final expense insurance has a different emphasis than universal life

Final Expense vs. Universal Life Insurance

Each life insurance policy has its own appealing qualities, with different mechanisms in how it works. Some allow you to have a plan that will always stay with you if you pay your premiums, and others have unique investment features that you can take advantage of through the duration of your policy. Here we will focus on how that works with final expense and universal life insurance.

Different Emphasis

The emphasis of final expense insurance is on covering funeral costs, which is reflected in the common death benefit amounts — typically between $5,000 and $20,000. Compare that to funeral costs which average $9,000. So, there’s usually enough to pay these expenses.

The universal life insurance emphasizes the policy’s cash value, which accrues interest.

They Both Have Different Versions, But for Different Reasons

Final expense insurance has three versions – typical final expense insurance, graded benefit, and guaranteed issue:

  • Regular final expense insurance doesn’t always have a waiting period. This is the most exclusive of the three types, as the potential for rejection is higher. Applicants are more likely to obtain this if they are in overall good health and are relatively young.
  • Graded final expense insurance’s tie between health and waiting periods applies to those with semi-serious conditions. The waiting period is two years. Dying in the first year of the waiting period disburses around 30-40% of the death benefit to beneficiaries, and 70-80% if the policyholder dies in the final year of the waiting period. The benefit is 100% after that.
  • Guaranteed issue’s relationship between health and waiting periods involves policyholders on the brink of death. The waiting period here is two years, and if the policyholder dies in that time, his or her loved ones will receive nothing.

Universal life insurance’s variations have to do with how the savings account’s cash value accumulates. There’s fixed, indexed, and variable universal life insurance. The difference between these are:

  • With fixed universal life insurance, the cash value builds at a slower rate than the other two types because the interest rates are lower. Portfolio performance controls this buildup.
  • Indexed universal lets policyholders decide how much to put into indexed accounts. The funds do not go directly into the stock market. They’re based on the performance of a financial index.
  • Variable universal works in a way similar to a mutual fund. Instead of basing the cash value buildup on stock indexes, it’s mutual funds. 

They Lapse in Different Ways

Final expense insurance death benefits are guaranteed as long as the premiums are met, but the beneficiaries may not receive any money if the policyholder dies in the waiting period.

For universal life insurance, one can lose the policy if he or she lets the cash value drop below the costs to maintain the insurance policy. Excessive borrowing from the cash value and poor market performance can make someone lose a policy.

To find out more about final expense and how it compares to other life insurance policies, call us today at 1-877-674-0236.


Final Expense Direct’s utmost concern is the safety of our clients, their families, and our employees and agents. Our hearts, thoughts, and prayers go out to all that the Coronavirus outbreak has touched and those whose lives have been disrupted. While 98% of our workforce is working remotely, we are here if you need assistance. If you are a client, please contact Customer Support at 800-538-3610, Ext 2, with any questions in regards to your policy. You may also contact us via email at We will continue to monitor this situation and keep you updated.