What is final expense insurance? Do you know? If you don’t you should!
There are two guarantees in life: taxes and death so let’s face it, we’re all really just the walking dead 😉
Yeah, I know this isn’t a topic anyone really wants to talk about but it’s a part of life…
…and living in denial could be VERY costly for your loved ones. Did you know the average funeral cost is in the neighbourhood of $10,000 – $15,000?
Sure you can save a few bucks by skipping the brass band, single malt whiskey, and cigars – but you still have to shell out for the basics.
Don’t be a Zombie! Find out why you should deal with your final expenses TODAY!
Hey! Before we get started I want to share a little advice with you!
If you want a good answer to the question, "what is final expense insurance?", get input from an independent insurance agent.
No! I'm not telling you that because this is what I do - although it sure is a perk to believe in the products you sell!
The greatest salesperson fully believes that their product is the solution to their prospect’s pains because they know and sympathize with their prospect’s pains. Believe in Your Product or Your Company Before You Sell It, StephanieChung.com
I'm giving you this simple bit of advice because it's the best way for you to find the RIGHT life insurance burial policy for your individual circumstances.
A good independent agent worth their salt will not have a preference towards any particular carrier. They will simply connect you with the insurance company that has the best deal for you. Not all companies are created equal so be sure to give Policy Architects a call before you sign on the dotted line.
Rockstars Don't Let Their Family Get Eaten Alive by Debt
Zombies don't think about bankruptcy!
Debt’ll do it to you every single time.
Now imagine this!
Your kids have embarked on their careers and started families. You’re close to retirement. The term insurance you had (kudos to you for protecting your income and lifestyle while the kids were still in college) has expired. Man, life is good – you got them through the tough stages ALIVE, now they’re self-sufficient.
Phew! Now it’s time to enjoy life, travel, etc.
BOOM! The train you took to Montreal derailed and guess what? You weren’t so lucky.
Pre-planning funeral and pre-paying for services is always a good idea. This will relieve the burden for family members and loved ones during a difficult time and leave no questions when it comes to your final wishes. And pre-paying alleviates financial responsibilities while saving you money over the long term by locking in a price and sheltering it from inflation. Spotlight: Is pre-planning your funeral a good idea? SooToday.com
Well if you walked through life like a Zombie you didn't think about buying a final expense insurance policy or make any other arrangements. Sure it went through your mind, but you know...
I'm youngish and HEALTHY!
Hmmm I've heard it all before. The thing is none of that really matters now.
NOW life is different
So those kids that were set for a golden future have a funeral to plan and pay for.
All of the effort to put them through college and help them get off to a good start only to have them weighed down financially by funeral debt. Bet that was NEVER your idea.
Nobody wants to leave their children or family worse off because of their untimely demise.
Now a Rockstar would have bought that final expense policy because it really isn’t that expensive…
Stuff just sort of happens to the best of us at the worst of times.
Rockstars Buy Funeral Insurance
Zombies have no idea what that is!
Rockstars like to plan ahead. They don’t want to burden their families with unpaid funeral costs.
A life insurance burial policy is the most straightforward and simple option out there if you want to make sure your final expenses are covered.
In a nutshell, a funeral insurance policy is permanent life insurance that you purchase to cover end of life expenses. Most of the time it’s whole life insurance. Which means:
- Monthly premiums are guaranteed to never increase
- Your policy will never expire
- Coverage cannot decrease
- The policy is non-cancellable except for non-payment
- No medical exam is required to apply
- Death Benefit (cash) is paid out tax-free to your beneficiaries
Let’s take a look at the broad strokes of final expense insurance. Zombies can skip this section.
Rockstar vs. Zombies Final Expense Insurance 101
Let's go through the ins and outs of this very necessary product right now.
What is Final Expense Insurance?
The most important thing a Rockstar needs to know is that final expense insurance is a life insurance policy. It pays out cash to your survivors, tax-free, to cover your immediate burial costs when you go to join that big band in the sky.
Let's clear up something right now. There are a few terms that agents use for end-of-life planning including final expense insurance, burial insurance, funeral expense insurance, cremation insurance...
...which has created some confusion over the years. So what's the difference between these terms? THERE IS NO DIFFERENCE, they are all the same thing.
Final Expense Insurance = Funeral Insurance = Burial Insurance = Cremation Insurance
As I mentioned, all funeral expense insurance is permanent insurance. It has to last your entire life to pay out a death benefit to your beneficiaries. Final expense insurance comes in 3 different wrappers:
- Whole life
- Universal life, and
- Term-to-100 (this is permanent insurance despite it's name).
Note: Term insurance isn't used for final expenses because it doesn't cover you until the day you die. So this is one of those situations where permanent insurance is a great choice.
