The terminal stage of life accounts for a substantial share of healthcare expenditures over the life course. Using data from the Chinese Longitudinal Healthy Longevity Survey (2005–2018), this study examines the impact of health insurance coverage on healthcare spending during the last year of life. To address potential selection bias, we first estimate the probability of insurance coverage using logistic regression and then compare expenditure patterns between insured and uninsured populations through propensity score matching. We further conduct rural–urban and regional subgroup analyses to explore heterogeneity in insurance effects. Our results reveal significant differences in medical expenditures associated with insurance utilization, while no significant disparities are observed in nursing care costs across groups. These findings provide new evidence about increasing healthcare spending in a non-Western context, and call for a more balanced health system to reduce inequalities in end-of-life healthcare due to insurance coverage among the elderly.