What is final expense insurance?

The short version

Final expense insurance is a type of life insurance with a relatively small benefit, meant to cover the costs that come up when someone dies: a funeral or cremation, a burial plot, outstanding bills or small debts. When the insured person passes away, the insurer pays a lump sum to the beneficiary they named.

How it usually works

• You choose a coverage amount. Benefits are typically far smaller than a traditional life policy. The amounts available depend on the insurer, your age and your circumstances.
• You answer health and lifestyle questions. Many final expense policies do not require a medical exam. Instead you answer questions about your health, and your answers affect whether you're accepted and what you pay.
• You pay a premium. Monthly is common. Depending on the product, the premium may change as you get older, so ask how it is calculated.
• Your beneficiary receives the benefit. The money is paid to the person you named, who can use it however it's needed.

Who it can suit

• People who want to avoid leaving funeral costs to their family
• People who don't have, or no longer have, other life insurance
• People who want a simple application without a medical exam

It may not be the best fit if you need a large amount of coverage, for example to replace income or pay off a mortgage. A licensed advisor can help you compare.

Limits to know about

• Waiting periods. Some policies pay only a partial benefit, or a refund of premiums, if death occurs within the first one or two years.
• Exclusions. For example, many policies don't cover suicide in the first 24 months.
• Health matters. Your answers to health questions affect eligibility and price. Answer them accurately: an incorrect answer can put a claim at risk.
• Availability. Products, ages and amounts vary by insurer and by province. The partner products we link to are not available in Quebec.

Next: what funerals cost in Canada and how to choose a policy.

This guide is general information, not insurance, financial, legal or tax advice.