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Do Final Expense Premiums Change Over Time?

Overview

Final expense insurance is a specific type of life insurance policy that covers costs related to funerals and other related expenses. It has more value than other life insurance policies due to its simple approval process. Final expense insurance assists people in easing the burden on their loved ones when they pass away. Therefore, more and more people are becoming interested in this insurance policy and asking many questions about its various features. One of these questions is about the change in the premium of these policies with time. We will try to provide a detailed answer to this question and other supplement questions arising from this issue. 

What is the Final Expense Insurance

We should understand this insurance in full before knowing the answer of what is the impact of final expense premiums over time? Final expense insurance provides death benefits that generally covers burial costs, end-of-life medical bills, and other expenses associated with funerals. The significance and wide acceptance of this insurance policy is due to its easy qualification process. Most insurance policies usually reject or lay tough conditions on older people and those already suffering from chronic conditions. However, they can easily qualify for this policy after fulfilling simple requirements. 

Final Expense

Benefits of Final Expense Insurance

Simple Acceptance Process

Unlike most insurance policies, final expense insurance readily accepts individuals. It means aged persons and those with medical conditions can also take advantage of this insurance policy. However, patients with chronic conditions and seniors may need to pay additional premiums according to the policy. 

Fixed Premiums

A major feature that distinguishes final expense insurance from other insurance policies is their fixed premiums. These fixed premiums in most policies remain the same throughout the lifetime of the insurer. This provides peace of mind as they do not need to worry about paying additional premiums even after many years.

Simple Registration

The legal process and other registration requirements for final expense premiums are simple and easy to manage. During this registration process, the customers usually do not have to pass any medical exam and there are very few questions about their health in the undertaking. 

Cash Value

Like other life insurance policies, final expense policies also provide a cash value component. The insurers can use this cash value to pay policy premiums or withdraw cash to fulfill other requirements. 

Do Final Expense Rates Increase Over Time

Most final expense policies have fixed premiums and the amount you pay remains unchanged throughout your life. However, it doesn’t always happen and some insurance companies may increase premiums with deteriorating health conditions, old age, and other factors related to the insurer. Therefore, it is necessary to consider two main categories of these insurance policies. 

Fixed Premiums

These are the most common types of premiums available with final expense policies. In this policy, the premium amount is set at the time of purchasing policy and it remains constant despite the advanced age of the insurer.  These policies may have higher premiums than other options but individuals can plan their expenses in the future without worrying about an increase in the insurance cost of fixed premiums. 

Increasing Premiums

Unlike most final expense insurers, some policies also offer premiums that increase with the insurer’s age or other fixed intervals. Insurance companies offering these premiums attract a relatively younger segment of society with initially low premiums. However, they can increase significantly with time and may pose financial issues for the insurer in later stages. Therefore, it is important to read the policy in detail before signing the document to know about the change in the rate of premium with time. 

Factors Affecting Premiums

Even if your insurance policy has fixed premiums, several factors influence these costs related to other life insurance policies. You need to consider these factors before deciding about purchasing final expense insurance. 

Coverage Amount

The factor that directly affects the premium is the amount of death benefit. A lower coverage amount will lower insurance premiums, while a higher amount will ultimately increase the premium amount irrespective of your policy.

Health and Age

Another deciding factor for your premiums, including those related to final expense insurance, is your age and health condition. Premiums are generally low for younger people enjoying good health.  On the other hand, you likely need to pay higher premiums in older age or if suffering from any chronic condition. 

Inflation Rate

Fixed premium rates of final expense insurance remain constant with age and time. However, their value may decrease if the inflation rate increases after some years. It increases the cost of funerals and other end-of-life expenses, impacting negatively on the purchasing power of the insurer. In this scenario, even the fixed premium may become difficult to pay for the insurer. 

Type of Policy

As mentioned earlier, final expense insurance cost has two types of policies, which also influence premiums. Fixed premium policies have higher premium costs but they remain constant. However, increasing premium policies have initial lower premiums but they increase steadily and have more underwriting requirements for insurers.

Duration of Premium Payments

Another factor that determines the cost of premiums and their duration of payments. Various companies provide options for monthly, quarterly, or annual premium payments to their customers. Most insurers select monthly payments because of their simple management. However, they usually get discounts on annual payments that can reduce the cost considerably. Therefore, it is wise to consider the most affordable payment duration option according to your requirement and suits your financial condition. 

Changing Final Expense Insurance Premiums

Final Expense

You may face a situation when you are considering purchasing final expense insurance due to increasing premiums or other reasons. You should consider these factors before taking any step:

Understand Your Policy

The first step before taking any decision is to review your current policy. If its premium increases with interval, note the current and possible future increase in premiums and decide accordingly. 

Compare Both Policies

If you are not satisfied with your current premium policy, then compare it to any potential new policy. Read the details of both policies and decide whether a new insurance policy can provide you relief or if it is better to stick with the current one.

Take Services of a Financial Expert

It is not always easy for a layman to understand intricate insurance policies. Therefore, it is better to consult a financial advisor for a better understanding of these policies and their premiums. It might cost you some money but also protect you from making a wrong decision. 

Wait for the Right Time

After evaluating your requirements and your current plan, you may decide to stick with it currently. However, your financial or medical condition may change in the future. Therefore, you should evaluate your requirements regularly to make the right decision to change the policy at the right time. 

Future Advantages of Final Expense Insurance

Final expense insurance provides short-term and long-term benefits for insurers and their loved ones. Fixed premiums in these policies provide financial relief to individuals and their family in difficult times. The following are the reasons that make this policy reliable for future needs:

Emotional Relief

Final expense insurance can ease the financial burden at the time of losing a loved one. This financial aid can reduce the pressure on family members and they can focus on remembrance and prayer. 

Funeral Arrangements

Many final expense insurance policies dictate the process of funding for the funeral. This way, the insurer can spend on his funeral according to his will which can provide peace of mind. 

Live Life Peacefully

You can get peace of mind after knowing that your future costs are already covered. This way, you can enjoy your life fully without worrying about putting a financial burden on your family in the future. 

Conclusion

In most final expense insurance policies, the premiums remain constant and do not change with age or health condition. However, some insurance companies provide increasing premiums with low upfront costs. You need to decide to choose one of these policies according to your requirements and current and future status. 

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Health Insurance
Do final expense premiums always remain constant?

It depends on your specific policy. Most final expense companies provide fixed premiums that don’t change with time, while others offer increasing premiums at initially lower premiums.

Why do many people choose final expense insurance instead of other life insurance policies?

The main advantage of final expense insurance is its simple process. It is easily available for seniors and people with medical conditions. Additionally, many insurance companies provide fixed premiums that do not change under any condition.  

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