The average final expense policy costs between $40-$80 a month and depends on your age, sex, health, coverage amount, and life insurance company you choose. If you have significant health conditions or are over the age of 70, your premium will probably be higher and may cost between $80-$150 a month (though it may be less). Younger applicants who are in good health may qualify for rates in the $20-$50 range. Remember, a cheaper rate usually means fewer features and benefits for surviving loved ones. A few extra dollars a month could make a big difference in the support your family receives when you’re gone.
Cost is often the #1-factor people focus on…but it’s not the most important factor! Instead of focusing on how much the policy is going to cost, look at how many expenses will be left behind and how much they’ll cost your family. Common expenses include medical bills, credit card debt, and funeral costs. We’ll cover each of these costs below.
The current state of the healthcare industry has led to higher prescription costs, expensive medical procedures, and health insurance that doesn’t always cover consumer needs.
Of the 2.85 million people who died in the U.S. in 2019, more than eighty percent were on Medicare before they passed. A disproportionate share of Medicare spending occurs in the last year of life, covering costs related to chronic conditions, inpatient hospitalizations, and hospice care.
But government programs like Medicare and Medicaid only cover about two-thirds of healthcare spending by the elderly, according to the National Bureau of Economic Research. The report, which is based on data collected through the Medicare Current Beneficiary Survey between 1996 and 2010, found that healthcare spending for people aged 65 and over was approximately $18,424 per person, per year.
Medicare paid an average of $153 per day, per person, in 2016 to cover hospice care, in the following categories:
- Routine home care – $193 per day for services that patients need on a day-to-day basis.
- Continuous home care – $41 per hour for services during crises or at least eight hours a day to manage acute symptoms.
- Inpatient respite care – $173 per day to relieve unpaid caregivers on an occasional basis for no more than five days at a time.
- General inpatient care – $744 per day for care that cannot be provided in other settings.
Patients may still be responsible for co-payments, prescription drugs, emergency care, inpatient facilities, nursing care, and other end-of-life expenses. This leaves many people with a significant financial obligation that they can’t always afford. Final expense life insurance can help protect loved ones from the financial responsibility of any outstanding medical bills.
73% of American consumers die in debt according to research from Experian FileOne and Credit.com. The average total balance left is roughly $61,554 (including mortgages). Unfortunately, this debt doesn’t just disappear. In most cases, the estate pays off as many debts as possible before any assets are distributed to surviving family.
Here’s the average breakdown of consumer debt according to the research:
- Student Loans = $25,391
- Auto Loans = $17,111
- Personal Loans = $14,793
- Credit Card Debt = $4,531
Family members who count on the deceased’s assets to cover the final arrangements are often surprised to learn that there isn’t enough left over once all of the deceased’s bills have been paid.
Traditional life insurance is often used to leave your family enough money after you pass away and is often proportionate to the income your family would lose with your passing. Term insurance is the most common type of income replacement and can have face amounts in the millions of dollars.
Final expense life insurance is different. It’s uncommon for a final expense policy to be more than $20,000 because it focuses on paying for a very specific debt: funeral or cremation arrangements (learn more: how does cremation work?).
Families often expect their loved one’s estate will cover the cost of the funeral or that the funeral won’t cost much. But most families don’t realize the average funeral cost can be $9,000 or more. Final expense insurance can help reduce these costs and prevent families from emotionally overspending, especially when they know there’s a designated amount available.