Final expense insurance and term life insurance are both low-cost insurance options. Both of them have a death benefit that gets paid upon the policyholder’s death. But here we’ll see that there are many stark contrasts between these two, and in the end, you can see which is the right one for you.
Who Are These Two Policies For?
Final expense insurance appeals to seniors who want to leave money behind for their loved ones, but have a difficult time obtaining a traditional life insurance policy. Final expense insurance doesn’t expire.
Term life insurance is for those wanting an inexpensive life insurance policy just in case something happens to them. Term life insurance can reject you due to age or overall health. Term life insurance is relatively inexpensive because policies are only in force for a short period of time. However, the policies don’t last forever. You can outlive your policy, and have to choose between letting it lapse, renewing coverage, or upgrading to permanent insurance.
Joining a final expense insurance policy is fairly easy. There are no medical exams, only medical questions. While the applicant’s health still has an effect on insurability for a standard final expense policy, final expense has an option for those in significantly declining health. A person with nowhere else to turn for coverage can get a guaranteed issue policy and receive a death benefit in a short matter of time.
For term life insurance, the individual’s health status is closely evaluated to determine insurability. Factors such as age, sex, policyholder’s health, state regulations, interest rates, and the company’s financial state all influence the monthly premium costs.
Each Has Different Types
There are a few different types of final expense insurance:
- Traditional final expense insurance – can come without a waiting period. This policy is best for those in good health who join when they’re first able to.
- Graded benefit – two-year waiting period. This is for those with semi-serious conditions. Your beneficiaries get a percentage of the death benefit. If you die during the first year, your loved ones get 30-40%, and 70-80% the second year.
- Guaranteed issue – two-year waiting period. If you’ve been rejected from other types of insurance because of poor health, then this is the one to get.
Term life is split into:
- Level term – no changes in premiums or death benefit. This costs more, in the beginning, to account for future rising costs
- Yearly renewable – you can renew the term annually. You don’t have to prove that you’re insurable, but the premiums go higher
- Decreasing term – you pay the same in premiums, but the death benefit decreases over time
Making the Decision
Final Expense Direct presents and guides you through these difficult choices. And just like how no two policies are alike, no two people are alike. If you’re interested in one of these plans, or if you’re wanting to get started on the right policy, call us today at 1-877-674-0236.