Technically, final expense insurance is a whole life insurance policy specifically marketed to cover the expenses associated with a funeral, memorial service, reception, cremation and/or burial. It is also commonly known as burial insurance, funeral insurance, or cremation insurance.

But while it is described as a policy to cover final expenses, beneficiaries who receive the death benefit are not required to use it to pay for final expenses — they can use it for any purpose they like. That’s because final expense insurance really falls into the category of modified whole life insurance or simplified issue life insurance, which are typically whole life policies with smaller death benefits, often between $2,000 and $20,000.

When buying final expense insurance, you will have to answer a series of questions related to your age and health. After you're approved, coverage will be in effect as long as you pay your premiums.

Because final expense insurance typically does not require a medical exam, it is often much easier to qualify for coverage even if you are older or in poor health. So if you can't qualify for traditional whole life insurance, final expense insurance may be an option.

But you may also find that final expense insurance does not provide the level of coverage you would want to leave behind for your loved ones. If you have dependents who rely on you financially, a final expense policy may be able to help cover funeral expenses and end-of-life medical costs, but not much else. It may be smarter to get term life, whole life, or a combination of the two to provide a much more significant death benefit.

Also, if you already have a life insurance policy, your death benefit may already be enough to cover funeral expenses and you likely don’t need extra final expense insurance.