Funeral Cost

How to Use Life Insurance to Pay for Funeral Expenses

An image of a calculator and a file folder, representing the act of budgeting for a funeral and funeral comparison options of the website Funeralocity

Many families consider using life insurance to cover the funeral expenses and burial costs after a loved one dies. The average price of a traditional funeral service can reach $8,000, so using life insurance can help ease this financial burden. However, the process is not as simple as it sounds, so it is essential to understand how it works ahead of time. Here’s what you need to know about using life insurance to pay funeral costs.

Payouts Take Time

Life insurance payouts don’t occur immediately. Once a claim is filed, the insurance company will then review the death certificate and investigate the request to determine the total benefit. This process takes time, which can be challenging while making funeral arrangements as payment is often expected upfront for most funeral providers. It can sometimes take anywhere from 30 to 60 days before beneficiaries receive payment, although—if the policy has complications—it can take several weeks or months. Remember that an insurance policy must remain active to receive a payout, and if there were any payment lapses, the policy might be rendered invalid. The number of beneficiaries also affects the total distribution, so the person paying the funeral costs might not be able to cover all the charges with their portion of the benefit.

Policy Assignment Options

Depending on the type of insurance policy, a beneficiary may be able to assign life insurance benefits to a funeral home to pay for funeral service charges. The recipient will complete a form to designate the benefits directly to the funeral provider or a third party, who then files a claim with the life insurance company. Policyholders can choose this option when pre-planning a funeral by naming the funeral home as the primary beneficiary. Most funeral homes accept life insurance policies as a form of payment. Still, it is important to verify the policy assignment terms with the insurance company before making arrangements with the funeral director.

Advance Funding Can Help

Advance funding companies, like Beneficiary Advance, are another option if you need money to pay funeral expenses when a loved one dies. As the name implies, advance funding offers policy beneficiaries an advance on their life insurance benefits. This solution can help if the family needs money quickly to finalize funeral arrangements. During this process, the beneficiary files an assignment request with the advance funding company, which will then verify that the policy is valid and there are no outstanding liens or other complications. Once the verification process is complete, the beneficiary will receive payment in just a few days and can pay any pending funeral bills without having to come out of pocket.

Make Updates Regularly

It is crucial to update your life insurance policy regularly to ensure that it has adequate coverage. Always review your policy after major life events such as marriage, divorce, or retirement. You should also review your list of beneficiaries routinely and make adjustments if circumstances change. Remember that a beneficiary can use insurance benefits for medical or other expenses as they see fit. If you are pre-planning your funeral, make sure to talk honestly with trusted recipients about using the funds to pay funeral costs instead of other bills.

The process of planning a funeral can be a complicated and confusing time. While using life insurance is one way to pay for funeral expenses, the ultimate guide from Funeralocity offers alternate payment options that you can use. Funeralocity helps to simplify the process by letting you compare costs and services while making funeral arrangements.

Back to Knowledge Center
Use zip code for more precise search results

Find and compare top funeral homes near you

Use exact address for more precise search results
The Funeralocity Advantage

The Funeralocity Advantage

Why you should connect to funeral home through Funeralocity

Funeralocity is the one place to compare all funeral and cremation providers

  • Transparent pricing for all funeral and cremation providers
  • Compare all of your options from the comfort of home
  • Exclusive discounts from credentialed Excellence Providers
  • Access to valuable end of life information
  • Competitive financing and insurance options

Who Will Pay for your Final Expenses?

  • Get affordable insurance coverage regardless of your health
  • Don’t burden your family with your end-of-life costs
  • Skip the funeral home visit
Learn more