Certainly life insurance proceeds can be used for funeral expenses. The beneficiary can decide what expenses can be paid for with the proceeds. The exception would be if the life insurance proceeds were to be dictated by a trust. I would recommend a good attorney in those cases. One can also buy a final expense plan in which the funeral home can be the beneficiary and the money would pay off the funeral. In most cases if prepaying a funeral that money is placed in an annuity and any proceeds after the funeral is paid go to the remaining family.
Life insurance is a very good tool for paying a funeral. It is best to use Whole Life or guaranteed no lapse Universal Life, so that the policy is sure to be in effect when you pass. If you are on Medicaid, they may not want you to have a permanent policy like that because of its cash value. If that is the case, you can assign your policy to a funeral home (as long it is of a reasonable face amount for the cost of a funeral and burial in your area). Many people simply leave the proceeds to a beneficiary they trust, with the instructions to pay their funeral first, then use the rest for other purposes.
Yes... No... The 'death benefit' fro a life insurance policy sure can pay for funeral costs. Here are some thoughts of mine on this subject...
1. DO NOT assign your life insurance policy over to a funeral home. Some states DON'T allow a funeral home to be the beneficiary of a life insurance policy. That's overall a good thing. Your desired beneficiary should get the check and spend the money according to your final wishes.
2. WRITE DOWN your final wishes. Pleeeaaassse don;t leave it a mystery for your family. Write it down. Record an audio. Shoot a video. Make it know to everyone that may help in the decision process as to what you want. I heard someone say, "Funerals rip families apart more than divorce." I have seen it.
3. If you really want your wishes to be followed, set up a trust. Then your life insurance benefits must be spent according to your wishes. Not just for a funeral, all your wishes. If you want $500 to go to the Save the Whales foundation, it's done. If you want $100 to got to your neighbor because you once broke his sprinkler head and you didn't fess up to it, it's done. If you want the rest to go to Joseph raves, Nashville TN, it's done!!!
Congrats for first buying life insurance. Unfortunately that is the first step, not the last. If you have any questions, please reach out!
- gravy.
.JPG){kind=avatar}
1. DO NOT assign your life insurance policy over to a funeral home. Some states DON'T allow a funeral home to be the beneficiary of a life insurance policy. That's overall a good thing. Your desired beneficiary should get the check and spend the money according to your final wishes.
2. WRITE DOWN your final wishes. Pleeeaaassse don;t leave it a mystery for your family. Write it down. Record an audio. Shoot a video. Make it know to everyone that may help in the decision process as to what you want. I heard someone say, "Funerals rip families apart more than divorce." I have seen it.
3. If you really want your wishes to be followed, set up a trust. Then your life insurance benefits must be spent according to your wishes. Not just for a funeral, all your wishes. If you want $500 to go to the Save the Whales foundation, it's done. If you want $100 to got to your neighbor because you once broke his sprinkler head and you didn't fess up to it, it's done. If you want the rest to go to Joseph raves, Nashville TN, it's done!!!
Congrats for first buying life insurance. Unfortunately that is the first step, not the last. If you have any questions, please reach out!
- gravy.