Can Final Expense Policies Have Living Benefits?

it may be limited but you can use FE policies to cover living benefits

You can technically use final expense policies to cover living benefits, but with its smaller payout, it may be a bit more limited than other plans—but not impossible.

How Final Expense Payouts Work

All life insurance policies provide a death benefit, or payout when the policyholder is no longer living. This money will then go towards the policyholder’s desired expenses and beneficiaries.

On average, final expense death benefits range anywhere from $5,000 to $50,000.

What You Can Use the Payout For

There are virtually no limitations a plan can enforce on what you can put this money towards. However, the amount you set for the payout will greatly determine what you can really use it for. These can potentially include:

  • Funeral Expenses
  • Medical Bills
  • Financial Support for Loved Ones
  • Personal Loans
  • Inheritance
  • Business Partner Shares
  • Estate Taxes, and More

Limitations of the Final Expense Death Benefit

However, for all of these potential uses, you must divide your payout of $5,000-$50,000 to each of them. So, you must choose what and how much to contribute towards it. 

While it wasn’t listed above, living expenses are another potential use of the final expense payout. When you as the policyholder have passed on, you may leave people behind who need help covering their living expenses until they can get back on their feet.

You can absolutely set aside funds for this purpose, but it may be extremely limited based on how much they need and what else you want to use it for.

Say, for instance, you want to use it for your funeral expenses and your loved one’s living expenses. If the average funeral costs around $6,000, you’ll need a payout that’s more than $6,000. Then, let’s say you want to set aside another $6,000 for living expenses. You’ll need at least a $12,000 death benefit, and even more if you want to use it for other things as well.

You can also use your final expense policy for your own living expenses. However, this may be risky. Once you start tapping into the death benefit, your monthly payments won’t change, and the payout won’t increase, only decrease.

Alternatives for Living Benefits

If you want to use your life insurance policy for your own living expenses, final expense may not be your best option. Term life policies are a bit bigger and easier to use for this purpose. Term life, however, is more difficult to qualify for than final expense. And, this doesn’t mean that final expense is a worse option—it’s still incredibly beneficial.

Get the Best Final Expense Insurance in All of Texas

Houston is one of the best places in all of Texas for excellent life insurance options, and Final Expense Direct has the best ones here waiting for you. If you want to learn more about your final expense provider options, give us a call at 1-877-674-0236.

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