Category Archives: Insurance

Final Expense Insurance – What is it and Why Should I Buy It?

Final expense insurance also referred to as “funeral” or “burial” insurance, is a life insurance policy that is designated for paying the final expenses of the insured that typically accumulate leading up to and immediately after the insured’s death.

It is no secret to anyone living in the United States that there is a cost for burying or cremating a family member or friend after they have passed. You are generally never allowed to simply bury old Uncle Fred in your backyard in the subdivision you live in. There are rules and laws that govern the disposition of a dead person.

What this means is that unless you prepay for the costs associated with your funeral or cremation, you are going to pass those costs on to your surviving loved ones when it’s your time to go. If you love and care for your family and friends, the last thing you should do is leave them with the significant costs of a funeral or cremation.

It Costs Money to Die

One of the most significant expenses related to dying is the cost of a funeral. Unfortunately, funerals are not affected by technology like many other services. They cost more today than ever, and the price will continue to go up because a funeral service involves labor and land.

Other expenses that are typically passed on to surviving loved ones are unpaid medical or nursing home expenses, mortgages, and any debt that was guaranteed by the insured and another family member or friend. Even the cost of cremation can get expensive when you include a memorial service or choose to have the urn buried in a cemetery.

According to Parting, a well respected funeral home comparison business, the cost of a moderately priced funeral will cost about $8,000 to $10,000 and will typically not include the memorial service. You can save quite a bit by going the cremation route, but it can still end up costing about $2,000 to $3,000 with a memorial service not included.

It costs someone money when you die, so why pass the debt on to surviving loved ones or friends when you can easily prepay these imminent costs with an affordable final expense insurance policy?

 Why Purchase Final Expense Insurance?

For many people that already have life insurance, the insurance they’ve purchased is term insurance, which is not permanent. This means you could easily outlive your policy and be unable to afford to renew it or buy life insurance to replace it.

Many people get their life insurance through work and don’t understand that if they leave, get fired, or retire; their life insurance policy does not go with them. Here again, it’s likely that the cost of buying a new policy is unaffordable or you may not qualify because of health issues.

There is also a large group of people who believe their church will take care of their funeral when they die. This may or may not be true, but even if it is, do you really want to pass on the cost of your funeral to the church members?

Finally, there is that group of people who are not married and have no children, so they figure why carry any life insurance? The answer is quite simple, if you expect to be properly buried (or cremated) when you die, someone will have to pay for it.

 Final Expense Insurance is the Affordable Answer

Final expense insurance is the most affordable method to prepay your final expenses. The insurance used most often is whole life insurance which offers the guarantees you’ll prefer for a final expense product. Whole life insurance is guaranteed for a lifetime as long as the periodic premium is paid. The policy cannot be canceled by the insurer except for non-payment of premium. The monthly premium remains the same for the life of the policy and will not change because of age or illness.

Since final expense insurance is typically purchased with a lower death benefit than normal life insurance, most people find the monthly premium very affordable, and the policy can build cash value over time, which the insured can access at some point in time. The final expense policy is also considered a “simple issue policy” which means the company rarely requires a medical exam and therefore the policy is issued quickly compared to other larger insurance policies.

There are Two Types of Policies to Choose From

Most insurance companies that offer final expense insurance will have two different products available:

  1. No Exam Final Expense Insurance: This is a whole life policy that can be issued final expense insurance exambased on underwriting questions and rarely involves a medical exam or blood test. If you qualify based on your answers to the health questions on the application, the policy will be issued. If you do not qualify because of health issues you have listed, the company will generally refer you to a “guaranteed issue” policy
  2. Guaranteed Issue Final Expense Insurance: This type of whole life policy does not have any health questions on the application, and the policy is generally guaranteed issue final expense insuranceissued without regard to any health issues you may be experiencing. These policies typically allow a maximum death benefit of $25,000 and contain a waiting period before the coverage is fully in force.

The waiting period is usually two to three years. If you die from natural causes during the waiting period, your insurance company will not pay the death benefit to your beneficiary. They would instead receive an amount equal to all the premiums you have paid in, and in some cases, an additional amount of 5 to 10 percent. If, however, you die within the waiting period as a result of an accident, the insurance company will typically pay the full death benefit from day one.

 When is the Best Time to Purchase?

All life insurance rates are based primarily on your age and your health. Knowing this, it would be advantageous to purchase your final expense insurance when you are younger to assure you are getting the lowest rate possible. The longer you put off taking out the policy, the higher the rate you will pay.

For example, the monthly rate for a 45-year-old non-smoker for a $20,000 death benefit would be about $45. If that same person were to wait until age 65, the rate would then be about $108 per month. In this example, waiting until age 65 would end up costing you an additional $720 per year.

