Types of Final Expense Insurance Plans
Final expense life insurance is comprised of two major elements:
1. Permanent or Term based
2. Guaranteed or Simplified issue based
Before you decide to apply for final expense life insurance, you need to decide which types of plans are more suitable for you. Lets discuss for a few moments about whether you should purchase permanent or term based final expense insurance.
Permanent plans are almost always "whole life" based insurance products. This means, as long as you pay your premium, the policy will stay in force, usually until you decease or in some cases until you reach the ripe old age of 100!
The premium and death benefit are guaranteed to remain the same for the rest of your life. There is also a "cash value" associated with permanent plans and these values are also guaranteed.
If you want coverage until you pass on, no matter when this happens, then this type of life plan is what you are looking for!
Term plans are based on the applicant deciding "how long" do you want this life policy to stay in force. Usually, these plans allow you to choose between a 10, 15, or 20 year contract.
The premium and death benefit are guaranteed to remain the same for the entire contract period. So for example, I decide that I need coverage for only 10 years. During the ten year period, the premiums and death benefit remains the same, however, if I live beyond the ten years, I will have no coverage. The life policy will cease to exist.
This type of product is less expensive than their permanent plans.
Here are some of the attributes of Final Expense Insurance:
Most policies are guaranteed or simplified issued
No medical exam is required
Usually final expense insurance has a 2-3 year waiting period, for example if the insured dies 6 months after policy issuance, only the premium will be reimbursed to the beneficiary
Guaranteed issued means, once you complete the application in its entirety, the insurance carrier "guarantees" to issue you a policy. Regardless of the status of your health, you will automatically qualify for these plans.
Guaranteed issued plans are more expensive than simplified or fully underwritten ones and can run as much as 100% higher in price than fully underwritten policies. Why? Because the insurance company will accept all health risks!
Simplified issued means, once you complete the application in its entirety, the insurance company will perform "limited" underwriting. The typical application will usually ask no more than four medical related questions. Once your application has been through underwriting&ldots;the insurance company can either accept or decline coverage.
This type of plan is much easier to qualify for than fully underwritten, however, the cost can be as much as 25-50% higher.