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How to Pay for Funeral Expenses with Life Insurance & More

By: Shelley Frost • Edited by: Katelynne Shepard • Subject Matter Expert Reviewed by: Kris Lamey • 9 cited sources • Updated Oct 17, 2024

When you lose a loved one, you face the emotional difficulty of the situation, but you also often have to deal with the stress of the finances of paying for a funeral. Preparing for funeral costs early eases the financial burden on your family. Learn more about end-of-life financing options.

Key Takeaways

• Planning for funeral costs eases the stress of your loved ones.
• Benefits from insurance plans, including life insurance and funeral insurance, can pay for funeral services.
• Alternative end-of-life financing options include prepaid plans, loans, government assistance, and crowdfunding.

Understanding Funeral, Memorial, and Cremation Costs

Data from the National Funeral Directors Association shows that the median cost for a funeral with burial was $8,300 in 2023^[1]. The median cost for a funeral with cremation was $6,280. Those costs include a basic service fee, which averages $2,495. Other expenses you can expect include fees for:

• The transfer of the body to the funeral home
• Embalming and other body preparation tasks
• Use of the facility and services of staff for the viewing and funeral
• Transportation, including the hearse and cars or vans for family members
• Printed memorial materials
• Casket or urn
• Flowers
• A headstone
• Burial plot
• Staff and equipment fees for graveside services
• Food and supplies for a reception after the funeral service
• Officiants
• Organists and soloists

Funeral homes offer many services, including handling other vendors, such as the florist. Under the Federal Trade Commission’s Funeral Rule, you have the right to purchase only the services you want without purchasing a package of services^[2]. Other price-related protections offered under this rule include:

• Pricing provided over the phone
• A written copy of the itemized General Price List upon visiting a funeral home
• Presentation of a written casket price list before seeing casket models
• An itemized, written statement showing the specific services you choose before you pay
• The option to use a casket you buy from another vendor without an additional fee
• Funeral services without embalming, as long as you comply with your state’s requirements

Understanding the costs you pay for funeral services helps you make decisions during an emotionally challenging time. It’s helpful to know your rights so you can make informed choices without being pressured into buying services you don’t want. 

Life Insurance for End-of-Life Financing

Beneficiaries often use the death benefits they receive from their loved one’s life insurance policies to cover funeral expenses. You can typically choose a lump sum or recurring payments. As the beneficiary, you choose how to spend the money, which may include funeral costs.

After filing a claim, the processing time varies from a few days to 1 or 2 months^[3]. If you don’t receive the payout immediately, you may need to fund the funeral expenses with an alternative method. For instance, you can pay for funeral costs out of pocket and consider the death benefit a reimbursement when it arrives. 

Funeral Insurance Policies (Final Expense Insurance)

You can purchase a special funeral insurance policy, also called final expense or burial insurance, to prepare for funeral and memorial costs. Despite the name, the insurance funds can be used as the beneficiary sees fit to manage the financial aspect of losing you. This includes paying off debt, medical bills or other expenses associated with your death.

Most policies allow you to choose more than one beneficiary. For example, if you have a spouse and two children, you may allocate 50% of the benefit to your spouse and 25% to each child. Choosing a designated beneficiary for the death benefit may expedite the process.

Kris Lamey, MBA & Former Finance Director

Prepaid Funeral Plans and Payable-on-Death Accounts (PODs)

Prepaid funeral plans allow you to plan and pay for your funeral while you’re alive. Guaranteed prepaid funeral plans mean you pay the current prices for the services you choose. The funeral provider performs those services without additional fees, even if the prices increase over time. You can save on costs by paying current prices for a funeral that might not happen for years or decades. Non-guaranteed plans don’t offer the same price protection. If the costs of services increase at the time of your funeral, your loved ones may have to pay the difference. 

It’s important to protect yourself by asking what happens if the service provider goes out of business. Also, ask if you can cancel the plans and get a full refund. 

An alternative way to set aside money before you die is a payable-on-death account. This special bank account allows you to name a beneficiary. You maintain full control of the money in the account while you’re alive. The beneficiary gains access to the funds upon your passing without the assets going through probate court. That immediate access allows the beneficiary to pay for funeral expenses. 

