Final expense insurance policies are the super simple version of traditional life insurance. Sometimes called burial insurance, they’re small policies without all of the features (extra costs) of conventional life insurance.
Final expense is a sub-category of life insurance. Insurance companies created this as people moved away from buying whole life insurance. Term is less costly and more popular nowadays. The one thing it doesn’t provide for is end-of-life expenses, like a funeral in Los Angeles, CA.
Since term only covers a specified number of years (usually working years or while children are still financially dependent), most people outlive their term policy.
The average burial/cremation and service costs $10,000 in the United States. Coupled with over 50% of households having less than $1,000 to cover an emergency, that passes on the cost of dying to the Los Angeles, CA family left behind.
Insurance companies designed final expense to cover that inevitable, but often unexpected cost.
Final expense covers death, just like life insurance.
It’s not dependant on any cause of death or qualifying scenarios.
The main difference between final expense and regular life insurance is it has a much smaller policy benefits in Los Angeles, CA. Most policies range from $5,000 to $50,000. Whereas traditional life insurance usually starts around $50,000 and caps in the millions.
When you purchase a policy, you set the beneficiary. The beneficiary is the person who receives the money - called the face amount or death benefit. (These terms are interchangeable, but we’ll be using face amount because it sounds less morbid.)
We recommend setting the beneficiary as the person who will be organizing your Los Angeles, CA funeral service.
If you’re buying for a parent, you can set yourself as the owner and beneficiary. Your parent will be the insured.
Once the insured passes, you submit the paperwork to the insurance company. Your Los Angeles, CA insurance agent can help you do this. Many Los Angeles, CA funeral homes will also help with insurance claims paperwork. The insurance company will review the claim and mail you a check.
That money can be used for anything you want. If you have a face amount of $25,000 and only end up spending $14,000 on the cremation and services, the remaining $11,000 can go toward whatever you wish. This is why we strongly discourage naming the funeral home as the beneficiary. They have no obligation to pass on any remaining funds to the family.