How does Final Expense Insurance differ from Term Life Insurance?

Term Life Insurance offers the insured a chance to pay premiums for a defined amount of time.  If the insured dies during that time, the beneficiary receives the money.  If the insured does not die, he or she then has the option of renewing the policy (usually at increased monthly rates) or not.

For Final Expense Life Insurance, the insured pays premiums until he or she dies – and that amount never changes.  Once the insured dies, the beneficiary receives cash of up to $25,000 (depending on the amount of the policy) which they can use for death/burial expenses, any left-over debt (including medical costs), and anything else they choose.

In short, the differences are as follows:  Term offers lower rates for a specified period of time; Final Expense offers unchanging rates for the rest of the insured’s life; Term carries no cash value; Final Expense accumulates cash value; Term is protective insurance only (the beneficiary receives benefits only if the insured dies within the specified time – otherwise, the policy lapses with no benefits paid out); Final Expense always results in benefits being paid.