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Final Expense Insurance in Canada: End-of-Life Coverage Guide

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A final expense insurance in Canada aims to ease the financial pressures of end-of-life costs, providing peace of mind to policyholders and their loved ones. These life insurance policies usually cover expenses such as funeral arrangements, unpaid bills, and any other immediate costs related to a person’s death. This type of life insurance policy helps ease the burden on grieving families by taking care of their immediate cash needs so that they can focus on the mourning process without additional financial stress.

One of the significant aspects of final expense insurance is its accessibility to most Canadians. Various types of policies are available (especially if the life-insured-to-be is in generally good health), catering to different needs and preferences. Regular underwritten and non-medical life insurance options exist depending on the person’s health conditions.

Key Takeaways

  • Final expense insurance covers end-of-life expenses, providing financial relief from immediate cash needs at death.
  • Most Canadians are eligible for some form of final expense insurance.
  • Planning with final expense insurance helps secure peace of mind in knowing that there’s money set aside to take care of costs arising from one’s death.

Importance of Final Expense Insurance in Canada

Final expense insurance in Canada provides a specific form of financial security designed to cover costs associated with end-of-life expenses, ensuring individuals can safeguard their loved ones from the financial burdens of death.

Definition and Purpose

Also known as burial or funeral insurance, final expense insurance is a type of life insurance policy tailored to cover the immediate costs that arise at a person’s end of life, such as funeral arrangements, taxes at death, and any outstanding debts. The insurance company usually provides a smaller death benefit payout to cover basic end-of-life expenses. 

  • Objective: To alleviate the financial stress on loved ones for end-of-life expenses.
  • Benefit: Lump-sum payment directly to beneficiaries.

Comparison to Other Life Insurance Policies

People often compare final expense insurance policies to other life insurance policies. Key differences include:

Coverage:

  • Final expense insurance provides a smaller, targeted coverage for end-of-life expenses.
  • Final expense insurance typically provides lower death benefits than income protection and estate planning life insurance.

Eligibility:

  • Final expense policies are typically easier to qualify for, with some available without a medical exam.
  • Traditional life insurance coverage often requires a comprehensive medical underwriting process.

Cost:

  • The final expense insurance premium is usually lower (depending on type and age), reflecting the more focused coverage.
  • Traditional life insurance, especially permanent life insurance policies, often features higher premiums due to a higher amount of coverage.

Duration:

  • Usually, final expense insurance lasts for the insured’s lifetime as long as they pay the premiums, as it is a form of permanent coverage.
  • Term life insurance policies are in effect for a specific period, after which they expire if not renewed.

Both final expense insurance and traditional life insurance policies serve crucial roles in financial planning, but their appropriateness depends on an individual’s specific circumstances and planning needs.

Eligibility and Policy Types

Permanent life insurance, like whole life and term to age 100, is usually the policy of choice for most Canadians regarding final-expense life insurance because you never really know when it will come. There are, however, a small number of Canadians who opt to implement a term life insurance policy for final expense purposes; while we don’t usually recommend this, it’s an option if a term policy makes sense for the client’s budget and situation.

Canadian Resident Requirements

One must be a Canadian resident to be eligible for final expense insurance. Visiting parents and grandparents (tourist visa) whose permanent residency is already in process can also qualify for final expense coverage. 

Policy Options for Coverage

Policy Type: The common types of final expense insurance available in Canada include simplified issue life insurance and fully underwritten life insurance policies. Simplified issue policies typically do not require a medical exam, making them a viable option for those with health-related concerns.

  • Coverage Amount: Insurance providers offer different coverage amounts, usually ranging from as low as $5,000 up to $750,000, depending on the policy and provider.
  • Funeral Insurance Policy: Commonly referred to as funeral or burial insurance, these policies cover the costs associated with end-of-life arrangements.

Type of Policy

  • Immediate Full Benefit Policies: These are available to individuals without primary severe health concerns and provide the policy’s total value upon issuance.
  • Deferred Benefit Policies: Insurance companies may offer deferred death benefit policies for individuals with existing health issues at the time of the application.