Try not to worry about all the details. As I mentioned before, a good independent agent like Policy Architects will answer all of your questions and help you find you the best "wrapper" at the best possible price. Call us today at 1.888.501.9583.
How Does Final Expense Insurance Work?
Now that we got the "what is final expense insurance" question out of the way, we can dig a bit deeper.
When you pass away, your life insurance burial policy guarantees that the insurance company cuts a tax-free cheque directly to your beneficiaries. This will give them the money to pay your funeral costs.
There are no conditions or restrictions on how the money is used. This can be a good thing or a bad one - depending on your beneficiaries 😉
...and if there is any money leftover after all the immediate burial costs have been paid, your loved ones can decide how to spend it.
Did I mention that the money is paid out to your loved ones Tax-Free?
How Much Does a Funeral REALLY Cost?
Well I hate to be the bearer of bad news.
It costs a LOT!
...and if you want some music, booze and a couple of cigars, well you are talking a pretty penny ladies and gentleman.
According to various sources, the average funeral cost in Canada is around $10,000 and I've actually heard of people spending in excess of $25,000.
A financially savvy Rockstar knows that a $10,000 funeral today will cost 'em about $15,000 twenty years from now. So it would be prudent to get a final expense policy for at least $15,000 to make sure your family is covered.
Hey you can't lose. The worst case scenario? There will be some money leftover after the immediate burial costs are paid. This is a good problem to have.
Did you know....
65% of Canadians choose Cremation over a traditional burial ceremony? The good news is, if this is the way you wanna go, it's about 40% cheaper than the time-honoured funeral ceremony.
Other Factors Affecting the Cost of a Funeral:
Do you have children, grandchildren or siblings who live on the other side of the country?
Would you like to help pay for their travel expenses when they attend your memorial?
Factor that into your funeral planning budget too. Don’t forget that there may be other outside costs that should be considered, this is just one example.
Canada Pension Death Benefit
If you’ve been paying into the Canada Pension Plan (CPP) for the prerequisite number of years, you may be eligible to receive the CPP Death Benefit up to a maximum of $2500.
Personally, I look at this as icing on the cake. Assuming you qualify, your survivors have to fill out an application and payment from service Canada. Processing can take anywhere from 6 to 12 weeks.
Do you really want your loved ones to front the funeral home money to pay for your burial and then wait to be reimbursed by the Government? Not to mention the fact that it’s taxable and will only cover a small percentage of the funeral costs.
PSSST - I've got a little tax info for ya'
Is the CPP death benefit taxable?
Yes, the CPP Death Benefit is taxable income and the tax must be paid by the person who receives the money whether it's the estate or an individual.
Are funeral expenses tax deductible in Canada?
No, the estate is on the hook for the whole kit'n'kaboodle: All funeral expenses, probate charges, and fees. None of these expenses is deductible.
*THE GOOD NEWS: All final expense insurance proceeds are paid out tax-free and free of probate as long as your named beneficiaries are alive.
How Much Does Funeral Insurance COST!?
Of course, this is the section you've been looking for. I think most people who ask me "what is funeral expense insurance?" really mean - how much is it gonna cost me??
Unfortunately folks think funeral insurance is far more costly than it actually is!
Which means you may not like this answer.
...I wish I could give you an exact figure to fit your personal situation but as I've said before, funeral insurance isn't a one-size fits-all sort of deal. Insurance companies look at your:
To determine how much your burial policy will cost. I will however share some sample quotes with you below!
Yes adequate coverage is important, but If you're on a fixed income and money's tight, buy whatever you can afford! It's better to have a little bit of protection than nothing at all.
Did you know you can get as little as $5,000 in coverage?! Sure it won't cover everything but it will go a long way to help your family with the funeral costs. Plus, If you happen to qualify for the CPP death benefit amount ($2500) as well, that's $7500 of total coverage!
$25K is the lowest face value many traditional insurers offer, BUT there are many companies that will underwrite smaller amounts: Give us a call at Policy Architects to discuss your options 1.888.501.9583!
Here are some of the payment options you have:
- You can pay monthly until the age of 100 or your death, whichever comes first
- There's also the option to pay the entire policy in 20 years which may be something you consider if you're younger and don't want to pay premiums into your 80's. If you're older however, this probably wouldn't be a good strategy.
- There are policies that have graded premiums meaning your premiums will increase as you get older. At Policy Architects, we only recommend policies that have guaranteed level monthly premiums. Graded premiums are to be avoided at all cost simply because they can get out of hand when you are most vulnerable.
Do I have to take a medical exam?
