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American Benefits final expense insurance is a type of life insurance designed to cover funeral expenses and other final costs.
This type of insurance is typically purchased by individuals in their 50s, 60s, and 70s who are on a fixed income and have limited savings.
It's essential to understand that American Benefits final expense insurance is not a traditional life insurance policy, but rather a specialized product designed to meet the unique needs of seniors.
The average cost of a funeral in the United States is around $7,000 to $10,000, and this insurance helps to cover these expenses.
What is Final Expense Insurance?
Final expense insurance is a type of permanent life insurance designed to cover costs that arise at the end of life. It's relatively easy to qualify for, making it ideal for older individuals or those who have health issues.
These policies are meant to provide money for your loved ones after your passing, which can help reduce their stress and financial burden. The average cost of a funeral with burial and a viewing is $7,848, according to the National Funeral Directors Association.
Final expense coverage can pay for virtually anything your loved ones need, not just funeral expenses. It's typically not expensive and relatively easy to get, making it a practical option for many people.
Benefits and Coverage
The death benefit from American Benefits Final Expense Insurance can be used for anything, from medical bills to credit card debt, and the beneficiary has full discretion on how to spend it.
Most policy amounts are under $50,000, with the average policy being taken out for $10,000 to $20,000. This amount can vary depending on your health and what you're looking to protect.
The death benefit can also be used to pay off any outstanding debts, including auto loans and credit cards. In many cases, loved ones spend money on funeral costs, travel for loved ones, legal expenses, and medical bills.
Here are some common items that beneficiaries use the death benefit for:
- Funeral Costs: Pay for the burial or cremation, viewing, venue rental, officiant, flowers, catering and more.
- Travel for Loved Ones: Help with transportation costs for friends and family traveling from distant places to attend a memorial.
- Legal Expenses: Hire experts to assist with managing the estate and navigating the probate process.
- Medical Bills: Close out accounts for any end-of-life treatment or care.
- Debt: Pay off any other debts, including auto loans and credit cards.
- Other Purposes: Beneficiaries have full discretion to use the funds for anything they need.
It's essential to review your coverage often to ensure you have enough to protect surviving family members, as funeral costs are rising all the time and your health could change suddenly as you get older.
Affordability
Final expense insurance can be surprisingly affordable, especially when you consider the costs of funeral expenses. The average cost of a funeral with viewing and burial is $8,755, and can easily exceed $10,000 with additional costs.
Coverage ranges from $5,000 to $50,000, making it a manageable expense for many people. The cost of final expense insurance depends on several factors, including age, health, and coverage amount.
Here are some estimated monthly premiums for final expense insurance:
Keep in mind that a cheaper rate may mean fewer features and benefits for your loved ones. But even a few extra dollars a month can make a big difference in the support they receive.
Policy Options and Features
There are several types of final expense insurance policies available, including burial insurance, pre-need insurance, and simplified issue whole life insurance.
Burial insurance is specifically designed to cover funeral and burial expenses, while pre-need insurance allows you to pre-plan and pre-pay for your funeral arrangements. Simplified issue whole life insurance provides coverage for final expenses and also builds cash value over time.
You can choose from a variety of coverage options, including $5,000 to $25,000 in coverage for a fixed rate, as seen in Guaranteed Issue Whole Life insurance.
Some final expense policies offer living benefits, including coverages for chronic or terminal illnesses, which can provide financial protection for your loved ones.
Here are some features to consider when choosing a final expense policy:
These features can help you make an informed decision and choose the right policy to provide financial protection for your loved ones.
Policy Comparison
Policy Comparison is a crucial step in choosing the right final expense insurance policy. You should compare multiple companies to find the best policy for your needs, as no company can be the best option for everyone.
To compare policies, consider the price and underwriting requirements of each company. For example, Mutual of Omaha offers a $20,000 policy for $98.79 per month with a two-year waiting period, while Aflac offers a similar policy for $83.77 per month with no waiting period.
A breakdown of what each company offers to a hypothetical client is shown below:
By comparing policies from multiple companies, you can find the best option for your needs and budget. You should also consider the type of policy, such as burial insurance, pre-need insurance, or simplified issue whole life insurance, to ensure it meets your specific needs.
Other Funeral Companies We Reviewed
In addition to Policy Options, we also reviewed other funeral companies that offer unique features and benefits.
Dignity Funeral Plans offers a "Tree Planting" option, where a tree is planted in the UK in memory of the deceased.
National Funeral Directors Association (NFDA) offers a "Funeral Planning" service that guides customers through the planning process.
Dignity Funeral Plans also offers a "Pre-paid Funeral Plan" that can be paid in full upfront or in installments.
The NFDA's funeral planning service includes a "Funeral Director" who will work with the customer to create a personalized funeral plan.
Application and Claims Process
Applying for American Benefits Final Expense Insurance is a relatively straightforward process. You can often get a free no obligation quote by calling or filling out a form online.
The application itself can vary in length, but some companies, like Lincoln Heritage, have a 1-page application and don't require a medical exam. Coverage is based on your answers to health questions, not medical tests.
