What Factors Affect Final Expense Insurance Premiums?
Final expense insurance offers families the assurance of knowing that final costs such as funerals and burial expenses will be covered. This type of insurance is basically life insurance that is specifically allocated for a loved one's final costs, and is purchased to protect those left behind from having to try to figure out how to pay for costly services in their time of grief. The insured can feel confident that his or her loved ones are protected from financial burden, and get on with living life without worrying about the future. In addition, an individual who seeks to purchase this type of insurance policy does not have worry about extremely high premium costs and burdensome medical exams. Typically, permanent final expense insurance is much more affordable than traditional term or whole life insurance, and usually only requires that the applicant answer a few health questions.
Though final expense insurance is affordable and fairly simple to purchase, there are certain factors that determine the costs that the insured will pay for premiums. These factors are similar to other types of insurance that an individual may purchase. However, because the purchase of final expense insurance is flexible depending on age and policy amount, a consumer who is interested in purchasing a policy can select options to keep premium costs well within his or her budget.
Health, Risk and Age Factors
Final expense insurance is a great option for individuals who are not in the best health, because an exam is usually not necessary. However, several medical questions must be answered that might increase premium costs. People with major health issues, for example, might find that their premiums are slightly higher than healthier individuals. In addition, smokers might pay more for coverage. Premium amounts for health conditions vary from company to company, so consumers with health concerns will get the best premium prices when they comparison shop for policies.
Individuals who have certain risk factors in their lives also might have higher premiums. Having risky jobs, engaging in dangerous activities and having genetic health issues can cause final expense insurance premiums to be higher. Gender might even be a factor for some companies, because women typically live longer than men.
Age is also a key factor when it comes to final expense insurance premium costs, which is typical of most types of insurance. Though insurance companies' policies vary when it comes to age, people are generally eligible for this type of insurance between the ages of 40 to 85. Older individuals present more risk, so they must pay higher premiums for coverage. In other words, the younger a person is when he or she purchases a final expense insurance policy, the less the premiums will cost.
Benefit Amounts and Payment Schedules
The premiums of all types of life insurance, including final expense insurance, increase in correlation with the overall benefit amount. Various companies offer a wide range of benefit amounts, though basically those seeking coverage can select benefit amounts from $2,000 to $50,000. The higher the total benefit amount, the higher the premiums.
Those who purchase final expense policies might be able to receive a discount based on when they pay their premiums. Some companies offer monthly, quarterly, semi-annual and annual premium payment schedules, and offer discounts to their customers who choose to pay over longer intervals. For example, an individual who pays semi-annually or annually might pay a little less for premiums than someone who pays monthly or quarterly. Regardless of the overall cost factors, the price of premiums is worth the peace of mind that a final expense insurance policy provides.