Preparing for a funeral can be an exhausting event but making sure you have the financial resource to cover the cost of a burial and funeral are extremely important for personal estate planning. Whether you've been to a funeral before or you've experienced the loss of a loved one, it is important to know that final expense insurance can be depended on to provide a financial safety net to cover these costs. Final expense insurance is a superior product for seniors that removes the financial obligations of your family to celebrate your life with friends and family when a person dies.
While standard whole life insurance policies can provide funeral and burial coverage, final expense insurance policies provide superior coverage given the facts they contain a lower face value than traditional life insurance policies. The cost for a burial insurance policy is affordable and can provide thousands of dollars to pay for a basic funeral service, casket, cemetery plot and flowers. Term or whole life insurance on the other hand often exceed an individual's needs. Final expense life insurance can provide many seniors who have been denied for traditional coverage with the opportunity to obtain financial protection.
Just as with other life insurance policies, final expense insurance payouts are paid directly to the beneficiary in a lump sum. This means that you don’t have to worry about whether or not final expenses will be taken care of. The beneficiary can choose what needs to be paid and can take care of it with the insurance proceeds.
Different Types of Final Expense Insurance
Although all final expense insurance policies do have a few things in common, there are three main types of coverage that are available. Understanding these three types will help you make the right decision. For example, if you or your parents have some medical-related issues, a modified or graded benefit option might be offered. If you or your parents are in really good health, however, you may want to insist on finding insurance with level coverage. By looking for a final expense insurance quote, you can get an idea of what is out there and what might be available for you or your parents.
Level
With this type of final expense insurance, you don’t have to worry about being covered; your coverage will take effect right away, and the full face value will be paid when you pass away, regardless of how soon it might occur after coverage has been purchased. This type of final expense insurance is generally reserved for those who are in good health.
Graded
Graded policies are a solid option for those who aren’t in the best of health but who want as much coverage as possible. With graded coverage, there is a 24-month waiting period before the full death benefit will be paid, but the beneficiary will be paid a percentage of the benefit. For example, some policies involve a 25-percent payout during the first year and a 75-percent payout during the second year. Once the two-year waiting period has ended, however, the full death benefit will be paid upon the insured’s death.
Modified
With a modified policy, you are subject to a waiting period that generally lasts for two years. If something happens during this time period, the beneficiary will be repaid the amount of the premiums paid along with a small percentage. For example, some companies offer the full amount of premiums paid plus 10 percent in the first year or 20 percent during the second year. With these policies, the full death benefit is paid after the two-year period has passed.
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