Final expense insurance, also known as “burial” insurance, is a life insurance policy with a low face value, from $2,000 to typically $20,000, that is available when someone turns 50. It is not meant as insurance to support your family after you pass away, but instead to cover the funeral expenses. Policyholders can name any beneficiary, typically a family member or a funeral home, who would make the claim and receive the money upon the policyholder’s death. The beneficiary is then responsible for using the money to carry out the policyholder’s wishes and can also be used on final medical bills. The value of the policy is usually proportionate to the expense of your desired funeral and services.

Term Life insurance, also known as “pure life” insurance, is a type of life insurance that lasts for a set number of years–known as the term–before expiring. It guarantees payment of a stated death benefit during that specified term. If you die before the term is up, your beneficiary receives a death benefit as a tax-free lump sum of money. There is no other value than the guaranteed death benefit. Once the term expires, a policyholder can either renew it for another term or allow the policy to terminate. Due to its simplicity and affordability, purchasing term life insurance is one of the most popular ways to create a financial safety net.