Fact CheckedWhat is final expense insurance? Do you know? If you don’t, you should! Having a final expense policy can save your family money and stress.
Did you know the average funeral cost is around $8,000 – $15,000? And no, that doesn’t include the price of a plot or grave marker.
You can save a few bucks by skipping the brass band, single malt whiskey, and cigars – but you still have to shell out for the basics.
What is Final Expense Insurance Canada? Don’t Let Your Family Get Eaten Alive by Debt
Debt’ll do it to you every single time.
Now imagine this! Your kids embark on their careers and start families.
You’re close to retirement. The term insurance you maintain (kudos to you for protecting your income and lifestyle while the kids were still in college) just expired.
Man, life is good. You got them through the challenging stages ALIVE, and now they’re self-sufficient.
Phew! Now it’s time to enjoy life, travel, etc.
BOOM! The train you’re taking to Montreal derailed, and guess what? You aren’t so lucky.
“Pre-planning funeral and pre-paying for services is always a good idea. This will relieve the burden for family members and loved ones during a difficult time and leave no questions when it comes to your final wishes.”
Spotlight: Is pre-planning your funeral a good idea? SooToday.com
Plan, Your Family Will Thank You
Unfortunately, you didn’t think about setting up a funeral insurance policy or making any other arrangements to take care of your burial costs.
Sure, it went through your mind, but you know…
…I’m youngish and HEALTHY!
Hmmm, I’ve heard it all before. The thing is, none of that matters now.
Life Changes for Your Family When You Die!
So those kids that were set for a golden future now have a funeral to plan and pay for.
You put in all the effort to put them through college and help them get off to a good start, only to have them weighed down emotionally and financially. I bet that was NEVER your idea.
Nobody wants to leave their children or family worse off because of their untimely demise.
Things would have been very different if you had set up that final expense policy.
…or had some money set aside for early checkout.
What is Final Expense Insurance?
People who are forward-thinking like to plan. They don’t want to burden their families with unpaid funeral costs.
A life insurance burial policy is the most straightforward option to ensure your final expenses are covered.
A final expense policy is permanent life insurance that you purchase to cover end-of-life debts. Most of the time, it’s whole life, no exam insurance. Which means:
- Monthly premiums are guaranteed never to increase
- Your policy never expires
- Coverage cannot decrease
- The policy is non-cancellable except for non-payment
- No physical or medical exams are required to apply
- Death Benefit (cash) is paid out tax-free to your beneficiaries
Let’s take a look at the broad strokes of final expense insurance.
Final Expense Life Insurance Canada – The Basics
Final expense insurance is a life insurance policy that pays tax-free cash to your survivors to cover your immediate burial costs when you join that big band in the sky.
Let’s clarify something right now. Agents use a few terms for end-of-life planning, including final expense insurance, burial insurance, funeral insurance, and cremation insurance.
…which has created some confusion over the years. So, what’s the difference between these terms? THERE IS NO DIFFERENCE; they are all the same thing.
Final Expense Insurance = Funeral Insurance = Burial Insurance = Cremation Insurance
As I mentioned, all funeral insurance is permanent because It has to last your entire life to pay out a death benefit to your beneficiaries. Final expense life insurance comes in 3 different wrappers:
- Whole life no exam (most common)
- Guaranteed Universal life and
- Term-to-100 (this is permanent insurance despite its name).
“Note: Term insurance shouldn’t be used for final expenses because it’s temporary. It usually expires at age 80 or 85. If you survive past that age, you will not be covered until the day you die. So, this is one of those situations where permanent insurance is the only solution.”
It can be confusing, as there are many options. As I mentioned, an excellent independent agent like Policy Architects answers all your questions to help you find the best “wrapper” at the best price. Call us today at 1.888.501.9583.
How Does Final Expense Life Insurance Work?
Now that we have answered the question, “What is final expense insurance?” we can explore the topic further.
When you pass away, your life insurance burial policy guarantees that the insurance company cuts a tax-free cheque directly to your beneficiaries.
This gives them the money to pay for your funeral costs.
There are no conditions or restrictions on how the money is used. This can be a good thing or a bad one – depending on your beneficiaries 😉
If any money is left over after all the immediate burial costs have been paid, your loved ones decide how to spend it.
