Does life insurance cover funeral expenses?

A fellow caregiver asked...

My husband is dying of an illness. We have not done much preparations for his funeral. I have a life insurance policy on him. Can this be used to help cover the funeral costs and everything to do with it? And how long does it take to get a life insurance check?

Expert Answer

Barbara Repa, a senior editor, is an attorney, a journalist specializing in aging issues, and the author of Your Rights in the Workplace (Nolo), now in its 10th edition.

 Many people are able to do just what you want: pay the costs of a funeral with life insurance proceeds. The policy will generally state that a particular beneficiary should get the proceeds at death. But if you are the beneficiary and choose to spend them that way, that is your option.

You are right, however, to be concerned about timing, as insurers-often known for wrapping proceeds in red tape—can be slow in paying, And if there is any question about the cause of death that may require further investigation, such as a suicide or criminal involvement, then payouts can be held up for as long as two years.

But even when no suspicious circumstances are involved, companies vary widely on how long it takes to pay benefits. Check the policy. Some contain express promises about when the life insurance benefits will be paid to the beneficiary. If not, contact the insurer and press for that information directly.

There may be a few other sources to turn to for help in covering the funeral bill:

  • The Social Security Administration may make a payment of $255 to help cover final expenses if the deceased or family members meet eligibility requirements.
  • The local funeral or memorial society -- a nonprofit group devoted to protecting consumers' rights and keeping down inflated funeral costs -- may provide inexpensive options and information on payment assistance. The Funeral Consumers Alliance maintains a listing of local groups.
  • If the deceased was a veteran, some burial and memorial benefits may be available through the Department of Veterans Affairs.
  • Finally, most counties will pick up the costs when a person does not have the money or means to defray funeral expenses, and his or her relatives or friends are unable or unwilling to pay. Check with the local county treasurer's office for details.

If you don’t use the life insurance or other sources to pay, then know that the final expenses, including the costs of a funeral and burial or cremation, are generally paid out of the estate of the person who died -- if there's enough money and property of value to cover the bill.