How does final expense insurance work?
You choose a coverage amount, called the face amount. You pay a premium each month. When you pass away, the insurance company pays the face amount to your beneficiary, the person you named on the policy.
Because it is whole life insurance, the coverage does not run out at a certain age as long as premiums are paid. That is the key difference from term life, which only covers you for a set number of years.
The money is not tied to one funeral home. Your beneficiary can use it for burial, cremation, a service, or the bills that tend to show up later.
How much coverage do people buy?
Final expense policies are small compared with other life insurance. LIMRA, an industry research group, reported these averages for policies sold in 2024:
| Kind of policy | Share of sales | Average coverage |
|---|---|---|
| Simplified issue (health questions) | 85% | $14,535 |
| Guaranteed issue (no health questions) | 15% | $9,786 |
To pick your own amount, start with the funeral you want. The National Funeral Directors Association put the 2023 median at $8,300 for a funeral with viewing and burial and $6,280 for one with viewing and cremation. Then add any bills you would not want to leave behind. See our funeral cost guide for the full breakdown.
What are the two main kinds?
Simplified issue. You answer a short list of health questions on the application. There is no exam. Some plans pay the full benefit from day one for people who qualify; others use a waiting period for certain health conditions. This is the bigger group in the LIMRA data.
Guaranteed issue. No health questions. If you are in the company's age range, you are accepted. The trade off is a limited benefit early on. AAA Life, for example, accepts ages 45 to 85 and, for deaths not caused by an accident in the first two years, pays back the premiums plus 30% instead of the full amount, according to its product page (opens in a new tab). Our guaranteed issue guide explains this in plain terms.
The NAIC buyer's guide says a policy that skips detailed health information usually costs more and gives less coverage. If your health is fair, answering the questions can pay off.
What does final expense insurance cost?
There is no single price. Each company sets the premium from your age, health answers, tobacco use, the amount you pick and your state. Two people the same age can get very different prices.
A few ways to keep the cost down: pick an amount that matches the funeral you actually want, answer health questions if you can, and compare more than one company. Ask what the highest premium could ever be, as the NAIC (opens in a new tab) suggests, so you know it fits your budget for good.
How is it different from a prepaid funeral?
A prepaid funeral, also called a preneed contract, is an agreement with a funeral home. You pay now for goods and services it will provide later. The FTC (opens in a new tab) suggests asking what happens if the funeral home closes, if you move, or if you want to cancel.
Final expense insurance pays cash to a person instead. It can follow you if you move, and your family keeps the choice of funeral home. Some people use both. Either way, tell your family where the papers are.
How do I see my options?
- Decide roughly how much coverage you want.
- Know your medications and any major health conditions, so the health questions go quickly.
- Pick your beneficiary. You will need their name and details.
- Compare plans from more than one company.
Before you buy, the NAIC suggests checking with your state insurance department that the company is allowed to sell in your state (NAIC tips (opens in a new tab)).
Our quiz is one way to start. It takes a few minutes, it is free, and licensed insurance agents contact you with plans to compare. You can say no to any of them. If you want more background first, read about burial insurance or life insurance for seniors.