Did I mention that the money is paid to your loved ones Tax-Free?
How Much Does a Funeral Cost?
This is one of the most critical questions when setting up your final expense policy!
Unfortunately, it can cost a LOT! I hate to be the bearer of bad news.
…and if you want some music, booze, and a couple of cigars, you are talking a pretty penny, ladies and gentlemen.
According to various sources, the average funeral cost in Canada is around $10,000. I’ve heard of people spending up to $25,000 and even more.
OUCH!
Conversely, I’ve heard consumers getting basic cremations for as little as $2,000 or less. The average cost of a cremation with service and extras (obituary notice, viewing, flowers, etc.) probably runs in the neighborhood of $4,500.
Whether you choose burial or cremation, chances are you’re not dying today. So, how much will these same funeral goods and services cost 10, 20, or 25 years from now?
Make Room for Inflation
A financially savvy person knows that a $10,000 funeral today will cost about $14,859 twenty years from now (based on an average inflation rate of 2%). So, to ensure your family is covered, getting a final expense policy for at least $15,000 would be prudent.
Hey, you can’t lose. In the worst-case scenario, your loved ones willhave some money left over after the immediate burial costs are paid. This is an excellent problem to have.
“65% of Canadians choose Cremation over a traditional burial ceremony? The good news is, if this is the way you wanna go, it’s about 40% cheaper than the time-honoured funeral ceremony.”
Other Factors Affecting the Cost of a Funeral:
Do you have children, grandchildren, or siblings who live on the other side of the country?
Would you like to help pay for their travel expenses when they attend your memorial?
Factor that into your funeral planning budget, too. Remember that there may be other outside costs that should be considered; this is just one example.
What About the Canada Pension Death Benefit?
If you’ve been paying into the Canada Pension Plan (CPP) for the prerequisite number of years, you may be eligible to receive the CPP Death Benefit up to a maximum of $2500.
I consider this the icing on the cake. Assuming you qualify, your survivors must fill out an application and wait for payment from Service Canada. Processing can take anywhere from 4 to 12 weeks.
If you’re on a fixed income—many of us are—it’s good to know that the government provides some money. You can consider that when deciding on a coverage amount for your final expense policy. You purchase a $5,000 whole-life no-exam policy through Plan Protection Canada. That means your total coverage, including the CPP death benefit, will be $7,500.
The question is, do you want your loved ones to front the funeral home money to pay for your burial and then wait to be reimbursed by the Government?
Remember that the CPP death benefit is 100% taxable and will only cover a small percentage of the funeral costs.
PSSST – I’ve got a little tax info for ya’
Is the CPP death benefit taxable?
Yes, the CPP Death Benefit is taxable income, and the tax must be paid by the person who receives the money, whether it’s the estate or an individual.
Are funeral expenses tax deductible in Canada?
No, the estate is on the hook for the whole kit ‘n’ kaboodle: All funeral expenses, probate charges, and fees. None of these expenses is deductible.
“THE GOOD NEWS: All final expense life insurance proceeds are paid out tax-free and free of probate as long as your named beneficiaries are alive.”
Rates & More
I mentioned above that funerals can cost a pretty penny.
Yes, adequate coverage is important, but if you’re on a fixed income and money’s tight, I would never recommend purchasing a policy you can’t afford. It’s essential that if you do buy a plan, the money is there when your loved ones need it the most.
“Better to have a small amount of coverage at the right price than too much coverage at the wrong price.” Confucius
Did you know you can get a final expense policy for as little as $5,000 in coverage?! (One carrier offers coverage amounts down to $1,000)
If you qualify for the CPP death benefit ($2500), that’s $7500 of total coverage!
Let’s take a look at some rates now.
Final Expense Insurance Rates
Below are accurate final expense insurance rates from Canada Protection Plan, one of Canada’s top no-medical life insurance companies. Other carriers who sell burial insurance include American Income Life, Assurant Life, Assumption Life, Industrial Alliance, Foresters, Empire Life, Wawanesa Life, and more.
These final expense quotes are for someone who is a nonsmoker. If you’ve smoked any tobacco products, including vaping, in the last 12 months, expect to pay up to 40% more.
