While there are some options for living benefits with a final expense policy, they aren’t standard, and will not be included with your policy unless you purchase a rider.
How Final Expense Coverage Works
To understand why living benefits don’t come with average final expense policies, you need to know how final expense works and how it compares to other policies that do offer living benefits.
First, living benefits, as the name implies, are funds you can use yourself rather than including them in your death benefit. The death benefit is a sum of money that is given to your beneficiaries when you, the policyholder, pass away. For final expense, this ranges anywhere from $2,000 to $50,000.
There are two ways to qualify for final expense — simplified issue and guaranteed issue. For the first, you just have to fill out a short, 10-15 form of broad medical questions about pre-existing and terminal conditions. There are no requirements to be eligible for guaranteed issue — you can skip the questionnaire and simply enroll.
Why Living Benefits Aren’t Standard
With this in mind, why don’t living benefits fit into the equation? Let’s compare final expense to whole life insurance, a common option that offers slow but steady living benefits.
Unlike final expense, you have to be fairly young and in pristine health to qualify for whole life insurance. The death benefit is also higher, ranging from $100,000 up to $1 million.
The difference that makes living benefits possible with whole life and not final expense is the duration of the policies and who is eligible — you can be much older and still qualify for final expense, anywhere from 60 to 85 years old. Compare this to whole life, which typically only enrolls people under age 60.
So, there’s simply more time to invest and grow your death benefit with whole life to receive living benefits without detracting from your death benefit.
Get Living Benefits with a Rider
There are options to receive living benefits through your final expense policy with riders. Insurance riders are additional benefits you can purchase alongside your policy. Here are your two rider options for living benefits with final expense:
- The accelerated death benefit rider lets you receive payments from your death benefit while you’re living to pay for medical expenses. You must have a critical or terminal illness that lowers your life expectancy to six months to two years to purchase it. Keep in mind that using this rider will take away from your death benefit.
- The long-term care rider lets you use your death benefit early to cover your long-term care. Once again, this detracts from your death benefit, but it can be useful to help cover costly care.
It’s Easier Than Ever to Get the Coverage You Need with Memorial
Memorial Insurance Group is here when you need us most. Give us a call today to learn more.