Life Insurance and Final Expense FAQ

The coverage stops, and your beneficiaries get nothing if you die after that date. Some policies let you renew year to year, but the premium goes up at each renewal and can climb steeply at older ages. Some term policies also let you convert to permanent coverage without new health questions, usually only before a deadline. Check your policy for a renewal or conversion option at least a year before the term ends.

Final expense insurance is a small whole life policy meant to cover a funeral, burial or cremation, and last bills. It pays cash to the person you name, who can use it for anything: the funeral home, a last hospital bill, a headstone or household bills. Because it is whole life, the coverage doesn't expire as long as premiums are paid, and the premium usually stays the same.

A graded death benefit means the policy pays less than the full face amount if you die from natural causes during the first years of coverage, usually two. It is common on guaranteed issue policies, which skip health questions. For example, Gerber Life's guaranteed policy pays 110% of the premiums earned if death from natural causes happens in the first two years, and the full benefit after that. Accidental death is covered in full from the start.

Usually not. Simplified issue final expense policies use a short health questionnaire instead of an exam, and guaranteed issue policies ask no health questions at all. Larger life insurance policies with full underwriting are where exams, lab work and prescription history checks are more common. Skipping the exam is convenient, but you generally pay more per dollar of coverage than a healthy person would with full underwriting.

Simplified issue policies ask a short set of health questions. If you're approved at the standard rate, the full benefit usually applies from day one. Guaranteed issue policies accept you within the company's age range with no health questions, but they cost more for the same coverage and usually have a two-year graded benefit. If your health lets you qualify for simplified issue, it is usually the better value.

Ask the funeral home for its price list. The Federal Trade Commission's Funeral Rule requires funeral homes to give you written price lists for their goods and services. You don't have to accept a package, and you're allowed to bring a casket or urn from somewhere else. The FTC suggests comparing prices from at least two funeral homes, ideally before you need them, so your coverage amount is based on real local prices.

No. A prepaid, or preneed, funeral contract pays a specific funeral home for arrangements you choose now. Final expense insurance pays cash to your beneficiary, who can use it anywhere. The FTC notes that state laws govern prepaid funerals and protections vary widely. Before signing a preneed contract, ask how your money is held, what happens if the funeral home closes, whether you can cancel, and whether it transfers if you move.

Usually not for federal income tax. The IRS says life insurance proceeds you receive as a beneficiary because the insured person died aren't included in gross income, and you don't have to report them. Interest paid on those proceeds is taxable. The rules are different if the policy was sold or transferred for value. State inheritance tax is a separate question, so check how Nebraska's tax applies to your situation.

Nebraska taxes what each heir receives, with rates set by the heir's relationship to the person who died. For deaths on or after January 1, 2023, close relatives like children, parents and siblings pay 1% above $100,000 each. More distant relatives such as aunts, uncles, nieces and nephews pay 11% on amounts over $40,000, and unrelated heirs pay 15% on amounts over $25,000. Surviving spouses are fully exempt. Ask an estate attorney how it applies to your assets.

Look up its rating from a financial strength rating agency such as AM Best, which many insurers also publish on their own websites. Several Nebraska-based companies publish strong ratings: Mutual of Omaha reports A+ (Stable), Physicians Mutual reports A+ Superior from October 2025, and Ameritas reports A Excellent from June 25, 2026. A rating tells you about the company's ability to pay claims, not about the price of a policy.

Review them after any big life change, such as a death in the family, a divorce, a remarriage or a new grandchild, and at least every few years otherwise. The beneficiary form on the policy usually controls who gets the money, even if your will says something different. Naming a backup, or contingent, beneficiary helps if your first choice dies before you. An estate attorney can help if you want a trust to receive the money.