You should also consider health issues. It’s certainly more likely that you will have better health when you’re 45 years-old than when you are 65-years-old. Serious health issues could force you to purchase a guaranteed issue policy which is more expensive than a traditional one.

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Buy Life Insurance with Preexisting Conditions

Preexisting conditions will usually have a substantial impact on life insurance rates; however, they do not always prevent you from being able to purchase an affordable policy. The good news is the life insurance industry has become very competitive, and insurance companies are now offering life insurance policies to people who may have been rejected in the past.

Typical Health Issues

Even though preexisting conditions differ according to how old you are and where you live, the most popular diseases and illnesses are still making it difficult, yet not always impossible to get an affordable life insurance solution.

heart disease  Heart Disease – People who have a health history that includes a heart-related event will be judged on how much time has passed since the event took place, and how well your overall health has improved since the heart attack. If it has been more than seven years and you are currently healthy, your carrier is likely to offer a standard rating. If it has been three to seven years, you’ll typically be accepted with a table rating. If your heart attack was as recent as three years, you’d be better off looking at an alternative policy such as guaranteed issue whole life insurance. You’ll pay more but you will most probably qualify for coverage.

stroke  Stroke – Even though stroke is the number two killer of Americans today, a stroke survivor can get a life insurance policy. There are several factors that the underwriter will consider to determine your rate if accepted: How old you were when the event took place and the number of years since it happened; your follow-up test results; results from a medical exam ordered by the underwriter; and all pertinent information from your doctor. Your underwriter is going to consider as much data as possible and take into consideration your current health condition and lifestyle to determine your classification if your application is considered acceptable.

If after speaking with your independent agent, you both agree that a declination is probable, then, by all means, consider buying a guaranteed issue policy to make certain you have some coverage in place when the worst happens.

diabetes  Type 1 or Type 2 Diabetes – Diabetes is likely one of the most common chronic diseases in America today, and because of lifestyle and diet, more people are being diagnosed every year. Fortunately, there are insurers who are willing to compete for these cases, and as a result, the underwriting has gotten a bit more liberal over the last five years. Your A1C levels, current health condition, and lifestyle will be the most critical parts of the underwriting process. If your A1C levels are below 7.0, and you are not experiencing associated illnesses, you can expect a standard rating from some insurance companies. This standard rating should be great news for the large group of people who are struggling to manage this disease.

hepatitis c  Hepatitis C – Hepatitis C is probably one of the most unexpected diagnoses today, and in many cases is diagnosed in people who have had no symptoms. Most people are diagnosed as a result of a blood test for other reasons such as for a life insurance application. Typically, after being diagnosed, your doctor will require a liver biopsy, and the results of this biopsy will play a considerable part in determining your insurance rate and the resulting premium. If your blood test indicates very high enzyme levels, and you continue to consume alcohol, it’s likely that your case will be declined.

copd  COPD – Since there is no cure for COPD (chronic obstructive pulmonary disease), getting approved for life insurance is substantially more difficult. Since this lung condition exists in varying degrees, when you were diagnosed will play an important part in the underwriting process. If your diagnosis was recent and your attacks are considered infrequent, there’s a good chance of your being approved with a standard rate are higher – but only if you have stopped smoking for several years. Your underwriter will require all available information and test results from your pulmonologist and will also require an updated medical exam that will include a blood and urine sample. If you have frequent breathing attacks and tightness in the chest, it’s possible you will be rated as substandard or even declined coverage.

The Alternative to Consider

There is good news for the many Americans who suffer from a chronic disease preexisting conditionsand have been unable to purchase traditional life insurance because of pre-existing conditions. Today, many insurance companies are offering Final Expense Insurance, also referred to as burial insurance, on a “guaranteed issue” basis. Guaranteed issue is the term used for non-medical life insurance. The insurance company typically asks only a few questions about your health and does not require a medical exam, blood and urine test, or an attending physician statement from your doctor.

Since the insurer is taking on an unknown health risk, they will apply a waiting period of two or three years before they will pay the death benefit if you die within that period from natural causes. If your death is the result of a covered accident, your beneficiary will receive the full benefit you were approved for from day one. If you die from natural causes during the waiting period, the company will return the entire premium you’ve paid in, and in many cases, the insurer will add a small percentage to that amount.

In either case, your best chance of buying affordable traditional or guaranteed preexisting condition insuranceissue life insurance is to contact an independent agent that represents all of the highly-rated carriers and who are experts at taking on tough cases and helping those Americans with pre-existing conditions. The insurance professionals at are familiar with the information needed from the underwriter and will be able to help you navigate through the process of finding coverage that will fit within your budget.


