Life Insurance vs. Final Expense Insurance: Which Should You Choose?

By Krista DeKuyper | March 31, 2025 | Life Insurance

Do you know the difference between life insurance and final expense insurance? Life insurance supports your family at the end of your life, but it’s not the only insurance option available. What about immediate end-of-life expenses, such as burial costs, gravestones, and keepsakes? That’s where final expense insurance would come in. Essentially, life insurance and final expense insurance both serve to protect your family financially after your death, but cater to different needs and circumstances. In this article, we’ll explore the primary differences between the two types of insurance, as well as when you should consider each option. 

Differences Between Life Insurance and Final Expense Insurance

Coverage

Life insurance offers a larger death benefit ranging from $100,000 CAD to several million dollars, depending on the plan and policy chosen. It provides extensive financial security for your beneficiaries, enabling them to cover living expenses, debts, and even future financial goals. Life insurance can remain in force for a set term (term life) or for the lifetime of the insured (permanent life).

Final expense insurance provides a much smaller sum of money, meant to cover immediate funeral expenses and no more than that. Coverage would typically range from $5,000 to $50,000 CAD depending on projected burial costs. It does not include financial support for ongoing living expenses. 

Purpose

The purpose of life insurance is to offer financial security and peace of mind to your dependents. As this is the case, it can fulfill a wide range of financial needs from paying off a mortgage, funding a child’s education, or simply giving your family time to process your passing without financial difficulties.

The purpose of final expense insurance is more defined, unlike with conventional life insurance. It is designed to alleviate the financial burden of funeral and burial costs, ensuring your family won’t have to pay out of pocket for immediate expenses after death. 

life insurance vs final expense insurance which to choose

When Should You Choose Life Insurance?

Life Insurance is suited for individuals who:

  • Have dependents that rely on their income
  • Have significantly high debts that dependents will need to pay off
  • Want to support their family financially post-death

It’s also worth noting that life insurance is an effective tool for long-term estate planning, allowing you to allocate funds for taxes or other costs your estate may incur after your death.

When Should You Choose Final Expense Insurance?

Final Expense Insurance is suited for individuals who:

  • Are mainly concerned with covering funeral and burial expenses
  • Want a more affordable option than life insurance
  • Are not in optimal health and need an insurance option that doesn’t require medical underwriting
  • Anticipate their family will be unable to cover immediate costs associated with their passing
  • Have limited financial obligations or assets to pass down after death

Key Considerations for Choosing Between Life Insurance and Final Expense Insurance

Choosing between life insurance and final expense insurance ultimately depends on your financial goals, your dependents’ needs, and your personal preferences. If you’re still unsure, follow these steps and consider the questions below to help you make an informed decision:

  • Assess Your Financial Situation: Do you have large outstanding debts? What is your financial situation like currently and how would those close to you be impacted? 
  • Consider Your Family Dynamics: Think about what your family needs and if you want insurance to help provide that. Do you have children that you want to attend post-secondary education? Would they be able to fund their own education if you passed? Is your partner a stay-at-home parent who relies on your income? Would they be able to keep providing for your family? Consider not just current but future expenses, and how your family would be impacted without your income. 
  • Consult with a Professional: At HealthQuotes, we work with our clients to deliver a tailored insurance solution designed to meet all your needs. We understand the Canadian insurance market and can guide you through your final expense and life insurance options. Trust us to provide clarity on what you can expect from a final expense or life insurance plan. Contact us today for free, no-obligation quotes!
  • Review Your Policy Regularly: Regardless of which type of insurance you choose, it’s essential to review and adjust your policy as your life circumstances change.

In conclusion, both life insurance and final expense insurance serve distinct and valuable purposes. By understanding the differences and determining your specific needs, you can make a choice that provides lasting peace of mind for both you and your loved ones.