As you get older, you may think about what will happen when you are gone. It is crucial to plan for that day so that your loved ones aren’t left making the difficult decisions when you die. An essential part of thinking through it all includes planning your funeral and how to pay for it. One myth is that your insurance policy will cover your funeral expenses. However, this is not always the case. If you’re in the planning stages now, learn whether life insurance could pay for your funeral expenses.

Does Life Insurance Pay for Funeral Expenses?

Most life insurance policies are a lump sum payout to a named beneficiary. A life insurance payout replaces lost income and pays off any debts and taxes your estate may need to settle.

Sometimes, your estate also owes a bill to Medicaid recovery programs for any care you received from the state’s program. There are often unexpected bills and even court costs that can come up. An insurance policy is not always enough to also pay for a funeral. 

If you expect your beneficiary to pay for your funeral costs from the insurance payout, they hopefully honor your wishes. However, it does not always work out that way. 

Irresponsible Beneficiaries

As a named beneficiary to your insurance policy, there is no legal obligation to use the insurance money to pay for your funeral. If the beneficiary chooses to instead keep the money for their own expenses, your plans may fall by the wayside.

For example, if you have a grown child who is a gambling or drug addict or in significant debt, your funeral plan may not be their priority. They could choose to spend the money from the insurance policy elsewhere, leaving the rest of the family to pay for a funeral. In a worst-case scenario, no one will step up to honor your funeral plans.

If your beneficiary is unreliable or has financial struggles, life insurance may not be the best plan to pay for your funeral expenses. When planning for your funeral using life insurance, make sure your beneficiary understands what you expect and will carry out your wishes.

Insurance Policy Timeline

Sometimes an insurance company holds onto a payout for one reason or another. There could be an investigation into your death or a legal holdup. Even an administrative error could keep the funds from reaching your family in time for your funeral. 

If this is the case, your loved ones could be left footing the bill and wondering if they will ever get a reimbursement. In some cases, your family may not be able to afford the funeral you planned.

What About Burial Insurance?

What people call “Final Expense” or “Burial Insurance” is just another word for a life insurance policy taken out specifically to cover funeral expenses. It is also often called “modified whole life insurance.” You can buy this type of insurance policy to cover everything from funeral flowers to a vault, casket, and payment to an officiant. 

Whether burial insurance will cover your final expenses or not still rests on the beneficiary. The beneficiary by law may still use this insurance money from burial or final expense policies however they choose. Administrative or investigative hold-ups can also still occur. These types of insurance are really no different than life insurance.

Another Way

There is only one way to pre-plan your funeral and ensure that all is paid for before you pass away. This option is to pre-plan and pay for your funeral expenses yourself. With this method, you can ensure that your wishes are honored. When you plan and finance your own funeral, you and your loved ones do not need to worry about who will pay for your plans.  

The monies you set aside for your funeral go to your funeral alone. They do not go to taxes, a loved one’s debt, or administrative insurance costs.

Make a Pre Plan

Another benefit to making a pre-plan directly with the funeral home is that you work with your providers directly to plan and pay for everything ahead of time. Planning together allows you to get to know the funeral director and how they will work with your family. You can understand what resources they have available to help your family with grief. You see their facilities and know precisely where and how to plan the entire funeral.

When you make funeral plans along with making the payment, you set your plans in stone. No family members can change your last rites into something different than what you would have wanted. You retain the ability to plan your last event. Since your funeral is a celebration of your life, isn’t that how it should be?

We Can Help

At Renaissance Funeral Home, our decades of experience building relationships with families who lose a loved one show our stability and commitment to you. We are a family-run funeral home that your family can rely on for planning and to help you cope with the loss of a loved one.

Offering every type of burial, including green burial, we also provide on-site cremation services. Our attention to your cultural and religious traditions helps your family and friends feel welcome and respected. Our beautiful state-of-the-art accommodations host large and tasteful gatherings for your loved ones.

It is truly a gift to your loved ones to go ahead and take care of all of the details before the inevitable occurs. Make a plan with us for your arrangements and give your family a chance to grieve. Contact us today and find out how we can help you make the plan of a lifetime.