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Does Life Insurance Cover Funeral Expenses?
Yes, a life insurance payout can be used to cover funeral and burial costs, medical bills and other end-of-life expenses. However, life insurance policy beneficiaries can use the death benefit any way they choose. That's why it's a good idea to make your wishes known to your loved ones.
Learn more about your life insurance options below.
Understanding Life Insurance
The best life insurance option for you will ultimately depend on your age, health and lifestyle, and the amount of coverage you require. Below, we evaluate three common life insurance options to give you a better idea of how they work.
- Term life insurance provides coverage for a predetermined amount of time (usually between five and 30 years). If the policyholder outlives the term of the policy, no death benefit is paid to the beneficiary. Generally, term life insurance more affordable than permanent life insurance.
- Permanent life insurance doesn't expire, providing coverage for your entire life (as long as your premiums are paid). Although permanent life insurance is usually more expensive than term life, it accrues cash value over time.
- Final expense insurance policies have lower payouts than traditional policies and are designed to cover funeral costs and other end-of-life expenses. Some final expense policies are "guaranteed issue", meaning there are no health questions or exams. They are usually restricted to a certain age range (50 and 85, for example). Therefore, even older adults with preexisting medical conditions can be granted coverage. These plans may have a graded death benefit for an initial period of time.
Other Uses for Death Benefits
Paying for your funeral is not the only way that your life insurance death benefit can be used. Other common uses for life insurance payouts include:
- Paying your mortgage. Your mortgage doesn't go away when you pass away, and your family will likely be left with the payments. A life insurance policy will help your family continue to make mortgage payments to ensure they do not have to sell the property and move.
- Paying off consumer debt. If you were to die, your unpaid debts would most likely fall to your family to pay. A life insurance policy helps ensure your loved ones are not burdened by the debt you leave behind.
- Providing a financial safety net for your family. Whether or not you are the primary earner in your family, your death will likely take a toll on your family's financial security. A life insurance policy can help make up for your loss of income, pay for child care and maintain your family's standard of living. How far your family can stretch the life insurance payout depends on how large of a policy you purchase.
- Saving for your child's future. The death benefit of a life insurance policy can help pay your child's college tuition or pay for a private school while they are young.
To learn more about life insurance and how it works, speak with a licensed agent at 800-966-7169, or read through some of our guides below.
- Who Has the Greatest Need for Life Insurance?
- Determining Your Life Insurance Needs
- Can You Have Two Life Insurance Policies?
*Applications for insurance may be subject to acceptance by insurer. Rates and coverage amounts will depend upon the carrier selected.