Final Expense Insurance
vs Whole Life Insurance
This may sound confusing at first because most final expense life insurance policies are whole life insurance. Both are permanent, meaning that once issued you can keep them in force by paying the premium. Both usually accumulate cash values which you can get by making a policy loan or by surrendering the policy. A policy loan allows you to keep the policy in force by continuing to pay the premium. If you surrender the policy you get the cash value, but the coverage would end.
Advantage of Whole Life Insurance
Whole life underwriting guidelines are generally stricter which allows for more coverage at a lower price. If you are in fairly good health, you can qualify for more coverage at a lower rate and lock in the rate on a permanent basis. Extra good health factors can have a positive effect on the cost of your policy.
Advantage of Final Expense Life Insurance
In case a person is growing older and finds that the costs of their “end of life expenses” are not yet provided for, a final expense life insurance policy may be the solution for their needs. Health problems at any age make it more difficult to qualify for life insurance; however, when a person is sixty, seventy or eighty, whole life insurance is much more expensive and more difficult to qualify for.
Final Expense Life Insurance is designed to be more lenient on health conditions by having a higher cost and can be issued with smaller face amounts in many cases as low as $3.000. Whole life policies generally have a minimum face amount of $25,000 with a few companies offering whole life down to $10,000. As previously mentioned a person would have to be in good health to qualify for the whole life policy.
So, for the person whose assets are low and needs a few thousand dollars to cover the end of life expenses, the Final Expense Policy can be a problem solver.
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