Having regular life insurance is important because it will provide your loved ones with income replacement when you have departed from this life and can’t provide for them anymore. However, if you are already retired and no longer have dependents, traditional life insurance is not exactly what you need.
When you are in late adulthood, there is still one large expense that you need to prepare for, which is your funeral services. In this case, the policy that you should get is burial insurance. Despite its importance, there are still some misconceptions regarding policies like John Hancock final expense life insurance. This article will debunk the common misconceptions about it.
- 1 What Exactly is a Final Expense Life Insurance?
- 2 Final Expense Life Insurance is Expensive
- 3 Insurance Proceeds Can Only Be Spent on Funeral Services
- 4 It Is Difficult to Get Approved for Final Expense Life Insurance
- 5 Final Expense Life Insurance Requires Rigorous Medical Examinations
- 6 Beneficiaries Will Pay Taxes to Get the Insurance Proceeds
What Exactly is a Final Expense Life Insurance?
Final expense life insurance goes by other names, such as funeral insurance, burial insurance, or simplified issue insurance. According to an Investopedia article, its most notable feature is that it is a small whole life policy with a death benefit or face value that typically ranges from $2,000 to $50,000.
Final Expense Life Insurance is Expensive
Most people think that final expense insurance is expensive, but this is not the case. Final expense insurance is one of the most affordable policies that you can get because the premiums are typically inexpensive.
Having one is important because it will help your loved ones pay the bills directly related to your death. These bills could either be unpaid debts, funeral services, and hospital expenses, to name a few.
Insurance Proceeds Can Only Be Spent on Funeral Services
Burial insurance like John Hancock final expense life insurance is designed to cover expenses related to funeral services. These expenses may include memorial service, embalming, buying a casket, or cremation. However, it does not mean that proceeds should all be used for expenses related to a funeral.
Your beneficiaries can use benefits from burial insurance as they see fit. This means beneficiaries can use the proceeds for the house mortgage payment, car mortgage, unpaid credit card bills, and many more. You can also indicate your will or last testament where your insurance proceeds should go; you need to prepare for it in advance.
It Is Difficult to Get Approved for Final Expense Life Insurance
One common misconception regarding final expense insurance is that it is quite difficult to gain approval and get covered; this is not true. According to reports, final expense insurance is an insurance policy that gets a higher approval rate than other insurance options. This is because it is a smaller policy.
If you happen to own an existing life insurance policy, final expense insurance can be a great addition to your financial planning goals or objectives. You can easily acquire to lessen the financial burden of your family after your death.
Final Expense Life Insurance Requires Rigorous Medical Examinations
Final expense life insurance is typically for adults in the middle adulthood or late adulthood stages. This is why it is no surprise that most people think that it requires a rigorous medical exam before one is approved; this is not true. Some final expense policies do not require medical examinations.
The only health-related process when acquiring final expense insurance is a questionnaire for your health status and prescription history. Final expense insurance does not require medical examinations, which is why you can buy it online or through a telephone call.
Beneficiaries Will Pay Taxes to Get the Insurance Proceeds
The standard feature of a traditional life insurance policy is that the death benefit is not taxable. However, because final expense insurance is a smaller policy, some individuals think it is taxable. This is not true. The death benefit for a burial insurance policy shares the same feature with a traditional one when it comes to taxes, which means they are tax-free.
This means your heirs can use the insurance proceeds for any purpose without paying any taxes. Also, the death benefit from this type of life insurance is guaranteed, so you don’t have to worry about the insurance company decreasing your policy’s benefit amount.
A final expense life insurance is a policy that you should undoubtedly consider, especially if you are about to retire or are already retired. It is the life insurance policy that is the least expensive.
If you can’t afford expensive life insurance but need one due to income replacement for your dependents, final expense life insurance should be your priority. Check out a reputable insurance company that offers this type of policy today!