No, you don’t have to take a medical exam to qualify for a life insurance burial policy but buyer beware: the less information life insurance company has on you – the more expensive the premiums.
The non-medical option is always more expensive because you’re paying for the convenience of not taking a health exam. You’re also limited to lower maximum payouts, usually $25,000.
Which bring me to this – did you know Final Expense is offered as fully underwritten life insurance as well? The decision is yours. Hey, if you can’t bring yourself to go through a medical exam you won’t be left out in the cold.
A lot of my clients like the fact that you can buy no medical exam funeral insurance online in a matter of minutes. Hey if you’re in a hurry, or older and worried about your health, it’s really great to know you can get coverage in place fast with little to no hassle.
Having said that, if you are relatively healthy and want to take funeral insurance off your “to do” list I would suggest speaking to the agents at Policy Architects because we could save you some serious cash. Call us today at 1.888.501.9583!
No Medical Final Expense vs. Fully Underwritten
Healthy 70 year old Male
Take a random Rockstar - male, healthy, 70 years old, non-smoker. He wants $20,000 final expense insurance to cover funeral costs so his bandmates (family) aren't left holding the bag when he plays his final note. If he goes with a traditional carrier like Empire Life with full underwriting which means a phone interview & vitals, a burial policy (Solution 100) will cost him:
- $117.63 per month
With a No Medical insurer like Canada Protection Plan (CPP), he'll pay:
- $122.56 per month
That's just $4.93 more per month for similar funeral cover insurance
*NOTE These coverages are similar but not identical. The Empire Life policy has higher guaranteed cash and paid up values than the Canada Protection Plan example.
Prepaid Funeral Plans vs Funeral Expense Insurance
Rockstars preplan funerals, they don't prepay
This is a subject that deserves an entire post but for the sake of making sure we touch all the bases, I'm going to go through it briefly.
There's more than enough evidence to categorically say purchasing a final expense policy is a superior strategy to pre-paying your funeral costs, hands-down!
There are at least 12 good reasons to avoid prepaid funeral plans, and here are some of them:
- You can't move your prepaid funeral plan...and if on the off chance you can, there are fees and paper work. What happens if you move?
- It's very difficult to make changes to your prepaid plan - who wants the hassle?
- Prepaid burials don't guarantee coverage for future funeral costs. Services outside of the funeral home's control may go up which may mean you'll pay more.
- The Funeral Home gets to hold onto your money. What if something comes up like an emergency? It's also a bad place for growth. Why not invest somewhere with returns?
- The Funeral Home is your beneficiary if you buy a life insurance burial policy through them. Hmmm.
The bottom line is it's awesome to pre-plan your funeral but unnecessary to pre-pay. A final expense policy gives you the ultimate flexibility because it pays out cold hard cash which means your family has options when it comes to executing your end of life wishes.
Rockstars like flexibility and that's what a funeral insurance policy gives you!
Age Ain't Nothin' But a Number
Even if you're a senior and googling what is final expense insurance you're NOT out of luck!
In Canada, you can get a final expense insurance policy up to the age of 85, but the most common age range for applicants is between 50 - 80,
Did you know that even as a non-resident, you can qualify to purchase funeral insurance?
As long as you're one of the following:
- landed immigrant
- foreign worker
- nanny or student
- holder of a super visa
You're eligible to buy final expense insurance. Even if you've only been in the country for a short period of time, as long as you're under the age of 75 and have a permanent Canadian address, you're eligible for Guaranteed Issue burial insurance.
Note: If you have a super visa, a funeral insurance policy can ensure that your immediate burial costs don't become the responsibility of your children or grandchildren while you're visiting in Canada.
Rockstars GoFund Themselves!
Zombies think Go Fund Me is a plan....
YIKES! Now this is scary.
If you truly don't have the money I guess Go Fund Me may provide an emergency solution. The thing is you are relying on the generosity of others - and that may or may not come to fruition.
The only way to assure your funeral WON'T be a drain on your family is to PLAN. Here are a few good suggestions!
3 Ways to Pay for Your Funeral Expenses
Yep, you can self-fund your funeral. To be perfectly frank this is probably the most financially intelligent approach to final expenses.
...but there's a catch.
You need to be good with money. This means planning ahead for your retirement with a financial planner to invest your income wisely.
If you've been responsible then chances are your estate is large enough to easily handle those pesky funeral costs. In that case, cheers to you! You're a Platinum Selling Rockstar!
PSST! This is NOT always the case
But for the rest of us zombies out there – self-funding can be a disaster.
Do you really want to take that gamble? Sure, maybe you’ll be in the flush – OR – maybe your kids are gonna have to rely on Go Fund Me to scrape enough cash together to take care of business.
