Final expense insurance, explained plainly
A small life insurance policy meant to pay for a funeral and the last bills, so the people you leave behind do not have to.
Most families find out what a funeral costs in the worst week of their lives. Final expense insurance is one way to settle that question ahead of time. Here is what it is, what it costs to need it, and what to check before you buy.
What a funeral costs
The National Funeral Directors Association surveys funeral home price lists every two years. Its most recent median figures are from 2023.
| Type of funeral | 2023 median |
|---|---|
| Viewing and burialIncludes a vault. Up from $7,848 in 2021. | $8,300 |
| Viewing and cremationUp from $5,801 in 2021. | $6,280 |
Those medians leave things out. They do not include the cemetery plot, opening the grave, a headstone or marker, or cash costs such as flowers, obituaries and the officiant. The real bill is often higher.
What final expense insurance is
It is a whole life insurance policy with a small face amount, usually between $5,000 and $25,000. When the insured person dies, the insurer pays that amount to the beneficiary they named. The beneficiary can spend it on anything: the funeral, medical bills, a final utility bill.
- The premium stays the same. Whole life prices do not rise as you age once the policy is in force.
- The coverage does not expire. Unlike term insurance, it lasts for life as long as premiums are paid.
- There is usually no medical exam. Most plans use health questions instead.
The three kinds of plans
Plans are sorted by how much they ask about your health. The fewer questions, the higher the price and the longer the wait.
| Plan type | How it works |
|---|---|
| Level benefit | You answer health questions. If approved, the full amount is paid from the first day. Usually the lowest price. |
| Graded benefit | For some health conditions. Pays part of the amount if death occurs in the first year or two, then the full amount. |
| Guaranteed acceptance | No health questions. If death from illness occurs in the first two or three years, many plans return only the premiums paid plus some interest. Accidental death is usually paid in full from the first day. Usually the highest price. |
Watch the waiting period. An advertisement that says "guaranteed acceptance" or "no health questions" almost always comes with one. Ask exactly when the full benefit starts and get it in writing.
Who it fits, and who it does not
Final expense insurance tends to fit people in their 50s to early 80s who have no life insurance, or whose coverage ended when they retired, and who want a fixed amount set aside for the funeral.
It is often a poor fit if you are under 50, because term life buys far more coverage for the money. It may also be unnecessary if you already have savings set aside or a policy large enough to cover the funeral.
Other ways to plan
- A payable-on-death bank account. Money in the account goes straight to the person you name. It can be set up at most banks at no cost.
- A prepaid funeral plan. You pay a funeral home ahead of time. The Federal Trade Commission advises asking what happens to your money if the funeral home goes out of business or you move, because some plans do not transfer.
- Comparing funeral homes. Under the FTC's Funeral Rule, funeral homes must give you an itemized price list, and must give you prices over the phone without asking for your contact details first.
Questions to ask before you buy any policy
- When does the full benefit start?
- Can the premium ever go up?
- What happens if I miss a payment? How long is the grace period?
- Which insurance company issues the policy, and what is its financial strength rating?
- Can I cancel within the first 30 days for a full refund?
See whether a final expense plan could fit you
Sources
- National Funeral Directors Association, Statistics. 2023 General Price List Study medians for funerals with burial and with cremation.
- Federal Trade Commission, The FTC Funeral Rule. Price lists and what funeral homes must provide.
- Interstate Insurance Product Regulation Commission, Graded benefit whole life standards. Limits on reduced-benefit periods.
- Federal Trade Commission, Planning Your Own Funeral. Prepaid plans and transfer limits.
Plan details vary by insurer and state. Our editorial policy explains how we handle updates.