How Much Does Final Expense Insurance Cost?
One of the first questions people ask about final expense insurance is how much it costs. The answer depends on a few personal factors, but the good news is that final expense insurance is designed to be affordable, especially for seniors on a fixed income.
Most people pay somewhere between $20 and $100 per month for final expense coverage. That range is wide because premiums depend on your age, health, gender, whether you use tobacco, and how much coverage you choose. This article breaks down each of those factors so you know what to expect.
Factors That Affect Your Premium
Your Age
Age is the single biggest factor in determining your premium. The younger you are when you apply, the less you will pay. A 55-year-old will pay significantly less than a 75-year-old for the same amount of coverage.
This is why many financial advisors recommend purchasing final expense insurance sooner rather than later. Every year you wait, your premiums will be higher. Locking in a rate at a younger age saves money over the life of the policy.
Your Health
Most final expense policies use simplified underwriting, which means they ask a short list of health questions rather than requiring a medical exam. Your answers to these questions determine whether you qualify for the best rates.
Common health questions cover topics like:
- Have you been diagnosed with cancer, heart disease, or other serious conditions?
- Have you been hospitalized in the past two years?
- Do you use oxygen or a wheelchair?
- Are you currently in a nursing home or assisted living facility?
If your health is relatively good, you will qualify for preferred or standard rates. If you have more serious health issues, you may still qualify but at a higher premium, or you might consider a guaranteed issue policy.
Your Gender
Women generally pay less than men for final expense insurance because they have a longer average life expectancy. The difference is not dramatic, but it is consistent across all age groups.
Tobacco Use
If you smoke cigarettes, use chewing tobacco, or use other nicotine products, you will pay higher premiums. Tobacco users typically pay 30 to 50 percent more than non-tobacco users for the same coverage. Some insurance companies have a waiting period after you quit before they offer non-tobacco rates, often 12 to 36 months.
Coverage Amount
Final expense policies typically range from $2,000 to $25,000 in coverage. The more coverage you choose, the higher your monthly premium. However, the cost per thousand dollars of coverage stays roughly the same, so doubling your coverage approximately doubles your premium.
Sample Monthly Premiums
The following estimates give you a general idea of what to expect. These are approximate figures for a $10,000 simplified issue final expense policy. Your actual rates may be higher or lower depending on the insurance carrier and your specific health profile.
Non-Tobacco Female
- Age 50: $25 to $35 per month
- Age 55: $30 to $40 per month
- Age 60: $35 to $50 per month
- Age 65: $45 to $60 per month
- Age 70: $55 to $80 per month
- Age 75: $75 to $110 per month
- Age 80: $100 to $150 per month
Non-Tobacco Male
- Age 50: $30 to $45 per month
- Age 55: $35 to $50 per month
- Age 60: $45 to $60 per month
- Age 65: $55 to $75 per month
- Age 70: $70 to $100 per month
- Age 75: $95 to $135 per month
- Age 80: $125 to $180 per month
These numbers illustrate why applying at a younger age makes such a difference. A 55-year-old man might pay $40 per month, while the same man waiting until 70 could pay $85 or more for identical coverage.
How to Get the Best Rate
Compare Multiple Companies
Different insurance carriers set their own rates, and they can vary significantly. One company might be the cheapest option for a 65-year-old with diabetes, while another might offer better rates for a healthy 58-year-old. Working with a licensed agent who represents multiple carriers is the most efficient way to compare options.
Apply While You Are Healthy
If you are considering final expense insurance, applying sooner is almost always better. Your health today is likely better than it will be in five or ten years. Locking in a rate now protects you from future health changes that could increase your premiums or limit your options.
Choose the Right Coverage Amount
You do not need to over-insure. Think about what expenses you want to cover. If a basic cremation and a small memorial service would cost $5,000 to $7,000, then a $10,000 policy provides a comfortable cushion. If you want a traditional funeral with burial, you might want $15,000 to $20,000.
A licensed agent can help you estimate the costs in your area and choose an appropriate coverage amount.
Ask About Preferred Rates
Some insurance carriers offer preferred rates for applicants who are in excellent health. If you take no medications, have no major health conditions, and are within a healthy weight range, you may qualify for these lower rates. Not all companies offer them, so it pays to shop around.
Guaranteed Issue Costs More
If you have significant health issues and cannot qualify for a simplified issue policy, guaranteed issue final expense insurance is still available. However, expect to pay more.
Guaranteed issue policies typically cost 30 to 70 percent more than simplified issue policies for the same coverage amount. This higher cost reflects the fact that the insurance company is accepting you without any health information.
Additionally, guaranteed issue policies include a waiting period, usually two to three years. If you pass away during this period, your beneficiary receives a refund of premiums plus interest rather than the full death benefit. After the waiting period, the full benefit is in effect.
Despite the higher cost, guaranteed issue policies serve an important purpose for people who have no other options. Having some coverage is better than leaving your family with nothing.
Is Final Expense Insurance Affordable on a Fixed Income?
For most seniors, the answer is yes. A policy providing $10,000 in coverage typically costs less than $2 per day. Many people find that amount manageable even on Social Security income alone.
Here are a few things that help with affordability:
- Premiums never increase. The amount you pay when you start the policy is the amount you pay for life. There are no surprise increases.
- You can choose a smaller policy. If $10,000 in coverage stretches your budget, a $5,000 policy cuts the premium roughly in half.
- Some companies offer bank draft discounts. Paying through automatic bank draft rather than receiving a monthly bill can save you a few dollars per month.
What Happens If You Stop Paying?
If you stop paying premiums, most final expense policies have a 30-day grace period during which your coverage remains active. After that, the policy may lapse.
However, because final expense insurance is a form of whole life insurance, it builds a small cash value over time. If your policy has accumulated enough cash value, it may be able to sustain itself for a period even without premium payments. Some policies also offer a reduced paid-up option, which lowers your death benefit but keeps some coverage in force without further payments.
Your insurance agent can explain the specific options available with any policy you are considering.
Getting an Accurate Quote
The sample premiums in this article are general estimates. The only way to know exactly what you would pay is to get a personalized quote based on your age, health, and coverage needs.
A licensed insurance agent who specializes in final expense coverage can provide you with a free, no-obligation quote. They can also compare rates from multiple insurance companies to make sure you are getting the best price available for your situation.
There is no cost to get a quote, and there is no pressure to buy. Having accurate information helps you make a confident decision about protecting your family.
The Bottom Line
Final expense insurance is one of the most affordable types of life insurance available. Monthly premiums typically range from $20 to $100, depending on your age and health. The sooner you apply, the less you will pay, and your rate is locked in for life.
The cost of not having coverage is much higher. Without a policy in place, your family could face thousands of dollars in unexpected expenses at a time when they are already grieving. For the price of a daily cup of coffee, you can make sure that does not happen.