Final expense life insurance vs. traditional life insurance
Note: Ethos does not offer final expense-specific life insurance, although our whole life plans for seniors ages 66-85 can be used for these costs. This information is shared to help our customers make an informed decision about their life insurance needs.
Life insurance comes in many different forms. Some policies can be used to supplement income during retirement. Others provide protection for a specific length of time, such as your mortgage repayment period. And then, there’s a policy that is designed to cover end-of-life expenses.
Final expense life insurance is an insurance policy that can help pay for the cost of funerals, cremations, and other end-of-life expenses. When you consider that the median funeral cost is $7,848 for a viewing and burial, having final expense insurance can be a good investment.
If you are choosing between traditional life insurance vs. funeral insurance, it’s important to understand the differences between the two policies. Although final expense insurance can be valuable, you might decide that regular life insurance is a better option for your needs.
What is final expense insurance?
Final expense life insurance, also called burial insurance, is a type of permanent life insurance. It provides protection for your lifetime, beginning when your coverage takes effect, as long as you pay the premiums. Final expense insurance is also guaranteed, so everyone who applies can get approved.
When you pass away, your beneficiary receives a death benefit, which is usually put toward end-of-life costs, such as funeral services, cremation, burials, final medical bills, and unpaid debt. But technically, the money can be used for any purpose.
One of the biggest benefits of final expense insurance is that the policies are not medically underwritten. This makes it a good option for seniors or people who have pre-existing health conditions that make it difficult to get approved for traditional life insurance.
What is traditional life insurance?
There are several different types of traditional life insurance. Through Ethos, you can purchase term life insurance and whole life insurance for seniors. Term life offers protection for a specific period of time, whereas whole life offers coverage for your entire life.
Term life and whole life have a guaranteed death benefit that gets paid out after you pass away. The money can be used for any purpose but is most commonly used to financially support loved ones, like a spouse or dependent children.
In addition, some whole life policies build cash value, which is similar to a savings account. When your cash value balance reaches a certain amount, you can borrow from it.
If you purchase traditional life insurance through Ethos, you’ll never be required to take a medical exam (just answer a few health questions).
What’s the difference between life insurance and burial insurance?
Standard life insurance and burial insurance share some similarities, but they are different in a variety of ways.
First, final expense life insurance offers less coverage than traditional life insurance. Most final expense insurance policies have a death benefit capped at $30,000. In contrast, if you purchase term life insurance you can often get up to $1 million in coverage or more.
Another difference is cost. Because burial insurance is guaranteed issue, it’s typically more expensive than some types of traditional life insurance. While you can get approved regardless of age or health, keep in mind that you’ll be paying a high premium for a small amount of coverage.
Final expense whole life insurance also builds cash value over the life of the policy. At a certain point, you have the option to borrow that money, similar to a personal loan. With traditional term life insurance, you don’t get the benefit of cash value.
With final expense insurance, you sometimes have the option to designate a funeral home as your beneficiary. In this case, the death benefit gets paid to the funeral home that is arranging your final wishes, so your loved ones don’t have to pay anything out-of-pocket.
How to choose between traditional life insurance vs. funeral insurance
If you are choosing between life insurance vs. funeral insurance, it’s important to consider the pros and cons of each type of insurance. Traditional life insurance usually offers more coverage for a lower premium. However, final expense insurance is easier to qualify for.
Generally speaking, funeral insurance can be a good option for older adults, and for individuals whose health has prevented them from getting traditional life insurance in the past. If you want to help your loved ones pay for your funeral costs, this policy might be right for you.
However, if you are young and healthy, or want a higher amount of coverage, you should consider a term life insurance policy. Your approval is based on a few basic health questions, and the premiums are more affordable than final expense insurance.
Traditional life insurance from Ethos
Ethos whole life policies can serve as final expense burial insurance for some people. Seniors between the ages of 66-85 can purchase guarantee issue whole life insurance, with no medical exam (just answer a few health questions). You can get a policy with up to $30,000 in coverage, depending on your age and your health questionnaire responses.
People under 65 should consider term life insurance from Ethos. You could purchase up to $2 million in coverage over a 10-, 15-, 20-, or 30-year term. If you're not sure how much coverage you might need, you can use the online calculate coverage tool.
When you’re ready to get a quote, click check my price to see your estimated rate. Coverage begins as soon as you pay the first premium, with no waiting period necessary.