You probably have seen the commercials on TV with Alex Trebek pitching a life insurance plan with no medical questions. These ads typically show elderly people discussing how one of their friends died and the surviving spouse was left with all the bills.
What they are selling is known in the industry as "Final Expense" insurance and if you plan correctly, you won't need it.
Final Expense is a whole life policy, typically sold in units. Each unit is $1000, so multiply the price Mr. Trebek is telling you times the number of units needed to have a nice funeral. With the average cost of a funeral between $7000 - $10,000, depending on where you live and how fancy you want to your send off to be, you'll be paying more than the price you see on the screen.
The "no medical exam" part can cost you extra as well. Anytime an insurer does less underwriting on a policy, they build that additional risk into the premium.
And some final expense policies have a provision that says that if you die in the first 2 years of the policy, your beneficiary doesn't get the death amount, but instead a refund of the premiums paid plus some interest.
The reason people purchase these policies is because they have either put off the inevitable and/or they have had a health scare, which makes them less able to get better rates. Generally speaking, you probably will not be getting healthier as you age. Now is the time to look at life insurance, not when you are sick and old.
So what can you do to avoid all of this? Talk with your insurance agent (hopefully it's us!) and discuss a comprehensive life insurance plan that includes your final expenses. An affordable alternative is a Guaranteed Universal Life policy purchased while healthy and will cover you to age 120 (yes, we do that now). The lower rates will be locked in and you'll have one less thing to worry about.
