The median cost of funerals was $7,640 in 2019. This is not including a vault. These skyrocketing expenses make many of us plan for a final expense insurance policy. It not only allows your loved ones to give you a decent funeral but also takes care of the bills until they can get back on their feet.
Many insurance companies sell a variety of plans, including the final expense. Finding the right one can be challenging. Going with reputable names like John Hancock final expense life insurance is advisable so that you are not conned into paying more and getting less. This article compares a final expense insurance policy to a guaranteed life insurance plan to differentiate between the two.
Usually, final expense plans are available to older citizens only. The eligibility criteria for the policy is between the ages of 50-80 years. Such policies are provided to meet the immediate expenses after death. A guaranteed life insurance plan also has similar age criteria. What sets these two apart is that the guaranteed cover will provide a death benefit despite your health condition. A simple final expense policy covers only healthy people or those with certain illnesses.
A final expense policy is rather rigid about your health condition. It will ask you questions about your health at the time of sign up. You will also have to wait for 24-36 months before you are eligible to receive the benefits. That said, a few insurers such as John Hancock final expense life insurance repays the premiums with a 10% interest if you pass away before the mandatory waiting period is over. So, you don’t lose any money.
A guaranteed insurance plan asks no or a few questions about your health and provides you with a life cover for the rest of your life. It’s a kind of no-exam cover that makes payment to your heirs as long as all premiums have been paid.
Many people are opting for final expense covers because they are affordable. The monthly premiums are low as the death benefit is not more than $50,000. That said, a guaranteed cover will be slightly more expensive than a simple final expense plan. It is because they charge slightly more for overlooking your health condition. With the ever-increasing burial costs, it is best to plan for the expense so that your loved ones are not stranded with a hefty burial bill.
A final expense life cover can provide benefits ranging from $5,000 to $20,000. A guaranteed life insurance plan can cover a higher amount if you can afford the premiums. As the name suggests, a final expense covers only those expenses and therefore provides limited cover. A guaranteed life plan can be taken at any point, and you can decide how much should be paid as a death benefit to your heirs.
Ease Of Coverage Wise
A guaranteed issue life insurance policy is easier to get as there are few to no medical questions involved. You may pay a slightly high premium, but it is worth the extra payment if you suffer from any illnesses. A simple final expense plan will ask you a few health-related questions and may not provide coverage. Usually, people prefer to keep their lifestyle private, and a guaranteed issue ensures that it remains so.
Premiums And Payout Wise
Both types of policies allow for monthly premium payments. Also, the premiums are fixed, unlike a life cover where premiums are incremental. The death benefits in both plans are fixed, too, regardless of what age you die. With traditional life cover plans, the death benefit expires after you cross a certain age. It means that all the premiums you paid for so long are down the drain.
How To Decide?
Now that you know about final expense life insurance plans and guaranteed issue insurance covers. Deciding which suits your needs is simple too. If you have one or more health conditions, you need to go for a guaranteed life cover. If your illness is terminal and your life expectancy is less than two years, then don’t go for the cover. Instead, save the premiums into your savings account.
If you are healthy, you can save on the premium payments by opting for a final expense life insurance plan. The death benefit can depend on the amount you can pay monthly.
As you approach your senior years, you must make sensible financial decisions. One such decision is opting for a final expense life insurance policy, which will leave a small sum for your loved ones to meet with the immediate expense after your passing. Choosing a reliable plan like John Hancock final expense life insurance can make things simple and less expensive.