Cost Considerations and Benefits

When implementing final expense insurance in Canada, individuals should consider the potential financial impact of funeral costs and the advantages of securing adequate coverage to ease this burden for loved ones today and in the future.

At SmartWealth, we work with you in exploring options that you can qualify for and one that fits your cash flow. If you need help planning final expense insurance for yourself or a loved one, please book a schedule here.

Average Funeral and Related Costs

The average funeral cost in Canada can vary significantly, but expenses typically range from $5,000 to $15,000. The mentioned expenses cover the essential service charges, transportation, a coffin, the option of visitation or viewing, and the costs associated with either burial or cremation. Additional fees for extra services like flowers, an obituary notice, and a memorial can accrue. It’s important to note that cremation costs are usually lower than traditional burial costs, which can help reduce overall end-of-life expenses.

Benefits of Adequate Coverage

Final expense insurance can offer significant benefits, including a guaranteed death benefit amount that can cover these end-of-life expenses. The policies are typically whole-life insurance, which means they may also accumulate a cash value over time. Taking a proper approach can relieve the financial strain on an individual’s family and enable them to handle funeral expenses, potential medical bills, and any outstanding debts without experiencing undue stress or financial burden.

Application and Medical Underwriting

When applying for final expense insurance in Canada, the process can vary based on the insurer’s requirements for medical underwriting. Applicants may encounter different protocols regarding medical examshealth questions, and the impact of their health status and smoking habits.

Medical Exam and Health Questions

For many final expense insurance plans, an applicant may go through a medical exam and respond to health questions. The examination typically involves medical tests to assess the applicant’s overall health. Depending on the plan, the insurer might require blood tests, blood pressure checks, and other medical tests to gather necessary health information. Coverage options such as the simplified issue life insurance offer minimal to no medical underwriting for applicants.

Impact of Health Issues and Smoking Status

An applicant’s health issues and smoking status can significantly affect their eligibility and premiums. Those with serious health concerns or a history of poor health may face higher premiums or limited coverage options. Individuals in good health, on the other hand, often enjoy lower premiums. Smoking, in particular, is viewed as a high-risk factor and can lead to increased rates. Carriers like Canada Protection Plan and Industrial Alliance offer Simplified Issue Final Expense Coverage, which caters to applicants who wish to avoid extensive underwriting. These plans provide coverage without a medical exam or health questions, ensuring faster approval and immediate protection, regardless of health issues or smoking status.

Benefits of Final Expense Insurance

Final expense insurance addresses the costs that arise at the end of life, ensuring that loved ones are not burdened with final expense costs during an already emotionally challenging time, and provides a financial safety net explicitly designed for this purpose.

Support for Family Members

Final expense insurance offers a clear advantage by lifting the financial obligations off the shoulders of family members when they are mourning. It ensures they are not left to deal with the cost of burial expenses and final arrangements, which can be significant. This type of support allows them to concentrate on supporting one another and honouring their loved one’s memory rather than being distracted or overwhelmed by economic concerns.

Reducing Financial Stress at a Difficult Time

Beyond covering funeral-related costs, final expense insurance can also aid in managing outstanding debts left by the deceased. A policy can offer financial support to help settle exceptional accounts that require payment, thereby reducing the stress of financial matters during a difficult time. This insurance is a proactive step towards ensuring that end-of-life expenses, including any ceremonial costs or legal fees, are adequately covered.

Choosing the Right Policy

For healthy individuals, regularly underwritten permanent life insurance is usually a cost-effective option offering lifetime coverage. Those who may have had coverage declined due to health and lifestyle have limited options for getting final expense insurance. The important thing is to have life insurance coverage that offers more than enough to cover the immediate costs of death.

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If you need help applying for final expense life insurance for yourself or loved ones, please book an appointment with our team today, and we'll help you choose the right policy that meets your needs and one you can qualify for.

