Final Expense Insurance

A client wanting coverage only for final expenses is suited to:

1. A.A small final-expense whole life policyCorrect - modest permanent coverage for final costs.
2. B.A variable annuityA variable annuity accumulates retirement savings and exposes the client to market risk. Final expenses call for a modest and certain death benefit rather than an investment account.
3. C.A 1,000,000 term policyThis is far more coverage than the stated need, so the client pays for protection never asked for. Term also expires, which fits poorly with an expense that arises whenever death happens to occur.
4. D.Disability insuranceDisability coverage responds while the insured is alive and unable to work. It pays nothing at death, which is exactly when final expenses arise.

Why: A small (final-expense) whole life policy is designed to cover burial and final costs.

A client wanting a small policy to cover funeral and final expenses, without a medical exam, should buy:

1. A.Final-expense (simplified-issue) insuranceCorrect - small face, no full exam.
2. B.A group pensionA group pension is a retirement funding vehicle that pays income to a living retiree. It is not life coverage and provides nothing sized to burial costs, which is what the stem asks for.
3. C.A 529 planA 529 plan is an education savings account, and the surface appeal is that it also requires no medical exam. It provides no death benefit of any kind, so it cannot fund final expenses.
4. D.A large variable universal life policyVariable universal life does pay a death benefit, so it is closer than the other wrong answers. It fails both constraints in the stem: the client wants a small face amount, while VUL is a large investment-oriented contract that normally goes through full underwriting including an exam.

Why: Final-expense (simplified-issue) insurance offers a small face amount without a full medical exam.

A client wanting a small policy for final expenses without underwriting hurdles should buy:

1. A.A group pensionPension plans turn on employment and eligibility rules rather than medical underwriting, which may be the loose association. What they deliver is retirement income, not a benefit sized to cover a funeral.
2. B.A 529 planEducation savings accounts open with no health questions at all, which matches the no-underwriting half of the stem. They pay nothing when the owner dies, so they cannot fund final expenses.
3. C.Simplified- or guaranteed-issue final-expense insuranceCorrect - small face, minimal underwriting.
4. D.A large variable universal life policySize is the deciding constraint, and this choice fails it outright. A large variable universal life policy also goes through the most demanding underwriting of anything on this list, which is precisely the hurdle the client wants to avoid.

Why: Simplified-issue or guaranteed-issue final-expense insurance requires little or no medical underwriting.