“NOTE: You may or may not qualify for these final expense insurance rates. Your health determines your premiums – which could be more or less than these quotes.”
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| Age & Gender | $10,000 | $20,000 |
| 50 Year Old Male | $22.64 per month | $39.89 per month |
| 50 Year Old Female | $20.06 per month | $34.72 per month |
| 55 Year Old Male | $25.71 per month | $46.03 per month |
| 55 Year Old Female | $23.77 per month | $42.14 per month |
| 60 Year Old Male | $34.40 per month | $63.40 per month |
| 60 Year Old Female | $29.98 per month | $54.56 per month |
| 65 Year Old Male | $46.67 per month | $87.95 per month |
| 65 Year Old Female | $38.32 per month | $71.24 per month |
| 70 Year Old Male | $63.98 per month | $122.56 per month |
| 70 Year Old Female | $47.33 per month | $89.26 per month |
| 75 Year Old Male | $92.12 per month | $178.85 per month |
| 75 Year Old Female | $66.69 per month | $127.98 per month |
| 80 Year Old Male | $123.36 per month | $241.33 per month |
| 80 Year Old Female | $91.34 per month | $177.28 per month |
NOTE* With most carriers, including the Canada Protection Plan, the insured cannot be over 80 when the application is submitted. That means if you’re 80 years old and seven months old, they’ll consider you to be 81 years old as you are closest to that birthday.
Final Expense Policy Payment Options
Most people think you must make monthly payments for your final expense policy, but this isn’t the only way.
Here are some of the payment options you have:
- Most carriers offer the option of paying monthly or annually. If you decide to pay annually, you’ll save 8% on your premiums, equivalent to approximately one month’s premium.
- You can pay monthly until age 100 or your death, whichever comes first.
- There’s also an option to pay the entire policy in 20 years. This may be something to consider if you like the certainty of knowing that you’re paid up and don’t want ever to risk having the policy lapse because you missed a couple of payments.
- There are funeral insurance policies with graded premiums, meaning your premiums increase every five years over the plan’s life. At Policy Architects, we ONLY recommend policies with guaranteed-level monthly premiums. Graded premiums should be avoided simply because they can get out of hand when you are most vulnerable.
Do I Need a Medical Exam?
Nope…Most Funeral Insurance Policies Do NOT Require A Medical Exam
This is good news, especially if you hate needles!
Probably 95% of all final expense plans purchased are no medical life insurance policies. That means no needles, fluids, or physical tests! All that is required is answering a bunch of health and lifestyle questions.
There are two reasons for this:
- Most seniors who apply for these plans have mild to moderate health issues. It’s widespread for people in their 60s and 70s to have things like high blood pressure, high cholesterol, and even well-managed diabetes. The combination of age and health issues makes it less likely for traditional carriers to underwrite at affordable rates.
- Also, most funeral insurance policies are sold with smaller face amounts: $5000 – $15,000. Most traditional carriers will not issue a full medically underwritten policy for less than $25,000 or $50,000. So, there’s an entire industry built around servicing this group of consumers—seniors looking for small, whole-life, no-exam policies to cover final expenses.
If you want $10,000 or less coverage, a simplified-issue life insurance policy is your best bet. Many clients also like buying no-exam funeral insurance over the phone in minutes.
Knowing you can get coverage quickly with little to no hassle is great if you’re in a hurry or older and worried about your health.
Which brings me to this…
Fully Underwritten Final Expense Life Insurance
Did you know you can also buy a fully underwritten final expense policy?
The decision is yours. If you’re healthy, with no insurability issues, and looking for slightly larger coverage amounts (i.e., $25,000), this option may be worth exploring. These traditional, medically underwritten policies are somewhat cheaper than their non-medical counterparts. However, they tend to have much better guarantees in terms of cash values and reduced, paid-up insurance amounts.
Having said that, if you are relatively healthy and want to take funeral insurance off your “to-do” list, I suggest speaking to the agents at Policy Architects. We can help you figure out which option is best for you. Call us today at 1.888.501.9583 OR Schedule a Call when convenient for you.
No Medical Final Expense vs. Fully Underwritten Example: Healthy 70-Year-Old Male
For this example, let’s use a 70-year-old male, non-smoker. He wants a $20,000 final expense policy to cover funeral costs so his family isn’t left holding the bag when he dies.
