FAQs: Final Expense Life Insurance vs. Term Life Insurance

What is final expense life insurance?

A small permanent whole life policy (often $5,000–$40,000) designed to cover funeral and end-of-life costs. Premiums and coverage are level for life, and the policy builds modest cash value.

What is term life insurance?

Temporary coverage for a set period (e.g., 10, 20, or 30 years). It offers a larger death benefit per dollar of premium but does not build cash value and expires at the end of the term.

Which is cheaper—final expense or term?

For the same death benefit, term is typically cheaper. Final expense premiums are usually higher per $1,000 of coverage because the policy is permanent and often simplified-issue.

Who is final expense best for?

Seniors or those wanting lifetime coverage to handle funeral costs and small debts, especially if term coverage has expired or health conditions limit traditional underwriting.

Who is term life best for?

People who need larger amounts of coverage for a set period—like income replacement during working years or mortgage protection.

Do final expense policies require a medical exam?

Usually no. Most are simplified-issue (health questions only) or guaranteed-issue (no questions, graded period). Term life can be exam-free for some applicants, but larger amounts often require underwriting.

What is a graded death benefit?

With some final expense policies, non-accidental deaths in the first 2 years may pay a limited benefit (e.g., return of premium plus interest). After the graded period, full benefits are payable.

Does term life build cash value?

No. Term life is pure insurance and does not build cash value. Final expense whole life accumulates modest cash value you can access while living.

Can term life be converted to permanent insurance?

Many term policies have a conversion option within a specific window—useful if your health changes and you want lifetime coverage without new medical underwriting.

What happens when a term policy ends?

Coverage stops unless you convert during the allowed period or renew (often at much higher premiums). Some people add a small final expense policy to guarantee lifetime coverage.

Can I own both term and final expense?

Yes. Many families use term for large, temporary needs and a small final expense policy to ensure permanent funds for funeral costs.

How do I choose the right amount?

For term, total income replacement, debts, and future expenses (e.g., college, mortgage). For final expense, add funeral costs, small debts, and any legacy goals.

What if I have health issues?

Final expense carriers often accommodate common conditions with simplified or guaranteed issue. For term, we can shop multiple carriers—some offer accelerated/no-exam underwriting depending on age and amount.

Which option is better for covering funeral costs?

A small final expense policy is purpose-built for funeral needs and lasts for life. A term policy can work if the insured passes during the term, but it may expire before funds are needed.