Final expense insurance is a form of whole life insurance sold in small quantities, typically between $5,000 to $25,000.
The target demographic tends to be people who are age 50 and older, often in poor health and on a strict budget. They don’t have other life insurance or savings to handle final expenses. Final expense policies usually don’t require a health exam and are easy to get approved for.

To determine how much coverage you need, try to estimate the sum of your final expenses. You can do this in four simple steps:

Step 1: Calculate Household Expenses

  To estimate your family’s expenses, take the amount of a normal month’s expenses (include utilities, car expenses, house payments, food and transportation, insurance fees, etc.) and multiply the total by three. This will be about what your family needs to survive for a few months. So, if your total monthly expenses are $3,000, then your amount for family expenses will be $9,000 ($3,000 x 3 = $9,000).

Step 2: Consider Funeral Expenses

  Funeral expenses are dictated by what type of services you choose. See this list to help get an accurate estimate of the typical funeral-related expenses. We can assume, at this moment, that your expenses will average $10,000.

Step 3: Add to Get Total Final Expenses

  Next, add the above numbers together. In this case, it’s $9,000 (family expenses) + $10,000 (funeral expenses) = $19,000. So, this $19,000 would be the minimum coverage needed to account for both of these expenses.

Step 4: Keep Inflation in Mind

  Finally, there’s an inflation factor that varies for men and women. This factor depends on your age range. For example, for men ages 63-65, the multiplier is 1.83. So, you’d multiply 1.83 by the total you had from Step 3 for the total estimated cost.

You can try to make funeral arrangements through your will, but don’t expect reliable results. Wills are usually read after the funeral service and they must pass through probate court before provisions can be implemented. The probate process can take many months, at best. Chances are slim that your will would provide any immediate help with your final expenses.

Unfortunately, Medicaid and Social Security benefits barely begin to cover final expenses. Medicaid grants $1,500 (at most) to be counted toward funeral expenses. Social Security provides only $255 to a surviving spouse or child to be used for funeral costs.

Some folks buy final expense insurance to coincide with an existing life insurance policy. But, if you have a separate policy that focuses solely on funeral and burial costs, you can protect your beneficiaries from having to pull money from the general life policy to cover the final expenses.

There are virtually no limitations a plan can enforce on what you can put this money towards. However, the amount you set for the payout will greatly determine what you can really use it for. These can potentially include:
1. Funeral Expenses
2. Medical Bills
3. Financial Support for Loved Ones
4. Personal Loans
5. Inheritance
6. Business Partner Shares
7. Estate Taxes, and More

You are not limited to one final expense insurance policy. In fact, having more than one policy can be a good idea because you’ll be able to get greater coverage by default.
The catch is that you must also keep in mind that you should not exceed the benefits that you are capable of obtaining through your income. Policies have their own requirements related to your income level. As long as your benefits match what someone with your income level can afford, and as long as you pay your premiums, you have no limit on the number of policies you can join.
Since final expense insurance is a form of life insurance (whole life insurance), the same can be said for life insurance policies in general.