If he goes with a traditional carrier like Empire Life with full underwriting, which means a phone interview & vitals, a burial policy (Solution 100) costs him:
- $117.63 per month
With a No Medical insurer like Canada Protection Plan (CPP), he pays:
- $122.56 per month
That’s just $4.93 more per month for similar funeral coverage insurance.
“NOTE These coverages are similar but not identical. The Empire Life policy has much higher guaranteed cash and paid up insurance values than the Canada Protection Plan Policy.”
Prepaid Funeral Plans vs Final Expense Insurance
If You’re Financially Savvy, a Pre-Paid Funeral Plan May Not Be Your Best Option.
This subject deserves an entire post, but I will cover it briefly to ensure we cover all the bases.
There’s enough evidence to categorically say purchasing a final expense policy is superior to pre-paying your funeral costs, hands-down!
Here are some great reasons to make another choice for your funeral plans:
- You can’t move your prepaid funeral plan…and if, on the off chance, you can, there are fees and paperwork. What happens if you move?
- Changing your prepaid plan is tricky – who wants the hassle?
- Prepaid burials don’t guarantee coverage for future funeral costs. Services outside the funeral home’s control may increase, meaning you’ll have to pay more.
- The Funeral Home gets to hold onto your money. What if something comes up like an emergency? It’s also the wrong place for growth. Why not invest somewhere with returns?
- The Funeral Home is your beneficiary if you buy a life insurance burial policy through them. Hmmm.
“The provincial government has received as many as 85 inquiries…there could be up to 50 instances where money for a prearranged funeral was improperly handled”,
The bottom line is that it’s fantastic to pre-plan your funeral but unnecessary to pre-pay. A final expense policy gives you the ultimate flexibility because it pays out cold, hard cash, which means your family has options for executing your end-of-life wishes.
Final Expense & Assurant Life Of Canada
You can’t write a post about final expense life insurance without mentioning Assurant Life of Canada (Canada Purple Shield). This final expense pioneer is North America’s largest provider of preneed funeral insurance.
Chances are, if you or someone you know has made a pre-paid arrangement with your local funeral home, it is underwritten by Assurant Life of Canada. They’ve been in business for decades, are financially solid, and offer the best “set and forget” solution in the marketplace. Sounds good. It’s important to know that Assurant Life of Canada also has the most costly final expense insurance rates in the market.
If you want to read one of the most in-depth, fair, and balanced reports about the Canadian Preneed Insurance Industry, check out my Assurant Life of Canada review here.
When It Comes to a Final Expense Policy, Age Ain’t Nothin’ But a Number
Even if you’re a senior and googling what final expense life insurance is, you’re NOT out of luck!
In Canada, you can get a final expense policy up to age 85, but the most common age range for applicants is between 50 – 80.
Did you know that even as a non-resident, you can qualify to purchase funeral insurance?
As long as you’re one of the following:
- landed immigrant
- refugee
- foreign worker
- nanny or student
- holder of a super visa
You’re eligible to buy final expense insurance. Even if you’ve only been in the country for a short time, as long as you’re under 75 and have a permanent Canadian address, you’re eligible for Guaranteed Issue burial insurance.
“Note: If you have a super visa, a funeral insurance policy can ensure that your immediate burial costs don’t become the responsibility of your children or grandchildren while you’re visiting in Canada.”
Financial Whizzes GoFund Themselves
YIKES! Now, this is scary.
If you don’t have the money, GoFundMe may provide an emergency solution. However, you are relying on the generosity of others, which may or may not come to fruition.
The only way to ensure your funeral WON’T be a drain on your family is to PLAN. Here are a few good suggestions!
3 Ways to Pay for Your Funeral Expenses
1. Self Insurance
Yep, you can self-fund your funeral. This is probably the most financially intelligent approach to final expenses.
…but there’s a catch.
It would be best if you were good with money. This means planning for retirement with a financial advisor to invest your income wisely.
If you’ve been responsible, your estate is likely large enough to handle those pesky funeral costs easily. In that case, cheers to you!
2. Buy A Final Expense Policy
Another Rockstar move!