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Factors to Consider

One should consider several main factors in selecting a final expense policy. Coverage options are paramount; coverage typically ranges from $15,000 to $25,000 to appropriately address end-of-life expenses. Assessing the financial needs of surviving relatives can guide the decision on the coverage amount. It’s also good to compare life insurance products across different companies to ensure one gets the best policy terms and rates.

Simplified Issue Plans with guaranteed acceptance options ensure coverage for everyone regardless of health conditions (with limits) without needing medical examinations. They are often considered the best option for individuals with health conditions seeking peace of mind.

Working with a Licensed Insurance Agent

Consulting a licensed insurance agent can guide one through the complex landscape of life insurance options. As licensed agents, we have the expertise to match individuals’ unique circumstances with the best way to protect their beneficiaries. At SmartWealth, we offer personalized service, navigating the breadth of products to find a policy that provides sufficient coverage while considering budget constraints and future needs.

By working with an expert, you can understand intricate details that may otherwise be overlooked, like policy exclusions and coverage limitations. A licensed insurance agent can comprehensively compare plans and guide applicants through the application process, a pivotal step in securing the right policy for one’s final expenses.

Policy Terms and Claims

When considering final expense insurance in Canada, it is essential to understand the policy terms and the process for filing a claim. Carriers have designed these policies to provide peace of mind, with straightforward claim filing procedures and clearly defined elimination periods (deferred and guaranteed issue).

Understanding Potential Waiting Period

The waiting period is a critical term in terms of deferred and guaranteed issue final expense insurance policies. It refers to the time frame between the policy’s effective date and when the full death benefit becomes available. If the insured passes away during the waiting period (usually two years), beneficiaries may receive a limited death benefit amount or a return of the paid premiums. After the life insured passes away, the full death benefit is due to the beneficiaries.

How to File a Claim

Each life insurance carrier in Canada has a dedicated claims hotline. Beneficiaries should contact the insurance provider promptly after the life insured dies to file a claim, prepared with all necessary documentation, including the death certificate and policy numbers. Each provider has a different claim process, but most will usually email you a death benefit claim form, which the beneficiaries should fill out and submit. Many insurers aim for quick lump sum payment processing, often disbursing the death benefit amount within a few business days after the claim is approved. To maintain the policy’s validity, the insurer may review the application, and payment history of premiums during the claim process to confirm that the policy is enforced. 

Final Expense Planning with Life Insurance

When considering the end of life, it’s essential to ensure that one’s final wishes regarding funeral arrangements are respected and financially planned for. Final expense insurance is a tool that can help individuals in Canada prepare for these costs, empowering them to make decisions about their funeral service without burdening their loved ones financially.

Personal Preferences in Funeral Arrangements

Individuals have varied preferences for the type of funeral or memorial service they desire. It may range from a traditional burial in a funeral home to a more unique ceremony. Outlining these preferences beforehand is crucial. Please remember: They might want to choose the details, such as selecting the type of casket or urn, deciding on the music to play, or determining which readings to share. The advantage of planning is knowing that their final arrangements will reflect their wishes and relieve their loved ones from the pressure of making these decisions during a difficult time.

Considering Pre-need and Funeral Insurance Plans

 Final expense insurance plans cover essential end-of-life costs, including funeral and interment expenses. With coverage ranging from $15,000 to $25,000, individuals can choose a plan that suits their needs. Comparing options helps find a balance between benefits and costs, easing financial stress for families during mourning. 

By comparing different funeral insurance plans, individuals can find a solution that offers the right balance of benefits and cost, ensuring their funeral plans align with their financial means. This proactive approach can spare families the stress of economic hardship and confusion amid mourning.


Contact us for your Financial Services Needs

At SmartWealth, we provide expert advice for insurance, savings, retirement planning, and tax-efficient wealth transfer. As your Insurance and financial advisor, we work with you to create a personalized plan for your family or business that covers and meets your needs.

To schedule a consultation about your financial goals, or if you have any questions about insurance in Alberta, Manitoba, or Ontario, please book a virtual meeting to talk to an advisor today! We’re proudly based out of Winnipeg and service clients anywhere in Ontario, Manitoba and Alberta, including Guelph, Edmonton, and Brandon.

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