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June 15, 2019

Final Expense and How it Compares to Term Life

final expense vs term life insurance

Regardless of where you are in life, whether you have kids, grandkids, or are fresh out of college, you want to be protected from financial hardship. These days, funerals can cost on average around $15,000.1 With that being the case, it’s important to know your options for easing loved ones’ minds financially, on one of their worst days.

There are three ways your funeral can be insured: individual final expense policy, traditional term life insurance policy, or a whole life insurance policy.


An individual final expense policy, also known as burial insurance, refers to the minimal policy covering the cost of your funeral or cremation.2 You have the opportunity to choose your beneficiary, and depending on the policy, the amount left over after your burial expenses can be put toward other financial areas of concern caused by your passing.2 Often times it’s put towards hospital bills associated with the death, legal fees that may have accrued, or other similar areas of need. Generally, there aren’t any medical exams associated with a final expense policy, and it will last you for life, assuming all contracted requirements are being followed. There are two main types of financial expense coverage: guaranteed and simplified issue.


Guaranteed issue life insurance doesn’t require any health questions be asked to potential policy holders. With this type of plan, you usually won’t be able to receive your death benefit for at least two years. If you die before the two years, you may only get a refund of the premiums you have already paid. This type of insurance has a higher chance of approval for everyone, since most users are those who do not qualify for term life insurance because of their health status.3 This plan provides very limited coverage.


Simplified issue life insurance requires a more thorough process of questioning for your medical history than guaranteed issue life insurance. There is limited coverage for this policy due to the fact there is a rather high approval rate since most of those utilizing the policy do not qualify for fully underwritten life.4

Term life insurance provides more coverage than an individual final expense policy. Additionally, term life insurance actually holds final expense coverage within the policy. This type of policy differs by its set period of time in which it is active. The most common time periods are five, 10, 15, and 30 years. At the end of a period, there may be options to renew. Term life could be used, in addition to final expense, for education, income replacement, and mortgage payments.5 A fully underwritten term life insurance typically provides more protection than final expense as it may cover health and illnesses.

Similar to term life, whole life can provide more extensive coverage by considering more aspects of life that may be financially compromising. Final expense coverage is also another facet within a whole life insurance policy. The difference between term life and whole life is the length of time the policy is active. Whole life lasts for the duration of one’s life assuming all contractual obligations are continuously followed.

Final expense insurance is a way to minimally cover yourself and leave a financial source to your loved ones for your funeral and it can be purchased on its own, or through a whole or term life insurance policy. Traditional term life insurance helps protect more aspects of your life. Life insurance can get complicated, so consider reaching out to a licensed insurance Agent.

  1. Goodfinancialcents.com, Average Funeral Costs and Expenses, 2019
  2. Healthmarkets.com, What You Need To Know About Final Expense Insurance. 2017
  3. Investopedia.com, Guaranteed Issue Life Insurance. 2018
  4. Insure.com, Simplified Issue Term Life Insurance: the Basics. 2019
  5. Nerdwallet.com, What is Term Life Insurance

Categories: Insurance, Group Life Insurance

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