Filing a claim on your policy is also similar to a traditional life insurance policy. Your family members will need to notify the insurer that you've passed away, and they'll send the beneficiary claim forms to be signed and returned with a copy of the death certificate.
Application Process
Applying for life insurance is a relatively straightforward process.
You'll need to fill out an application, which can range from 1 to 10 pages in length, depending on the insurance company.
Some companies require a medical exam with blood and urine analysis, while others, like Lincoln Heritage, have a 1-page application with no medical exam required.
You can often get a free no-obligation quote by calling or filling out a form online.
Your quote will be provided directly from the insurer or one of its licensed representatives.
In some cases, coverage can be sold over the phone, but most policies will require some kind of face-to-face interaction.
Pre-Qualifying Questions
When applying for final expense life insurance, you'll likely be asked a series of pre-qualifying questions about your health. These questions cover the last two years of your health and are designed to help the insurance company assess your risk.
You may be asked if you've tested positive for HIV or AIDS, or if you're currently bedridden, hospitalized, or receiving hospice care. These conditions can impact your coverage, but it's not a guarantee that you won't qualify.
The application will also ask if you have certain health conditions, including heart disease, congestive heart failure, or stroke. Cancer, Alzheimer's disease, or dementia may also be included in the list of conditions.
You may be asked if you've had alcohol or drug abuse, or if you're taking medication or have been treated by a physician for any of the conditions mentioned above in the last two years.
Here are some examples of pre-qualifying questions you might encounter:
- Have you tested positive for HIV or AIDS?
- Are you currently bedridden, hospitalized, in a care facility, or receiving hospice care?
- Do you have disease of the heart, including heart attack or heart surgery?
- Do you have congestive heart failure?
- Do you have disease of the circulatory system, including stroke?
- Do you have cancer?
- Have you had alcohol or drug abuse?
- Do you have Alzheimer’s disease or dementia?
- Are you taking medication or been treated by a physician for any of the conditions above in the last 2 years?
Even if you answer "yes" to one or more of these questions, you may still qualify for coverage.
Filing a Claim
Filing a claim on a final expense policy is relatively straightforward. You start by notifying the insurer that the insured has passed away, which can be done over the phone.
The next step is to request claim forms from the insurer, which will be sent to the beneficiary. They'll need to sign and return these forms along with a copy of the death certificate.
The insurer will then use this paperwork to process the claim and pay out the money to the beneficiary.
Be Honest
Honesty is the best policy when applying for end-of-life insurance. You may think you can get away with hiding health issues, but companies often order years' worth of medical records when their insured dies during the policy's contestability period.
Some people assume that because most final expense policies don't require a medical exam, they can lie about their health and the insurance company will never know. But the reality is that companies can deny claims if there are any discrepancies between the answers on the application and the medical records.
The application questions cover the last two years of your health, including conditions like HIV, heart disease, and cancer. Even if you answer "yes" to one or more of these questions, you may still qualify for coverage.
Here are some example questions you may have to answer on the application:
- Have you tested positive for HIV or AIDS?
- Are you currently bedridden, hospitalized, in a care facility, or receiving hospice care?
- Do you have disease of the heart, including heart attack or heart surgery?
- Do you have congestive heart failure?
- Do you have disease of the circulatory system, including stroke?
- Do you have cancer?
- Have you had alcohol or drug abuse?
- Do you have Alzheimer’s disease or dementia?
- Are you taking medication or been treated by a physician for any of the conditions above in the last 2 years?
The most important thing you can do is answer questions honestly when getting end-of-life insurance. This will ensure that your benefit is not denied when your family needs it most.
Choosing the Right Policy
Final expense insurance policies are designed to cover end-of-life expenses, but they're not all created equal. To find the right policy for you, it's essential to understand the different types available.
Burial insurance is specifically designed to cover funeral and burial expenses, while pre-need insurance allows you to pre-plan and pre-pay for your funeral arrangements. Simplified issue whole life insurance provides coverage for final expenses and also builds cash value over time.
When choosing a policy, consider your age, health status, and the amount you want to leave to beneficiaries. This will help you determine which type of policy is best suited for your needs.
To make an informed decision, compare different types of policies and their features, benefits, and costs. This will help you find the right policy to provide financial protection for your loved ones.
Here are some key factors to consider when comparing policies:
By considering these factors and comparing different policies, you can find the right final expense insurance policy for your needs and provide peace of mind for your loved ones.
Frequently Asked Questions
Is final expense insurance worth it?
Final expense insurance provides a financial safety net for loved ones to cover final costs and expenses, offering peace of mind and financial protection during a difficult time. Consider investing in final expense insurance to ensure your family's financial well-being after you're gone.
Who is the #1 final expense insurance company?
Mutual of Omaha is considered the top final expense insurance company due to its low costs and quick claim payments. With over 100 years of experience and an A+ rating, they offer a reliable option for burial insurance.
Sources
- https://www.lhlic.com/final-expense-insurance/
- https://www.corebridgedirect.com/final-expense-insurance
- https://www.alliancegrouplife.com/resources/final-expense-insurance
- https://choicemutual.com/blog/best-burial-insurance-companies/
- https://www.westernsouthern.com/life-insurance/what-is-final-expense-life-insurance
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