Final expense
Small whole life policies. The job is that a funeral does not arrive as a bill for somebody else.
01 — WHAT IT IS
These are ordinary whole life policies in small amounts, bought for a specific and narrow purpose: covering the cost of a funeral and the loose ends that come with a death, so that the people left behind are not paying for it out of their own money in the worst week of their lives.
They are usually bought later in life, they are often approved with a few health questions and no medical exam, and they are the policies most likely to be sold badly, because the buyer is frequently older, frequently worried, and frequently talking to somebody who found them through a mailer.
Two things worth knowing before anybody sells you one. Some of these policies have a waiting period, where a death from natural causes in the first couple of years returns your premiums instead of paying the full amount. And a policy you cannot keep paying is worse than none, so the size has to be one that survives a hard year.
02 — BEFORE I RECOMMEND ONE
What I would ask you
- What you actually want it to cover, in specifics. A funeral, a debt, a gap.
- Whether there is a waiting period on the policy being discussed, and how long.
- Who would be dealing with this, and whether they know the policy exists. A policy nobody can find does not pay.
Ask me the awkward one
Whether you want to do this job or you are working out what cover you need, the first message is the same: tell me what is actually going on and I will tell you what I would do — including when the answer is that you should keep your money.