Does Life insurance Cover Funeral Costs

Summary: Life insurance provides a practical solution for covering expensive funeral costs while helping protect loved ones from being financially burdened during their time of grief.

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Have you ever thought about who will cover your funeral expenses when you're gone? It’s sometimes an uncomfortable topic to think about, but planning for these inevitable costs is one of the most thoughtful gifts you can give your family.

Life insurance is a practical option that helps ensure your loved ones won’t be financially burdened with paying final expenses while they’re grieving your loss. Here’s what to understand about using funeral life insurance to plan for your final expenses.

What is funeral life insurance?

Funeral life insurance is often referred to as final expense insurance or burial insurance. It's a type of life insurance specifically designed to cover the costs associated with funerals, burials, and related end-of-life expenses.

Some of its key features are:

Why use life insurance for your funeral costs?

Funeral life insurance provides relief to your family by helping to alleviate the financial burden of funeral expenses, helping protect loved ones from having to use their savings for your final costs. With death benefits typically issued within 24 hours of a claim being filed, beneficiaries receive immediate funds during their time of need. Moreover, since these payouts are generally made directly to the beneficiary, they bypass the probate process, ensuring faster access to money.

Another advantage of using life insurance to help cover funeral expenses is that life insurance proceeds are typically paid tax-free to beneficiaries. There are no restrictions on how the money can be used, so loved ones can help cover unforeseen costs with greater ease.

How much does a funeral cost?

Funerals can be expensive. The average funeral cost with a casket and vault is over $9,000, but can easily surpass $10,000.* Factors that can raise the cost include:

Besides funeral expenses, there are other end-of-life costs to consider, such as unpaid medical bills, legal fees, and taxes. The probate process for settling your estate can also be time-consuming and costly. Average costs are between 3% and 8% of your estate’s total value.⁽¹⁾

How much funeral life insurance coverage do you need?

If you want to leave behind enough money to cover your funeral costs, see how much of a death benefit you might need. If you also want to ensure that other funeral costs or end-of-life expenses are covered, such as tombstones or probate, a higher death benefit can help pay for some or all of these additional costs.

Ultimately, the amount of coverage you should obtain depends on your goals for the death benefit and what life insurance costs fit within your budget.

Which types of life insurance can help cover funerals?

Whole life and term life insurance are two common types of insurance used to cover funerals. Whole life is a form of permanent life insurance that remains in force as long as you meet your monthly premium payments. It also builds a cash value over time, growing at a guaranteed rate.

There are several types of permanent life insurance, including traditional whole life insurance and guaranteed issue whole life insurance. Guaranteed issue policies are popular with seniors because they don’t require a medical exam or health questions to qualify.** These policies typically offer death benefits of up to $25,000.

Individual term life insurance differs from whole life insurance in that it only provides coverage for a specific period, usually between 10 and 30 years. If you pass away after the policy expires and it hasn’t been renewed, no death benefit is paid.

While term life may offer more affordable premiums, it does not build cash value and must be renewed to maintain coverage. Keep in mind that renewal premiums are based on your age at the time you extend the policy, which typically results in higher costs.

What if you don’t qualify for life insurance?

If you don’t qualify for life insurance, you can always save on your own by putting money aside in a savings account. Most banks allow you to designate a beneficiary on the account, which enables the funds to be distributed directly to the beneficiary and avoid the probate process. Be sure to update beneficiaries if they pass away before you do. Otherwise, the funds in your bank account become part of your estate.

Pre-paid funeral plans are another option. These are payment plans you make ahead of time with a funeral provider to pay your funeral expenses in advance. You can pay in a lump sum or monthly payments. However, be sure to thoroughly research a funeral home before signing any contracts, as some states provide little to no protection if something goes awry.⁽²⁾

Frequently asked questions (FAQs)

Does all life insurance include funeral insurance?

No, not all life insurance is specifically designed to cover funeral costs. Funeral life insurance typically has a smaller payout and may send the death benefit more quickly to help cover end-of-life expenses. That said, most life insurance policies can still be used to pay for funeral and burial costs. The death benefit is paid to your beneficiary, who can use it as they see fit.

Should I cover my final expenses?

Covering your final expenses is recommended to avoid having your loved ones potentially take on debt during a time when they are going through the grieving process. About four in five Americans have $1,000 or less in emergency savings, so they may need to take out a loan or use a credit card to cover funeral expenses.⁽³⁾

Can my funeral plan be a part of my will?

Yes, you can detail your final wishes in your will. However, wills are meant to be read after you’ve already passed. Consider creating a separate document outlining your wishes to share with your family while you’re alive. Your loved ones will know how to honor your wishes from the moment you pass.

How do I enroll in life insurance?

Begin by researching insurers with solid financial strength ratings, and then compare policies that meet your specific needs. Most traditional policies require completing a medical exam or answering health questions.

Mutual of Omaha’s company, United of Omaha Life Insurance Company, offers guaranteed issue whole life insurance policies that require no medical exams or health questions. Moreover, United of Omaha has strong ratings across three major rating services. This demonstrates the ability to meet ongoing insurance demands, such as processing claims.

Is there a way to guarantee my beneficiaries use the death benefit to cover my final expenses?

You may be able to set up an irrevocable funeral trust and put your insurance policy into it to make sure the money is used in that way.⁽⁴⁾ An estate planning attorney can advise you on whether this makes sense for you. Communicating your wishes in writing to your beneficiaries and naming a trusted person to carry out your last wishes isn’t guaranteed, but it’s a simpler and more reasonable alternative.

*2023 NFDA General Price List Study
** Ages 50-75 in NY and Ages 45-85 in all other states

Sources:
(1)LegalMatch, The Cost of Probate: A State Comparison, February 2025
(2)ElderLawAnswers, What You Should Know About Prepaid Funeral Plans, March 2024
(3)U.S. News, Survey: 42% of Americans Don't Have an Emergency Fund, January 2025
(4)William C. Roof Law Group, Irrevocable Funeral Trusts, Accessed April 2025