Final expense vs guaranteed issue life insurance

Final expense policies are small life insurance policies meant to be used for funeral expenses. Guaranteed-issue life insurance policies are policies that don't require a medical exam or even a thorough medical questionnaire (some guaranteed issue policies ask questions about terminal illness, but some don’t).

Though final expense policies can be guaranteed-issue life insurance, not all final expense policies are guaranteed-issue. And not all guaranteed-issue policies are necessarily called final expense policies. ​ Read more:

• What is final expense life insurance
• Final expense life insurance vs. term life insurance

What is final expense life insurance​

Final expense life insurance is a type of whole life insurance that offers small coverage amounts to people who may not otherwise qualify for another type of policy like traditional term or whole life.

There are two types of final expense policies: simplified-issue life insurance , which requires you to answer a few questions about your health and guaranteed-issue life insurance, which guarantees coverage except for all except those who suffer from certain serious medical conditions.

The term "final expense life insurance" (also called burial insurance) is mostly about branding: you can buy a simplified-issue life insurance policy or guaranteed-issue life insurance policy for any reason, not just so your loved ones can pay for your funeral. But "final expense insurance" is industry shorthand for whole life policies with low death benefits that most people can qualify for, even if they're in poor health.

Final expense policies are one of two types:

• Simplified-issue life insurance , which requires you to answer questions about your health but doesn't require a medical exam
• Guaranteed-issue life insurance, which doesn't require medical questions or a medical exam. (Some policies may have knockout conditions, but some don't.)

Final expense insurance vs. term life insurance

• Final expense insurance is easier to qualify for than traditional term or whole life When it comes to term life insurance – which lasts a limited length of time – your health and age greatly affect your insurance rates, and you may even get outright declined (although it's rare). Final expense policies are not as strict about your health ratings: simplified-issue policies don't require a medical exam, and many guaranteed-issue policies don't ask health questions at all. ​

• Final expense insurance is more expensive than term life for comparable coverage amounts A $25,000 death benefit from a final expense policy will be more expensive than a $25,000 death benefit for a term life policy.

• Final expense insurance is available in lower coverage amounts than term life. The smallest term life policy you can purchase is $25,000, while final expense policies start at $2,000 or $5,000. But term policies also go up to $10 million, while final expense policies top out at $25,000 to $50,000, depending on the policy type. ​

• Most final expense policies are only available to older applicants Final expense insurance policies are generally only available to to people between the ages of 50 and 85. Term life insurance is available for applicants 18 to 80.
  ​ Even if you're a senior or have health issues that you think may disqualify you for a term life insurance policy, you should get term life quotes. People with health conditions like diabetes or a history of cancer, which were major roadblocks a few years ago, can often still qualify for term life insurance. It's important to get quotes from several companies, as each company approaches underwriting differently and your rates can vary by company.

And considering the cost of final expense and guaranteed-issue life insurance, older applicants may still find it more cost-effective to buy a term policy. You're likely to get higher death benefit options or lower premiums, or both.
​ Don't rush into an option that might be the wrong financial choice. Get a free term life insurance quote and talk to a licensed expert about your coverage options so you make the right decision in protecting your loved ones.