Final Expense

Thank you for visiting our web site. We are eager to provide you with accurate information about funeral planning and final expense planning. As a resource to you, let’s begin by understanding the difference between what is referred to as pre-planning and final expense planning.

The word “final expense” is used in two contexts. The first context is a marketing expression for expenses which occur in the final stages of life. The expenses can include medical, attorney, real estate taxes, funeral, cemetery, and several other expenses which may be left after death to survivors of the deceased.

The second context can be the name of an insurance product which provides an insurance policy, typically to seniors, for the purpose of funding expenses such as funeral, cemetery, etc. Many insurance companies carry final expense products and they are often advertised on T.V.

The word Pre-planning is typically associated with a funeral plan made at a funeral home, where specific goods and services are selected at the funeral home. An agreement is made between the funeral home and the consumer. The funds are either placed with an insurance company in a specifically type of policy called a pre-need policy, or they are placed in a bank trust. In both cases they can be placed in these vehicles either on revocable or irrevocable basis. Having said that, pre-planning can simply be written instructions placed on file at the funeral home. Pre-funding involves securing those written instructions with a contract between the funeral home and the consumer, and paying before the time of need.

A policy can be set aside on the irrevocable basis. A guarantee means that the funeral home has agreed the prices in the contract will not increase at the time of death for the survivors. Technically, the prices are not frozen, as the cost continues to rise for the funeral home, but the funeral home is going to offset the future cost of the funeral with the earned income gained in the policy. A policy can be set aside irrevocably for Medicaid planning purposes also.

Some funeral home owners, because of low interest rates, are simply setting funds aside on an revocable and not guaranteeing the contract. They will utilize funds available at the time of the death in the policy. Should there be an excess, they often return the excess, and if there is a shortfall, the funeral will collect the shortfall from the individual making the arrangements at the time of death.

Some exclusions do apply. Please contact us for details.