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Life Insurance Terms You Should Know

Life Insurance Terms You Should Know


Just like with lawyers, members of the insurance industry use unfamiliar terms when they discuss the various products they represent. Not because they’re smarter than anyone else, it’s just the nature of the industry. Certainly, anytime you’re speaking with an agent, you can interrupt and ask what they’re talking about; but when you’re reading about insurance, there is typically no glossary at the bottom of the article or web page that explains the unusual life insurance terms. For this reason, we’ve listed the most common terms and their meaning in layman terms.

When You’re Shopping for Life Insurancelife insurance terms

Term Insurance

Term life insurance refers to insurance that is purchased for a period of years (the term) which are typically 5, 10, 20, and 30 years. There is also annually renewable term which is a one-year policy. Since the premium remains the same throughout the policy term, the rates for a longer term are higher than rates for a shorter term because of the higher risk

When term policies expire, most companies will offer a renewal for a one or five year term, but the pricing will be based on your new age. Many insurers will also have a conversion privilege that allows the policyholder to convert the term policy to a permanent policy such as Universal Life or Whole Life without you having to prove you are still healthy. You will, however, pay the rate based on the new type of policy based on your new age.

Term insurance quotes can easily be done online as most independent agents have a “quote engine” on their website. It’s important to note that an online quote must be confirmed with an agent because there are underwriting questions that must be asked and answered before the application can be submitted.

Whole Life Insurance

Whole life is permanent insurance that provides coverage throughout your lifetime. These policies accumulate cash value because the periodic premium you pay is actually more than the cost of insurance during the early years and less than the cost of insurance in the latter years. The insurance company also pays a small amount of interest on the cash value account each month.

Whole life insurance is most attractive because the death benefit is guaranteed for your lifetime as long as you pay your periodic premium, the premium does not change, and you can borrow the cash that accumulates in the policy.

Universal Life Insurance (UL)

Universal life is a type of flexible permanent life insurance that offers lower cost insurance protection (like term) combined with a savings element (like whole life). The money in the savings account is invested by the insurer and credited to the account to allow for building the cash value of the policy.

The primary difference between UL and term or whole life insurance is its flexibility. With a UL policy, the premiums and face amount can be changed to accommodate life changes of the policyholder. Also with a UL policy, there is a minimum interest rate established by the insurer, but if the insurance company’s portfolio outperforms the minimum interest rate for the policy, the insurer will apply the excess earnings to the cash value of the policy. UL also allows access to the cash value through loans and partial surrender.

Death Benefit

The death benefit is the amount the insurer agrees to pay your beneficiary in the event of your death.

life insurance termsWhen You Apply for an Insurance Policy

Periodic Premium

This is the amount you pay to the insurer in return for the insurance policy. Typical premium periods are monthly, quarterly, semi-annually, or annually. Your premium will be based on many factors such as your age, your health, the amount of coverage, and your weight and height.


This is a process your insurer will require to determine the rate class you will be assigned. The process typically includes an application containing questions about your health, a medical exam, a blood and urine analysis, and reports from your doctors and any medical facilities you listed on the application.

Table Rating

A table rating is like a rate surcharge used by the insurer when the applicant does not qualify for standard insurance rates.

MIB (Medical Information Bureau)

Most insurers check the MIB database while going through the underwriting process. This database does not contain your medical records, it does, however, provide member insurance companies with information regarding health conditions and lifestyle information.


ScriptCheck is a for-profit organization that maintains a database of individual’s prescription records that only a life or health insurer can access.

life insurance termsWhen You’ve Been Approved for Coverage


Your beneficiary is the person(s) or organization(s) that you assign to receive the death benefit in your policy when you die.

Contingent Beneficiary

Your contingent beneficiary (alternate) receives the death benefit when your beneficiary does not survive your death. For example, you might name your spouse as beneficiary and then your children as contingent beneficiaries.

Cash Value

A savings account found in Whole Life and Universal Life policies that earn interest and is available to the policyholder through policy loans or surrender.


Riders are options that are available to purchase and add to your life insurance. Since they are an extension of coverage, most all riders require additional premium.

Policy Loan

A policy loan is when a policyholder borrows from their insurer and uses the cash value in their policy as collateral. Policy loans may or may not have to be repaid, but in all cases, the unpaid balance of the loan will be deducted from the death benefit if you die with an unpaid balance.


When a policyholder surrenders a life insurance policy, they are exchanging all their rights under the policy for the accumulated cash value, minus any surrender charges. Only a whole life or universal life policy can be surrendered.

Life Settlement

A life settlement occurs when an insured sells their life insurance policy to an individual or company for cash. The new owner keeps the policy in force and continues to pay the premiums. The purchaser receives a return on investment when the insured dies. Almost all types of policies are eligible for a life settlement. Typically, to qualify for a life settlement, you must be at least 65 years old with a life expectancy of 15 years or less, and the death benefit must be at least $100,000.

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