There are a few ways to purchase funeral insurance:
- If you have a health condition and/or value speed & convenience, secure a no medical exam policy. This is also the most popular way for 95% of seniors with some of these issues. They’re also looking for smaller coverage amounts unavailable with traditional insurers.
- If you’re reasonably healthy, want the best final expense insurance rate possible, and are willing to undergo a medical, apply to a traditional carrier with standard underwriting.
- Do you currently have a term life insurance policy in force? If so, you may be able to convert a small amount of your current term insurance (e.g., $25,000) into permanent insurance without providing any medical evidence. All that may be required is some paperwork.
Again, this is a situation where having a good independent life insurance agent worth his or her salt, is invaluable. Call Policy Architects today 1.888.501.9583 or schedule a call at your convenience.
3. Leave it for Your Family to Pay
Why would anyone do that, you ask?
It’s an awful thing to burden your family with, especially at a time of loss & stress.
…But It happens all the time.
No one wants to talk about death, but let’s be honest here for a moment. Make no bones about it – choosing NOT to sort out your end-of-life arrangements is choosing to let your family and loved ones sort the mess out later.
Please don’t kid yourself; not dealing with it is a choice. It sounds harsh, but it’s the truth.
“Your death should be a time of celebrating your life – not a time for your loved ones to crowdfund asking for donations toward the final expenses that you failed to properly plan toward.”
MJ Harris, HuffPost, GoFundMe is Not Life Insurance
Is There a Downside to a Final Expense Policy?
There are absolutely some cons! This is true for EVERYTHING under the sun.
Hey, there may be more financially practical ways to make funeral plans.
BUT—and this is a big but—many of us don’t take the initiative. Purchasing a funeral insurance policy sets you on the right path because you can set it and forget it.
Which is valuable to a LOT of us.
Final Expense Insurance Canada is NOT a Savings Plan
Some critics say that paying into a funeral insurance plan in the long term can amount to much more than the original face amount. Depending on your health, age, and career, that can be true.
It’s also important to remember that a final expense policy is not a savings plan. It’s permanent life insurance – usually whole life – that covers you from day one and pays out the entire death benefit regardless of how many payments you’ve made at the time of your passing.
The best way to pay for a funeral is to have cash on hand when that day comes. However, that isn’t always possible for many people. Did you know some consumers have the money to pay upfront but still decide to take out a funeral insurance policy anyway? Why? They can see the value in paying a small monthly amount to have someone else share the risk.
Final Expense Insurance and Your Estate
Not to mention, a final expense policy pays out quickly. Even if you have lots of cash, the average time to settle an estate is 9-18 months. A burial insurance policy pays out directly to your beneficiaries. It bypasses your estate and probate. They can use the money to pay immediate funeral costs; any cash remains with them. Remember, you don’t claim insurance proceeds as taxable income because all life insurance benefits pay tax-free.
For 95% of us with more modest needs, a final expense policy works well and is quite affordable! So I think the pros far outweigh the cons.
A Final Expense Policy Helps You Fund a Fond Farewell
Okay, so death isn’t all that appealing, but that doesn’t mean you can’t do it with style.
Hey, it’s your final hurrah.
If you want to pull out all the stops, final expense life insurance should be on your radar!
Just think about it! You could throw a party to beat all others – where people celebrate your life and all you’ve contributed.
… but parties are expensive. It will cost you a pretty penny if you want to provide food, wine, and fun.
Making sure your end-of-life expenses don’t become a burden to your loved ones is a GREAT move.
Why You Need Policy Architects For The Best Final Expense Quotes
So congrats, you reached the end of Final Expense Insurance for Seniors 101! Just because we’re all The Walking Dead doesn’t mean we can’t have some serious fun!
Why does funeral insurance have to be sad?
In my mind, final expense planning is ALL about love. What’s more important than your spouse, kids, and grandkids? Aren’t they the whole reason we work ourselves into the ground?
Instead of viewing life insurance as an honorable obligation, consider it a way to keep the promises you make—whether you are here or not.
Hey, I put my money where my mouth is. I have a substantial life insurance policy that will comfortably cover my immediate burial costs and all my family’s needs should something happen to me.!
To get the best, most accurate final expense quotes, call Policy Architects today!
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