You have two options to choose from when you want end-of-life coverage. These options are final expense insurance and traditional life insurance. To find out the difference between these two types of coverage, continue reading.
What Is Traditional Life Insurance?
Traditional life insurance contracts guarantee a death benefit payment to the policyholder’s beneficiaries. The payment is issued once the insured person dies. There are two types of life insurance: term life and permanent life.
Term-life insurance only covers the insured for a set period, up to thirty years, in most cases. Permanent life insurance provides coverage for the entirety of the insured person’s life, as long as they make their premium payments. Permanent life insurance options also come with a cash savings component in most cases, making them a worthwhile financial asset.
What Is Final Expense?
Final expense insurance is a form of permanent life insurance. Though, final expense is often separated from traditional life insurance products. These plans require less to enroll than traditional life insurance, as they don’t require a medical exam. Yet, final expense coverage is much more limited than traditional life insurance. The death benefits are lower, and premiums may be higher.
The Difference Between Final Expense and Traditional Life Insurance
While final expense insurance is a form of permanent life insurance, it doesn’t fall into the category of “traditional” life insurance. This is because final expense insurance is typically easier to acquire than traditional life insurance. Rather than taking a medical exam, as you would with traditional life insurance, final expense only requires answering medical questions.
Because final expense insurance is easier to apply for, you can expect less coverage. While traditional life insurance death benefits often exceed $50,000, final expense only provides death benefits between $2,000 to $50,000.
Another difference between final expense and traditional life insurance is that final expense insurance is sometimes guaranteed issue. This means certain plans cannot eliminate applicants due to underwriting. This is unlike traditional life insurance plans, which always require a health exam during the application process.
Compare Final Expense and Traditional Life Insurance
If you aren’t sure about whether you should apply for final expense or traditional life, get help from an expert. The insurance agents at SBHS are ready to help you find the coverage you need. Reach out to us today!