Can Life Insurance Cover Funeral Costs?

Funeral expenses can put a significant financial burden on loved ones as they grieve. And that doesn’t even include other end‐of‐life costs, such as medical care, assisted living, and nursing home stays.

However, getting a life insurance policy can help alleviate these financial worries since, when you pass away, they receive a significant death benefit to pay for these costs.

This article will dive into several policies that can help your loved ones pay for your funeral costs so that you can choose the best life insurance policy for your needs.

1.  Final expense insurance

Final expense insurance is a small whole life insurance policy designed specifically to help with  funeral costs and other end‐of‐list expenses, like hospital bills.

The death benefit may be smaller, but premiums are typically lower than other policy premiums. As a whole life insurance policy, it also comes with a cash value growth component that receives part of each premium payment and could grow\ tax‐deferred at a fixed rate.

Once you accumulate enough cash value, you can do the following:

• Withdraw it: Withdrawing may lower your death benefit, and you may owe taxes on any gains.
• Borrow against it: Life insurance loans offer low rates, no credit checks, and no fixed due dates. However, your policy can lapse if the loan grows larger than your cash value.
• Surrender your policy: You get the cash value minus surrender charges if you surrender your policy.

Many will find final expense insurance their best option if they only need to cover funeral expenses.

2.  Term life insurance

Term life insurance lasts for 10 to 30 years, meaning you risk outliving the policy.

However, term life insurance offers a more substantial death benefit and lower  premiums.. This makes term life insurance coverage an excellent potential option if you want to help your loved ones with more than funeral expenses but need to keep your premiums as low as possible.

3.  Guaranteed issue life insurance

Guaranteed issue life insurance is a small whole life policy usually with no medical exam. It has a low death benefit but offers lifelong coverage, less expensive premiums, cash value, and guaranteed approval. As a result, the application process is much faster and simpler.

However, many guaranteed issue life insurance policies have two to three‐year waiting periods where coverage is inactive. If you pass away during the waiting period, your beneficiaries may receive a refund of your premiums paid but no death benefit.

Once the waiting period ends, coverage kicks in, and this functions like any other small permanent life insurance policy.

These features make guaranteed issue life insurance a great option if you find medical exams invasive, only need coverage for end‐of‐life costs, and can afford to wait a couple of years before coverage kicks in.

4.  Whole life insurance

Whole life insurance is a full‐sized permanent life insurance policy. That means it has higher premiums than other policies on this list but offers a substantial death benefit that covers you for life and cash value that grows tax‐deferred at a fixed rate.

Whole life insurance can be best for those with a larger life insurance budget and complex financial needs since the cash value helps build wealth, and the large death benefit goes beyond covering funeral costs.

Help your loved ones cover funeral costs

Most life insurance policies offer a large enough death benefit to pay for funeral costs. However, each type of policy is suited to different situations.

Final expense insurance will suit many policyholders who need to help to cover funeral costs since its low premiums and small death benefit were designed for this purpose. Plus, its cash value lets you build wealth over time. However, guaranteed issue life insurance is also available for people who want a faster application process and no chance of denial.

Meanwhile, term life insurance can work great if you need to help provide more financial protection to your loved ones but need to keep costs low. Finally, you can step up to whole life insurance if you have a larger budget and complex financial needs.

Regardless of policy type, it is important to gather quotes from several insurers before signing any paperwork. That way, you can compare quotes to find the lowest rates on the coverage you need.

¹ Forbes. “What Is Term Life Insurance?”

Coverage is underwritten by American Family Life Assurance Company of Columbus. In New

York, coverage is underwritten by American Family Life Assurance Company of New York. 

68000 series: In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies:

ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100‐A68400. In

New York, NY68100‐NY68400. B61000 series: In Arkansas, Idaho, Oklahoma, Oregon,

Pennsylvania, Texas, & Virginia, Policies: ICC18B61JWO & ICC18B61JTO. In Virginia, Policies

ICC0965JTO & ICC0965JWO. B60000 series: In Arkansas, Idaho, Oklahoma, Pennsylvania, Texas,

& Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400.

Q60000 series: Whole: In Arkansas, Policy Q60100CAR. In Delaware, Policy Q60200M. In Idaho

Policy Q60100CID. In Oklahoma, Policy Q60100COK. In Oregon, Policy Q60100COR. In Texas,

Policy Q60100CTX. Q60000 series: Term: In Delaware, Policies Q60200C. In Arkansas, Idaho,

Oklahoma, Oregon, Texas, Policies ICC18Q60200C, ICC18Q60300C, ICC18Q60400C.

Aflac Final Expense insurance coverage is underwritten by Tier One Insurance Company, a subsidiary of Aflac Incorporated and is administered by Aetna Life Insurance Company. The life insurance policy described herein contains an optional Accelerated Death Benefits Rider that is intended for favorable tax treatment under Section 101(g) of the Internal Revenue Code. Aflac does not give legal or tax advice. Please consult with a qualified legal, tax, and accounting advisor before engaging in any transaction. In AR, AZ, ID, OK, OR, PA, TX and VA: Policies ICC21‐

AFLLBL21 and ICC21‐AFLRPL21; and Riders ICC21‐AFLABR22, ICC21‐AFLADB22, and ICC21AFLCDR22. Tier One Insurance Company is part of the Aflac family of insurers. In California, Tier

One Insurance Company does business as Tier One Life Insurance Company (Tier One NAIC 92908).

Receipt of accelerated death benefits may affect eligibility for public assistance programs. Benefits may also be taxable, and are not expected to receive the same favorable tax treatment as other types of accelerated death benefits that may be available.

This is a brief product overview only. Coverage may not be available in all states, including but not limited to DE, ID, NJ, NM, NY or VA. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations and exclusions. For complete details, including availability and costs, please contact your local Aflac agent.

WWHQ | 1932 Wynnton Road | Columbus, GA 31999

NY | 22 Corporate Woods Boulevard, Suite 2 | Albany, NY 12211

Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent.

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