If you opt to open a POD account, we recommend assigning the money to a designated beneficiary with specific instructions. This can help prevent hard feelings and legal issues amongst your survivors.

Kris Lamey, MBA & Former Finance Director

Funeral Loans

When you choose a funeral loan, you’re taking out a personal loan to cover the funeral costs. You receive the loan amount as a lump sum and pay it back in fixed payments with interest over a set period. Benefits of funeral loans include:

• Fast funding
• Ability to spread the costs out over time
• Building credit as you repay the loan
• Less financial stress at the time of the funeral

Potential negatives of taking out a funeral loan include:

• Taking on additional debt
• Paying more overall with interest and loan fees
• Possibility of hurting your credit if you default
• Inability to qualify if you have poor credit
• Sole responsibility for funeral expenses for borrower instead of sharing the costs with other loved ones

Government Assistance Programs

You may qualify for federal assistance for funeral expenses in certain circumstances. Common situations include:

• Veterans. The VA provides reimbursements for burial expenses of veterans^[4]. For service-related deaths, the reimbursement amount is up to $2,000. For non-service-related deaths, the VA reimburses up to $796 to patients hospitalized by the VA at the time of death and up to $300 for veterans who aren’t in a VA hospital when they pass away. Reimbursements from other government agencies may affect VA benefits. 
• COVID-19. FEMA offers a reimbursement of up to $9,000 for eligible funeral costs for deaths related to COVID-19^[5].
• Disasters. FEMA may also reimburse some funeral expenses related to eligible disasters^[6].
• Social Security. Eligible survivors may receive a lump-sum death payment of $255, which can go help you pay for funeral costs^[7].

Some state and local governments offer financial support for loved ones who can’t afford funeral expenses. The amounts vary, and you often need to meet eligibility requirements to receive the payments. 

Crowdfunding and Community Support

Turning to your community is an option for funding a funeral, especially for a sudden, unexpected death or when you’re not financially prepared. Crowdfunding platforms, such as GoFundMe, allow you to accept donations to cover the funeral expenses. These sites give you space to tell your story, which can appeal to generous community members who want to support you. 

Communities might also rally around your family to help with expenses. Community fundraisers are common when a family faces financial hardship and needs support for medical and funeral costs. Local banks sometimes coordinate accounts to accept donations. 

Common Questions About Funeral Expenses & Insurance

Funding Funeral Expenses

Learning the differences in end-of-life financing options helps ease the monetary burden during a difficult time. From various insurance options to prepaid funeral plans, exploring these options early allows your family to focus on celebrating your life without any extra worries. Consider the options that work best for you as part of your end-of-life preparations. 

Written by Shelley Frost

Shelley Frost holds a degree in education and has amassed a diverse writing portfolio primarily covering business, marketing, home improvement and senior living topics. Before moving to full-time freelancing, she worked in insurance, software testing and education, giving her a broad range of real-world skills to apply to her writing. She prides herself on her creativity and ability to capture the voice of each client. In her free time, Shelley enjoys decorating cakes, gardening, crafting, traveling and attending her kids' many school activities.

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Edited by Katelynne Shepard

Katelynne Shepard is a writer, editor and SME who is proficient at crafting and reviewing content. She has been a full-time copywriter and editor since 2011 and has written content for Fortune 500 companies, independent law firms, indie publishers, small-business owners and mainstream websites. She specializes in parenting, lifestyle, family law, personal injury, criminal law, immigration law, astrology, personal finance, education and health care. In addition to thousands of e-commerce product and category descriptions, Verle's work includes SEO blogs, social media posts and long-form informational articles.

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Subject Matter Expert Kris Lamey

Kris Lamey is a seasoned writer and subject matter expert (SME) in finance, holding a degree in Journalism and an MBA. Alongside her roles in radio and journalism, Kris has enjoyed over 15 years of success in the FinTech industry. She's a Real Estate investor (former broker) who currently freelances as a writer, boasting over 15 years of experience, and she eagerly welcomes new clients and challenging topics. Kris is also actively involved in the health care industry, specializing in mental and behavioral health. She is well-versed in various content formats, including articles, blogs, website marketing copy and press releases.