It is not unusual for families to expect to pay for a funeral with life insurance. It sounds like a simple and straightforward plan, doesn’t it? The truth is you can encounter an array of unexpected difficulties with life insurance policies.
The average cost of a traditional funeral service can be a financial burden for most families out there. Using life insurance policies to pay for funerals thus exudes practicality. As there are various complications of paying with insurance, it is crucial to comprehend how it works. Here are some of the ways through which you can avoid complications while using life insurance to pay for funerals.
Opt for Over-50s Life Insurance
As the name suggests, over-50’s life insurance policy is only for those who are above 50 years of old. The over-50 insurance is for those who haven’t qualified for other policies. If you are over 50 and under 85, you would be eligible for this scheme.
Note that the sum insured on these policies is usually lower when compared to other policies. That’s why over-50s life insurance policies are apt for funeral and death expenses.
Prepaying for Funeral Services
You can even opt for a pre-paid funeral plan where you pay in advance for your funeral. You can either pay in lump sum amounts in installments to the insurance company or funeral director. Your money would be invested in an insurance plan or a trust plan to be paid when you die. But make sure that you read the terms of the funeral plan correctly.
Review your Life Insurance Policy from Time to Time
If you are planning to utilize life insurance benefits to pay for your funeral, review them from time to time. You should check the policy and ensure that it is valid to eliminate problems during payouts. In case you have any questions, consult an experienced law attorney.
They would assist you in recognizing the red flag areas present in the policies. If you are in the middle of planning a funeral for a dear one, direct your queries to the funeral home. If you have specific questions and doubtful about the policy, ask your life insurance company without hesitating.
Update the Policies Periodically
It is imperative to update your life insurance policies regularly to make sure that it has good coverage. For instance, it is a good idea to review your policy after significant life events like marriage or retirement.
It is also imperative to review the list of beneficiaries your policy contains. Make alterations if the circumstances change. A beneficiary of your life insurance policy can use the benefits for medical expenses and significant expenditures.
In case you are planning your funeral, be honest with the trusted recipients. Ensure that they allocate funds only for paying for your funeral and not for any other purpose.
Opt for a Payable-on-Death Account
Are you wondering what a payable-on-death account is? It is a type of bank account that permits you to reserve funds for your funeral. A payable-on-death account would also allow you to name someone who can get access to your money.
Note that a payable-on-death account doesn’t fall in the category of a joint statement. In simple words, the beneficiary cannot access funds until your demise. Ensure that a beneficiary is a trustworthy person.
Seek Help of an Advance Funding Company
Many funeral homes collaborate with advanced funding agencies. As the name suggests, advance funding offers beneficiaries an advance on life insurance benefits. This solution can be helpful if your family requires funds to finalize funeral arrangements.
However, the beneficiary has to file an assignment request with the advance funding agency. Note that the advance funding agency verifies that there are no complications.
The process of funeral planning can be confusing. Using your life insurance policy to pay for funeral expenses is a great way to minimize the financial burden.