How To Pay for a Funeral With a Life Insurance Policy
One of the reasons people take out life insurance policies is to ensure that their loved ones don’t have to worry about paying for their funeral. And as funeral and burial prices continue to go up, life insurance policies to cover the costs are becoming essential.
According to the National Funeral Directors Association, the cost of a funeral with a viewing and burial in 2021 was $7,848. That leads us to the question, How to pay for a funeral with a life insurance policy?
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Do Life Insurance Policies Cover Funeral Costs?
When a beneficiary receives a death benefit from a life insurance policy, they are free to use the money however they wish. That said, there are certain life insurance policies – such as funeral insurance, burial insurance, and final expense insurance – that are specifically designed to pay for funeral costs.
One of the main benefits of these types of funeral-related life insurance policies is that the payout time for the death benefit is much faster. Typical life insurance policies take an average of 30 to 60 days to pay the death benefit. If the loved ones of the deceased don’t have thousands of dollars lying around, burying their loved one becomes difficult and stressful. That’s why many people choose burial insurance instead of (or in addition to) another life insurance policy.
So, the answer to the question, “Do life insurance policies cover funeral costs?”, the answer is yes – but some policies make it easier for loved ones.
| Life Insurance vs Burial Insurace for Funerals | |
| Life Insurance | Burial Insurance |
| Can take months to pay the death benefit | Pays the death benefit much faster |
| The death benefit can be any amount | The death benefit amount is designed to pay for funeral and burial costs, plus the final expenses of the deceased |
How to Pay for a Funeral With a Life Insurance Policy
How to pay for a funeral with life insurance depends on the type of policy you have. If the deceased had burial insurance, those left behind would likely receive the death payout in time to pay the funeral expenses with it.
But if there deceased had another type of life insurance, they may have to resort to other means. For instance, they may have to pay for the funeral with their own money and then wait for the life insurance policy’s death benefit to be reimbursed for the expenses.
Step One: Locate the Policy
The first step in paying for a funeral with a life insurance policy is looking at the policy to determine what type it is. If you aren’t sure where the policy is, and the policyholder isn’t around for you to ask, you can use the self-help tool at the National Association of Insurance Commissioner’s Life Insurance Policy Locator Service. It will search the records to locate any life insurance policy that your loved one had.
Once you have the policy, look at the death benefit to determine the amount of the policy. This will help guide your decisions about funeral costs.
Step Two: Contact the Funeral Home
Your next step is to set up an appointment with the funeral home. Be sure to take the insurance policy with you, as they will need to look at it to determine whether it is “assignable.” That means a portion of the death benefit can be paid directly to the funeral home. If it is assignable, the funeral director will work directly with the insurance company to get a portion of the policy assigned to them.
Step Three: File a Claim
The claim that the funeral home files with the insurance company is only for their portion of the death benefit. You will need to file a claim of your own to collect the remaining death benefit. To do so, you will need a copy of the death certificate, which the funeral director should be able to provide, as well as information about the deceased: their full legal name, address, date of birth and death, social security number, life insurance policy number, and cause of their death.
The life insurance company will also ask you for details about yourself to confirm that you are the beneficiary.
It’s important that you file the claim as quickly as possible so the death benefit will not be delayed. This is especially true if the life insurance policy is not assignable and you have to wait to be reimbursed for the funeral costs. If you have all of the required information when first contacting the life insurance company, it will make the process smoother and quicker.
Do Funeral Homes Accept Life Insurance?
The short answer to this question is yes… but there are exceptions. As discussed above, an insurance policy must be assignable for the funeral home to accept it. And even if the funeral home does accept your loved one’s life insurance policy, it may still ask you for a deposit for the funeral before you can get started on the preparations. This is yet another reason that one of the best senior life insurance policies is funeral insurance.
Speaking of funeral insurance, the following charts will give you an idea of what it will cost to get coverage:
Monthly Premium Rates for Men*
| $5,000 Death Benefit | ||
| Age | Determined 'In Good Health' by Insurer | No Health Questions Asked |
| 50 | $16 | $20 |
| 55 | $19 | $24 |
| 60 | $23 | $29 |
| 65 | $29 | $35 |
| 70 | $38 | $44 |
| 75 | $51 | $63 |
| 80 | $65 | $82 |
* Estimated rates do not reflect the rates of any particular life insurance company.
| $10,000 Death Benefit | ||
| Age | Determined 'In Good Health' by Insurer | No Health Questions Asked |
| 50 | $30 | $40 |
| 55 | $35 | $46 |
| 60 | $43 | $57 |
| 65 | $56 | $68 |
| 70 | $74 | $88 |
| 75 | $100 | $125 |
| 80 | $126 | $162 |
* Estimated rates do not reflect the rates of any particular life insurance company.
Monthly Premium Rates for Women*
| $5,000 Death Benefit | ||
| Age | Determined 'In Good Health' by Insurer | No Health Questions Asked |
| 50 | $14 | $15 |
| 55 | $16 | $18 |
| 60 | $18 | $24 |
| 65 | $22 | $28 |
| 70 | $28 | $35 |
| 75 | $38 | $46 |
| 80 | $48 | $64 |
* Estimated rates do not reflect the rates of any particular life insurance company.
| $10,000 Death Benefit | ||
| Age | Determined 'In Good Health' by Insurer | No Health Questions Asked |
| 50 | $25 | $28 |
| 55 | $28 | $36 |
| 60 | $33 | $45 |
| 65 | $41 | $55 |
| 70 | $53 | $69 |
| 75 | $72 | $90 |
| 80 | $93 | $126 |
* Estimated rates do not reflect the rates of any particular life insurance company.
Ensure That Your Burial Costs Are Covered
If you want to make sure that your loved ones can quickly pay for your funeral costs and final expenses, maybe it’s time to consider funeral insurance. You can get a free quote from Lincoln Heritage, one of the oldest and most trusted funeral insurance providers.
FAQs
Do life insurance policies cover funeral expenses?
Life insurance policies can cover funeral expenses. The beneficiary can use the death benefit however they please. But there are certain life insurance policies, such as funeral insurance, that are designed specifically for that purpose.
What’s the optimal plan to pay for funeral expenses?
The best way to pay for funeral expenses is with a final expense life insurance policy.. Other types of life insurance policies can take 30 to 60 days to pay out because the life insurance company may have to review the claim before paying it out. Various factors, like cause of death or missing paperwork, can delay the payout even more. With a funeral insurance policy, the insurance company will pay the claim as soon as it’s approved. This is ideal for parents who want to ensure that their kids don’t have to worry about coming up with the money to pay for their burial costs.
Do funeral homes accept life insurance?
Some funeral homes accept life insurance, but only if the life insurance policy is assignable. The funeral director can look at the life insurance policy to determine whether or not the policy is assignable. If it is, they will work with the insurance company to have a portion of the death benefit assigned to them to cover the funeral and burial costs. Keep in mind that the funeral home might require you to put down a deposit or set up a short-term payment plan while they are waiting for the insurance policy to pay out.