How can life insurance pay for a funeral?

If you’re worried about having money for a funeral, you could consider funeral insurance, which is also referred to as “burial insurance,” “end of life insurance” and “final expense insurance.”

Funeral insurance is a whole life insurance policy that generally has a death benefit between $5,000 and $25,000. Note that your beneficiary isn’t obligated to use the death benefit to pay for burial costs and could use the money to pay off debt or other expenses.

Another option is pre-need life insurance. This is a policy that allows you to lock in prices for specific funeral arrangements at a funeral home, such as the type of service, casket, burial plot and headstone. A “pre-need” life insurance payment will go directly to the funeral home.

But any type of life insurance payout can be used by your beneficiaries to pay funeral costs, including term life insurance.