How to pay for a funeral with life insurance

Our arrangers are often asked about how to pay for a funeral with life insurance. We think any pre-planning like this is a good thing.  Having to quickly put together funeral arrangements – including payment – is a real challenge for those already grieving.

Let’s discuss how a life insurance policy can help you make arrangements now.

Can I use my existing life insurance policy to pay for my funeral?

In the state of  New Hampshire, technically, no, you cannot. But, you can use your life insurance policy to cover future funeral expenses. 

When Phaneuf agrees to accept your life insurance assignment, it is generally a policy taken out by you. The death benefit can be used to cover your funeral. Your family would make Phaneuf Funeral Homes the beneficiary. Because money is not exchanged, this does not constitute pre paying for your funeral.

If you choose to pre pay for a funeral, we can place the funds into a special type of a life insurance product. It’s not a policy that requires a health exam. It’s a flat fee. And there are not multiple premiums. 

What are the potential drawbacks involved with using life insurance to pay for a funeral or other things I should be aware of?

There are certainly things to consider if you choose this route. If you end up using Medicaid benefits, New Hampshire may claim  some of your insurance payout before your family receives their portion of the benefit. 

Other loans against your life insurance policy could also lower your eventual benefit, not leaving enough to pay for the funeral.

Your ongoing premiums for life insurance may actually be higher than the full cost of a funeral. One option is cashing in your policy now in order to pre pay for your funeral. This option allows you to lock in costs now. But beware: businesses that pay you your already-paid life insurance benefits now often charge a hefty fee to do so.

Phaneuf understands that there are lots of options to ponder. We work with clients on payment plans and all sorts of options to ensure that this process is not a painful one.

What if my funeral wishes change along the line?

You may say, “Listen, back when I made these arrangements, cremation wasn’t as popular, and I really didn’t want to do it. Now, I’ve had a change of heart, and I want to modify my arrangements.” This is not a problem. We work with people regularly to update their wishes and payment options. Please contact us if you have any concerns or additional questions.