Final expense vs. guaranteed issue life insurance

Final expense policies are small life insurance policies in which the death benefit is often used for funeral expenses. Guaranteed issue life insurance policies are a type of final expense policy that doesn't require a medical exam or even a thorough medical questionnaire, though an underwriter may ask whether you have a terminal illness or reside in a nursing home.

The other kind of final expense policy, simplified issue, also allows you to skip the medical exam but does require a medical questionnaire. If you’re 45 years or older, in poor health, and only want a small amount of life insurance coverage, a final expense policy may be right for you. However, if you need your coverage to provide for more than end-of-life expenses, you’ll benefit most from term life insurance.

Final expense vs. guaranteed issue life insurance

Final expense life insurance, also known as burial insurance, is a type of whole life insurance that offers small coverage amounts — typically up to $25,000 or $50,000, depending on the type of policy — to people who may not otherwise qualify for standard term or whole life policy.

There are two types of final expense policies:

• Simplified issue life insurance , which requires you to answer questions about your health and may involve a prescription or medical records check, but doesn't require a medical exam.

• Guaranteed issue life insurance, which doesn't require medical questions or a medical exam for approval. (You could face denials from some companies if you have a terminal illness, HIV/AIDS, or currently live in a nursing home.)

Simplified issue vs. guaranteed issue life insurance

Methodology: Based on policies offered by AIG and Mutual of Omaha through Policygenius in October 2020.

Final expense insurance vs. term life insurance

If you still have dependents or debts, like a mortgage or auto loan, you probably need more than final expense insurance to cover your financial obligations. The death benefit from final expense insurance is enough to cover the cost of a funeral, but not enough to support your loved ones long-term. If you’re able to qualify, a term life insurance policy will offer more coverage for your money.

Methodology: Based on policies offered by Policygenius in October 2020

It’s easier to qualify for final expense insurance than term life because most term policies require you to undergo a more thorough medical review during underwriting, which can translate to higher premiums or occasionally, application rejections. However, final expense insurance typically costs more than term life and offers lower coverage amounts.