That is NOT the sort of legacy you want to leave to those you love.
Buying a life insurance burial policy is kind of like forcing yourself to save a little bit each month to cover your immediate burial costs. Except it’s not really saving money because you have the full coverage you pay for from day 1. Unless of course, you have a waiting period.
Why not take this worry out of the equation by working with Policy Architects to find the perfect final expense solution for you and your family?
Buy Final Expense Life Insurance
Another Rockstar move!
There are a few ways to purchase funeral insurance:
- If you're reasonably healthy, not in a rush, want the best rate possible and don't mind doing a medical, apply to a traditional carrier with standard underwriting.
- If you have a health condition and/or value speed & convenience, secure a no medical exam policy.
- Do you currently have a term life insurance policy that's in force? If so, it may be possible for you to convert a small amount of your current term insurance (ie. $25,000) into permanent insurance without providing any medical evidence. All that may be required is some paperwork.
Again, this is a situation where having a good independent life insurance agent worth his or her salt, is invaluable. Call Policy Architects today 1.888.501.9583!
Don't Plan Ahead, Leave it for the Family to Pay
Why would anyone do that you ask?
It's an awful thing to burden your family with, especially at a time of loss & stress.
...But It happens all the time.
No one really wants to talk about death but let's be honest here for a moment. Make no bones about it - Choosing NOT to sort it out your end of life arrangements is choosing to let your family and loved ones sort the mess out later. Don't kid yourself, not dealing with it is a choice. It's sounds harsh but it's the truth.
Rockstars communicate, Zombies like to bury their heads in the sand.
I know it's not easy. Perhaps you've left it for so long, you feel like you've run out of options. Maybe you're worried about money and embarrassed to bring the subject up.
Either way, dig deep and do your best to summon the courage to have a conversation with the people you care about the most. They'll be glad you did. Better to pay a small monthly amount now than to have your family hit with large lump sum later. This could really blindside them.
(Quick Fact) Did you know? Children and grandchildren are eligible to buy final expense coverage on their Grandparents.
Is There a Downside to Final Expense Insurance?
Absolutely! This is true for EVERYTHING under the sun.
Hey, I am here to tell you that there may be more financially expedient ways to make funeral plans.
BUT and this is a big but – many, many, many of us don’t take the initiative. Purchasing a funeral insurance policy sets you on the right path because you can set it and forget.
Which is valuable to a LOT of us.
Another issue you should be aware of is that the face values are fairly low – typically maxing out at $25K. If you have a large estate and lots of taxes that will hit your beneficiaries, there are better tools to use.
For 95% of us who have more modest needs, final expense works really well and is quite affordable!
Sample Rates for Funeral Insurance
Below you will see real final expense life insurance rates from Canada Protection Plan, one of the top no exam life insurance companies in Canada.
These quotes are for someone who is a non smoker. If you've smoked any tobacco products, including vaping, in the last 12 months, expect to pay up to 40% more.
NOTE: You may or may not qualify for these rates. Your health determines your premiums - which could be more or less than these quotes.
Rockstars Want to Have a Monster Mash
Not a Zombie bash...
Ok so death ain’t all that appealing but that doesn’t mean you can’t do it with style.
HEY, it’s your final hurrah.
So if you want to pull out all the stops, final expense insurance should be on your radar, my friends!
Just think about it! You could throw a party to beat all others – where people celebrate your life and all you’ve contributed.
…BUT parties are expensive. If you want to provide some food, wine, and fun it’s gonna cost ya a pretty penny.
Only a Zombie would leave it to the kids to plan!
You've made it through Final Expense 101. Remember, you're a Rockstar!
Making sure your end of life expenses won’t become a burden to your loved ones is a GREAT move.
Why Rockstars Pick Policy Architects
to Plan Their Final Expense Needs
...and Zombies procrastinate!
Hey guys, just because we’re all the walking dead doesn’t mean we can’t have some serious fun!
Why does funeral insurance have to be sad?
In my mind, final expense planning is ALL about love. What’s more important than your spouse, kids, and grandkids? Aren’t they the whole reason we work ourselves into the ground?
Instead of looking at life insurance as an honorous obligation, why not see it as a way to keep the promises you make – whether you are here or not.
Hey, I put my money where my mouth is. I have a substantial life insurance policy that will comfortably cover my immediate burial costs and all my family’s needs should something happen to me.
The premiums pale in comparison to the comfort I feel knowing that there's money to take care of business...
Not the mention the fact that my kids can afford to go to university - no matter what happens.
I know this article is provides a lot of insight into the question," what is final expense insurance?".
BUT if you have more questions, call Policy Architects today! We can find the right final expense solution for you. 1.888.501.9583