Life insurance can play a big role in financial planning. It pays out a death benefit if you pass away during the policy term, offering your beneficiaries better financial security in your absence. However, many types are available, which may make it seem daunting to choose the right policy for your unique needs.
Final expense insurance is one policy type with several differences from other plans. It can work well if your family is financially secure, but you want to help them cover funeral costs and related expenses in case you pass away. This article will explain the differences between final expense life insurance and other types of policies, then cover a few factors to weigh when applying for the right policy for you and your loved ones.
Don’t wait until it’s too late. Help cover yourself and your family with affordable coverage from Aflac.
Life insurance is a contract where the insurer pays a sum of money, called the death benefit, to the policyholder’s beneficiaries if the policyholder passes away during the policy term. In exchange, the policyholder pays premiums to maintain their coverage.1 Here are two types of life insurance policies:
Final expense insurance is a small permanent plan designed to help cover expenses like funeral costs and medical bills. Death benefits are smaller than traditional whole life insurance policies, but premiums are often lower than other policies.1 This policy may not have a medical exam – you only have to answer a few medical questions on the application. You also get coverage for life and can build cash value. Therefore, a final expense insurance policy can help prevent your loved ones from experiencing financial stress while they grieve. Aflac offers final expense whole life insurance that can you can apply for to get coverage.
Here are some key differences between final expense insurance and other life insurance policies:
Final expense death benefits tend to range between $5,000 and $25,000.2 According to the National Funeral Directors Association, the median cost of a funeral was nearly $8,000 in 2021.3 Therefore, a final expense policy may help cover most of your funeral costs. You could also get a larger death benefit to plan for other expenses.
Other life insurance policies, on the other hand, often come with larger death benefits. With a traditional policy, a rule of thumb is to get coverage worth 10 times your salary.4
Final expense insurance tends to offer low premiums since the death benefit is smaller. A 50-year-old male could get $10,000 of coverage for just $47 per month on average, and a 50-year-old female can qualify for premiums as low as $34 per month for the same amount of coverage.2 This helps reduce the cost of life insurance without giving up lifelong coverage. Since traditional life insurance policies offer a larger death benefit amount, they often come with higher premiums.
Final expense insurance coverage lasts for your entire life. That means you can purchase a policy early on to lock in the lowest premiums and maximize the time you have to build wealth through cash value. Term life insurance offers temporary coverage, meaning your policy will eventually expire.
Many traditional life insurance policies are designed to help with loss of income, pay off debts, help cover your children’s education, and save for emergencies. Final expense insurance has a smaller death benefit because it's designed specifically for end-of-life expenses, such as funeral costs.
Consider the following factors when picking a policy type:
Traditional life insurance policies, like term and whole life insurance, are more enhanced in nature. They help your family with the loss of your income and help pay off any debts while saving for the future. These policies may work better if you’re the primary wage earner or want to leave more wealth to your heirs.
Final expense insurance has a more specific purpose, helping your loved ones cover end-of-life costs without debt or financial strain. If your family is financially stable but needs help covering these costs, final expense insurance can allow them to receive the funds they need after your passing.
Now that you know the differences between final expense insurance and traditional life insurance policies, you may be considering your options. Aflac can help you choose which policy is right for you — whether that’s final expense insurance or another life insurance policy. Start chatting with an agent today to learn more and get a quote.
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1 The Annuity Expert – Life Insurance vs. Burial Insurance. https://www.annuityexpertadvice.com/life-insurance-vs-burial-insurance/. Accessed May 10, 2023.
2 Forbes – Is Burial Insurance Right for You? Updated February 6, 2023. https://www.forbes.com/advisor/life-insurance/burial-insurance/. Accessed May 10, 2023.
3 National Funeral Directors Association – Statistics. https://nfda.org/news/statistics. Accessed May 10, 2023.
4 Moneygeek – Final Expense Insurance vs. Life Insurance: What’s the Difference & Which One Should You Get? Updated May 8, 2023. https://www.moneygeek.com/insurance/life/types/final-expense-vs-life/. Accessed May 10, 2023.
Coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, coverage is underwritten by American Family Life Assurance Company of New York.
68000 series: In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100-A68400. In New York, NY68100-NY68400. B61000 series: In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC18B61JWO & ICC18B61JTO. In Virginia, Policies ICC0965JTO & ICC0965JWO. B60000 series: In Arkansas, Idaho, Oklahoma, Pennsylvania, Texas, & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Q60000 series: Whole: In Arkansas, Policy Q60100CAR. In Delaware, Policy Q60200M. In Idaho Policy Q60100CID. In Oklahoma, Policy Q60100COK. In Oregon, Policy Q60100COR. In Texas, Policy Q60100CTX. Q60000 series: Term: In Delaware, Policies Q60200C. In Arkansas, Idaho, Oklahoma, Oregon, Texas, Policies ICC18Q60200C, ICC18Q60300C, ICC18Q60400C.
Aflac Final Expense insurance coverage is underwritten by Tier One Insurance Company, a subsidiary of Aflac Incorporated and is administered by Aetna Life Insurance Company. The life insurance policy described herein contains an optional Accelerated Death Benefits Rider that is intended for favorable tax treatment under Section 101(g) of the Internal Revenue Code. Aflac does not give legal or tax advice. Please consult with a qualified legal, tax, and accounting advisor before engaging in any transaction. In AR, AZ, ID, OK, OR, PA, TX and VA: Policies ICC21-AFLLBL21 and ICC21-AFLRPL21; and Riders ICC21-AFLABR22, ICC21-AFLADB22, and ICC21-AFLCDR22. Tier One Insurance Company is part of the Aflac family of insurers. In California, Tier One Insurance Company does business as Tier One Life Insurance Company (Tier One NAIC 92908).
This is a brief product overview only. Coverage may not be available in all states, including but not limited to DE, ID, NJ, NM, NY or VA. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations and exclusions. For complete details, including availability and costs, please contact your local Aflac agent.
Aflac does not offer Universal or Variable Universal life insurance.
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