« All Articles

What is the Difference Between Final Expense and Term Life Insurance?

What is Final Expense Insurance?

Final expense insurance is a type of life insurance policy designed to cover funeral and final expenses. While the death benefit does not have to be used to pay for funeral costs and other end-of-life expenses, those who purchase a final expense insurance policy typically use the death benefit to pay for burials, cremations, caskets, or urns.

Final expense insurance remains active for the entirety of your life, so long as premiums are paid on time. In other words, your designated beneficiaries will receive the stated death benefit so long as you continue to pay your premiums.
 
Generally speaking, final expense insurance is an attractive life insurance policy for seniors looking for a way to protect their family from funeral costs; and with funeral costs continuing to rise and the average cost of a funeral ranging between $8,000 and $10,000,1 it should come as no surprise that final expense insurance policies have become a more popular option for those looking into life insurance at an older age.
 

What is Term Life Insurance?

Term life insurance is a type of life insurance policy that pays a stated death benefit in the event the person insured dies during the specified term of coverage. Term life insurance gets its name as it is only active for a specific “term” or period in time. This means the policyholder would generally have to renew their coverage after their term ends to guarantee another “term” of coverage.
 
Many companies offering life insurance policies to their employees provide term life insurance, which is oftentimes celebrated as being an easily accessible form of life insurance coverage. However, enrolling in a term life insurance policy after 65 can at times cost significantly more money at times than a final expense insurance policy. This may account for why some seniors opt for a final expense insurance policy over a term life insurance policy.

Also known as “burial insurance” and “permanent life insurance,” final expense insurance is a type of life insurance policy designed to cover funeral and final expenses. Term life insurance, on the other hand, is a type of life insurance policy that pays a stated death benefit in the event the person insured dies during the specified term of coverage. Term life insurance gets its name as it is only active for a specific “term” or period in time. This means the policyholder would generally have to renew their coverage after their term ends to guarantee another “term” of coverage.

Is Final Expense or Term Life Insurance Right for You?

Depending on your age, financial situation, and coverage goals, you may have trouble deciding on a life insurance policy that fits your needs. Since there is no one-size-fits-all approach to deciding on a life insurance policy, it is highly encouraged that you contact a licensed local insurance agent to explore your life insurance options and tend to your needs with a personalized and professional approach.