The main reason that a person buys life insurance is to help their family make it financially if they should die. This includes paying for the cost of the funeral. That said, It’s imperative to read the fine print in life insurance policies. These will vary greatly so it’s necessary to get a good understanding of what each particular type of life insurance policy will and won’t cover.

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Will Life Insurance Cover Funeral Expenses?

memorial graveIt’s important to understand that it will take some time, in many cases several weeks to several months, to get the money from the life insurance company, for this reason, it’s important to keep all copies of receipts and other itemizations to submit to the insurance company upon completion.

Before purchasing life insurance, it’s a good idea to understand what the cost of the average funeral is as well as other expenses that the family may have to deal with upon death. To do this, the following steps must be taken.

Cost Of The Average Funeral

According to the National Funeral Directors Association, the average funeral cost is $8,343 (Median Price 2012) with some soaring as high as $20,000. This includes the processing of the body for either viewing (embalming) or cremation, as well as the service itself.

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If the person is on Social Security, or otherwise qualifies for Social Security, they will be entitled to a one-time death benefit of approximately $250. Although that isn’t nearly enough for a funeral or final expenses, it is a start if there isn’t any life insurance.

Keep in mind too, that the fewer frills are chosen for a funeral, the lower the overall cost is going to be. In some areas, you can have a funeral for as little as $3000 and if you’re just seeking a cremation, you may even be able to find one for about $750 to $1000.

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Types of Life Insurance Policies

Life Insurance policies will vary greatly. Some will give a lump sum payout of $50,000 to $100,000 or more. This is dependent on the type of policy chosen, the reason for the death (most of the time suicide isn’t covered), and other particular factors that are unique to each individual policy. The first step in purchasing a life insurance policy is to add up all of the expenses required for life.

These expenses should include the following:

  • Monthly budget (rent/mortgage, utilities, extras such as satellite and other services, food, etc.)
  • Burial (call around and find out what the average funeral parlor in the area charge)
  • Car insurance
  • Life insurance
  • Other bills

Many life insurance policies will also have a waiting period in which coverages won’t be in effect until such a time as the waiting period has passed. This waiting period may be anywhere from 30 days to a year or two depending on the policy itself.

Some policies will have a one-time payout for a death benefit in addition to the rest of the life insurance policy coverages. This amount will vary according to policy.


You have to contact the insurance provider in order to release the payout ASAP.Unfortunately, the payout of a life insurance policy may take many months to receive. In most cases, proof of death must be sent in and it must be verified. This may be a death certificate or another document that notes the death.

The cause of death may also have to be investigated as well as any other mitigating circumstances that may have been going on at the time of death.

Not all insurance companies pay out slowly, however, it may take a few weeks to several months to get the full payout so plans should be made ahead of time for paying bills or postponing them until the life insurance check arrives.

When it comes to whether funeral expenses are taxable, here is something you must be aware of.

Prepay Funeral Expenses

In some cases, people will opt to prepay their funeral expenses and then pay themselves back with life insurance. This is doable in many cases. To do this, contact the funeral home and find out what all this will entail.

It may be as simple as pre-paying for a casket or a burial plot or it may be for cremation purposes. Regardless, having a handle on it ahead of time can save loved ones time and money in the long run. Many life insurance policies will reimburse this cost in the end so that the family is spared the expenses.

If you’re going a prepay route, be sure to get an itemized list of what the coverages do and don’t entail to ensure that your family is fully reimbursed and that they have all of the important details.

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Understand What Is Required

When it comes to a funeral, many funeral service providers will charge a large number of fees. Get these itemized before you agree to them. Keep in mind that the funeral service providers are out to make money as well. So always take someone along that isn’t as close to the situation to help you determine what you do and don’t require.

Typical services offered by a funeral service provider with costs:

  • Basic Services Fee $1975
  • Relocating The Body To The Funeral Home $300
  • Embalming (only required if there will be a viewing) $700
  • Hair and Makeup (only required if there will be a viewing) $250
  • Casket (this price will vary according to wood or metal) $500 to $5000
  • Cremation (this price will vary according to where it’s done) ($500 to $4000)
  • Viewing at the funeral parlor $400 and up depending on particular services involved.
  • Hearse $200 to $500
  • Family transport $50 to $500
  • Gravesite services $1000
  • Gravedigging $600 or more
  • Grave liner (not required in most states but the funeral services will try to get you to buy one) $1000
  • Gravestone (this price will vary greatly on where you get your gravestone. Generally speaking, if you buy it from the funeral parlor, it’s going to be more costly than if you purchase one elsewhere) $2500
  • Vault $1500

Note: The price of the services mentioned here is in USD and may vary depending on the provider, location, and client requirements.


Keep in mind that not all of the above are required. Many funeral service providers are going to push for these and you’ll want to have someone along that can “yay or nay” some of the services if you’re not going to require them. Some of the above life insurance policy isn’t going to cover (although if they do give you a payout for the life insurance policy you’re free to use it for what bills you need to pay).


Meet Mark Orourke, a seasoned funeral insurance expert with over 15 years of experience in the industry (Bachelor in Finance from SDSU, CA). With a passion for helping families prepare for the unexpected, Mark has dedicated his career to providing personalized funeral insurance solutions. Meeting the unique needs of each client is what Mark always prioritizes.