Why Add a Final Expense Policy When You Already Have Life Insurance

Many people believe their standard life insurance policy covers all end-of-life expenses. However, without a dedicated final expense policy, funeral homes may charge inflated prices when they learn about a large life insurance payout, reducing the amount your family ultimately receives.

When making funeral arrangements, your family will need to demonstrate their ability to pay, either through insurance coverage or immediate funds. This raises an important consideration about insurance coverage amounts.

While a $250,000 life insurance policy might seem like the better choice, a smaller final expense plan of $15,000-$30,000 may be more practical for funeral costs. Here’s why:

• Funeral homes, as businesses, often adjust their pricing based on a family’s perceived ability to pay. If they know there’s a large insurance policy available, they may suggest more expensive options and services. This can lead to unnecessarily high funeral costs.
• A final expense plan with a lower face value amount helps keep costs reasonable and ensures the funds are used as intended. The remaining portion of a larger life insurance policy can then serve its primary purpose – providing financial security for your family’s ongoing needs rather than being depleted by inflated funeral expenses.

Combining Insurance Plans – A Strategic Approach

Yes, you can have both types of insurance. Here’s how to make them work together effectively:

A final expense plan covers immediate funeral costs, while your life insurance provides long-term financial security for your family. To prevent price inflation, your family can present only the final expense policy to the funeral home, keeping the life insurance policy private. This approach helps:

• Keep funeral costs reasonable
• Preserve the full value of your larger life insurance policy for your family’s needs
• Protect your loved ones from financial pressure during their time of grief

This strategy allows your family to focus on what matters most – supporting each other and honoring your memory – rather than worrying about expenses.