Final expense
What is final expense insurance?
Ask two things before you sign: does it pay the full amount from day one, and how long until what you have paid in adds up to more than it pays out?
A small permanent policy, usually bought late, meant to cover a funeral rather than replace an income. Some pay in full from day one; some only after a waiting period.
Don't know a word? Press any purple word to see what it means. They're all listed at the bottom of the page.
Why people buy it
The appeal is real.
- Small amountsSized for a funeral, not an income.
- No medical exam on most of themFewer health questions can mean a waiting period before the full amount is paid. Details just below.
- Approval at an age when nothing else will take youFor a lot of people it is the only door still open, and that is a legitimate reason to walk through it.
The thing to check before you sign anything
These come in two shapes, and they get sold in the same conversation.
Both are legitimate products. They are not the same product.
If the person selling it cannot tell you in one sentence which of those two you are being offered, that is the answer to a different question.
And the arithmetic nobody volunteers
Keep paying long enough and you can pay in more than it pays out.
On a small policy bought late, that is not a trick. It is what happens when the premium is level and you live a long time.
Try it
At what point would you have paid in more than it pays out?
Put in the numbers from a policy you are looking at. This is arithmetic on what you typed — it is not a quote, and nothing is saved or sent anywhere.
- Run the sum before you buyAsk the person selling it to run it with you. One who will not do it in front of you is telling you something.
- Read the result the right way roundDying early is the thing this is for, and if that happens it pays out far more than you put in. The sum is not proof the product is bad. It is the number you are entitled to have in your head before you choose the amount and the payment.
Remember this
Ask which one it is: the full amount from day one, or only after a waiting period.
Words on this page
- Face amount
- The amount the policy pays out when you die.
- Permanent life insurance
- Coverage meant to last your whole life as long as it is paid for, not a set number of years.