will have the funeral, not by someone who is getting the policy for someone else. But, final expense insurance enables individuals to get a policy for someone else.
What do I need in order to get final expense insurance for my children?
The answer lies in insurable interest. This is when you are able to prove that you would face a significant financial loss or hardship if that loved one were to die. Your child fits in this category. The reason why this applies to children is because if a child were to pass away, the parents would bear the costs of the funeral.
Funerals are not cheap – they often cost between $7,000 and $9,000. Some funerals can be upwards of $12,000. The emotional pain combined with these steep costs can make for one of the worst times of your life. While nothing can take away from the heartbreak, you can make it so that the funeral costs will not be an additional burden on top of the hurt you already feel.
This goes without saying – this is an automatic financial hardship. When you sign up for a final expense policy, you’re given the choice in the policy size you want (death benefits go up to $50,000 in some cases) and you must answer health questions about your child.
This requires your written consent if your child is under 18. You will sign as your child’s parent or legal guardian.
What if my children are adults?
For adult children, the process is very much the same. You still have insurable interest because, like the other scenario, you will have to bear the funeral costs. However, when it comes to the other parts, your son or daughter will have to provide consent. This is not just in the form of signing their name to the policy. Your children must also give consent for access to his or her medical records. The insurance company will provide a policy with a particular rate based on your child’s health and lifestyle choices.
When you get this policy, you are paying the premiums – therefore, you can name yourself as a beneficiary so that the company will disburse the funds to you in the event that your child passes away. When these funds go to you, you will be able to cover the funeral costs in addition to anything else that needs to be paid.
Should You Get a Child Insurance Rider on Your Final Expense Policy?
In the event of your child’s death, you won’t have the extra burden of steep funeral costs. Child insurance riders have a death benefit ranging from $5,000 to $25,000. When you’re grieving this loss, the last thing you need is your debt kicking you while you’re down.
However, there are specific requirements that must be met.
Assess the Requirements for You
This is not an automatic “yes”. For you, the insurance companies will only provide this option for those between the ages of 18 to 65. Your insurer in particular may have a different qualifying age range, in which you would only qualify if you add this rider between the ages of 20 and 55.
Assess the Requirements for Your Child
Your child also has his or her own criteria to meet. A pre-existing condition may make this rider sound like a necessity, but in reality, a child with a pre-existing condition disqualifies you from adding a child insurance rider to your plan. Your child must also be between the ages of 15 days to 18 years old. They can be covered under this plan until they are 25 years old. Also, note that this policy only covers your children – not your grandchildren.
A Critical Factor to Consider
Given the narrow parameters, this policy is only going to be ideal for a few people who have final expense insurance.
Consider your child’s age relative to yours. If your children are born right around the time you get final expense insurance, you have cheaper premiums and a larger death benefit. If your child is nearing 18 when you first enroll in a final expense policy, then the additional premium may not be worth it since your child will more than likely be too old to attach to the policy. That, plus the death benefit would already be much lower. On the other hand, if your children happen to be born around the time you are in your 60’s, then their eligibility and coverage would possibly go for longer than your life expectancy. If you were to pass away at this point, your child can inherit your death benefit, and if your child happens to pass away shortly after you do, then the additional death benefit would be a financial cushion. Of course, this is a situation you would not want to happen. Also, note that the odds of having a child later in life only get lower. So, the child insurance rider may only be worth it if you are in an exceedingly rare situation.
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Can Young Adults Purchase Final Expense Insurance?
Yes, young adults can purchase final expense insurance. But do they need it? Can they benefit from it? Here’s a closer look at these questions and more.
What Is Final Expense?
Final expense is a type of life insurance policy. It provides a payout, or death benefit when the policyholder passes away. This payment can range anywhere from $5,000 to $75,000 and can be used for a variety of small costs, such as estate taxes, medical bills, and funeral arrangements.
Do Young Adults Need Final Expense?
Final expense is one of the easiest life insurance plans to qualify for. Unlike other life insurance plans, these policies accept both older individuals and anyone with poor health or a pre-existing condition, such as:
- Diabetes
- Heart disease
- High blood pressure
- High cholesterol
- Obesity
- Various forms of cancer
If you are a young adult with a pre-existing condition or general poor health, you will absolutely benefit from a final expense policy.
Should Young Adults Purchase Final Expense?
What if, however, you do not have a pre-existing condition as a young adult? Should you still consider final expense? More often than not, the answer is no. Final expense plans have a generally higher premium than other plans.
This is due to their lax eligibility requirements. The people they accept are typically at a higher risk than others, thus requiring a higher premium to make up for it. So, when considering a final expense plan as a young adult, you must keep in mind that you will likely be given a higher rate than you would with a different plan.
Simplified Issue vs. Guaranteed Issue
However, if you get a simplified rather than guaranteed issue final expense plan, you can get a significantly lower rate. These different enrollment processes determine your rate and eligibility.
With guaranteed issue, you are accepted without any questions regarding your health. So, even with serious health problems, you are still eligible. This means that, in order to make up for the risk of not knowing your health, your premium will be higher.
On the other hand, through simplified issue, you undergo a questionnaire known as medical underwriting. This way, if you have good health, you can get a much better rate than you would with guaranteed issue.
So, even as a young adult, you can get a good premium rate on final expense insurance through simplified issue.
We Can Help You Find the Insurance You Need
There’s no time like the present for young adults to purchase life insurance. With so much life ahead of you, it makes sense to want to cover it.
Finding the right insurance company, however, is difficult. With so many options in Houston, you need an agency like Final Expense Direct to do the hard work for you. We won’t take advantage of you, and we will do whatever it takes to get you the coverage you need. If you’re ready to get started, give us a call at 1-877-674-0236.
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The Lord Is Calling Me Home - What Happens If You Die With No Money And No Life Insurance?
