Online Financial Tips

Although none of us like to think about it, at some point we all need to prepare for the fact that we are not going to live forever. Have you ever thought about what your funeral should be like, or how much you need to have set aside for the funeral? While your family members are grieving their loss, the last thing that you want is to give them the additional burden of trying to figure out how to pay the funeral expenses.

According to a survey that was conducted in 2007, thirty four percent of those surveyed that were over fifty had done some funeral planning, and twenty three percent had prepaid part or all of it. A typical funeral today can run anywhere from $6,000 to $10,000. For a relatively small amount of money, you can put some insurance into place so the burden does not fall upon your family.

These types of policies are referred to as final expense insurance policies. This is a special type of life insurance policy that is issued with a relatively low face value, typically in the range of $5,000 to $50,000. You can name anyone as the beneficiary of this policy, just like with any other type of life insurance policy. This person would then be responsible for paying your final expenses so the burden is not on your family to find the funds. Be sure that you trust this person to take care of the bills, though, because technically they are allowed to do whatever they want with the money. You don’t want this policy to be another source of stress for your loved ones.

There are two types of final expense life insurance that you can purchase. One type is based on “term life,” in which it will cover you for a certain number of years or until you reach a certain age, at which point it will expire. The other type is based on “whole life,” in which it will be in effect for the rest of your life. Most of the time these policies will be either “simplified issue” or “guaranteed issue.” With a simplified issue policy, you will be asked several medical related questions, but you will not be required to take a medical exam. With a guaranteed issue policy, you do not have to answer any medical questions at all, but the tradeoff is that guaranteed issue policies are usually more expensive.

Even if you have a known medical condition, you will still probably be able to attain final expense life insurance. If there is a serious medical condition, they may issue you a policy with what is referred to as a “graded death benefit.” This is a policy where the death benefit is gradually increased, and your family will receive a lesser amount if you die early in the policy term. You can also use any type of life insurance policy to pay for your final expenses, but a standard policy is usually not able to be issued in such a small amount of face value. If you have many other debts, such as a large mortgage, you will probably be better off with a standard term life insurance policy.

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