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Final Expense Annuities

Updated on August 9, 2021
travishelmboldt profile image

Travis has been a husband and father for over 15 years. Served in the Army National Guard for 10 years. Currently a life insurance agent.

Final Expense Annuities

This article is about final expense annuities and how they might be beneficial to you.


A final expense annuity is not like a traditional annuity. A final expense annuity’s focus is primarily on final expenses, while a traditional annuity’s focus is on retirement. There aren’t many final expense companies that offer a final expense annuity.

Unlike a traditional annuity, a final expense annuity cannot be funded with qualified money. Meaning; money from an IRA, 401k, 403b, or any other retirement vehicle like these. Non-qualified money can only be used to fund a final expense annuity, such as money from a checking or savings account.

No health questions!

Since a final expense annuity is regarded as an investment, there are absolutely no health questions to answer when applying for one.

How does this annuity work?

A client will either pay a lump sum into the annuity or pay a small premium each month. The company will set the amount of years to invest into the annuity, as well as, the return interest rate. Some companies will offer a minimum and a maximum, or cap interest rates. After the investment period, the client can elect to surrender their annuity for a return of premiums paid, plus interest. If the client surrenders the annuity before the company specified investment period, the client will be charged a surrender fee.


There are risks.

There are certain risks involved, when dealing with any investment. All investments are solely reliant on the economy and various stock markets. If the economy and markets are very good, your investment will reap the benefits. If the economy and markets are down, your investment will either have slow growth, or become stagnate.

What happens if the client dies?

If the client dies during the investment period, the company will pay back the amount invested to the beneficiary. Most companies will pay back the invested amount, plus interest, but, minus any surrender fees.

If the client dies after the investment period, the beneficiary will receive a full return of premiums, plus the return interest.

The client can keep it!

A client can decide to keep the annuity well after the investment period and use it as final expense coverage.


Disclaimer: It is not the intention of this guide to sell a particular insurance product or to promote any insurance company or carrier.

© 2018 Travis Helmboldt


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