How to Cash in Life Insurance With Funeral Arrangements
Making funeral arrangements after a loved one has died can be confusing and difficult. Most people don't consider the many things that must be done immediately after a loved one's death in order to prepare and pay for funeral arrangements. If your loved one has a life insurance policy, this can often be used to pay the funeral home directly.
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Instructions
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If you're the beneficiary on a loved one's life insurance policy, know where to find that information in the case of your loved one's death.
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Call the company that holds the life insurance policy immediately after your loved one's death. The insurance company may ask for proof that you are the beneficiary. You may also have to complete other paperwork.
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Call a few funeral homes before visiting and ask up front if they will take a life insurance policy for the payment of funeral services. Most funeral homes will make arrangements pending payment from the policy.
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Bring to the funeral home any information you have, such as the life insurance company name, phone number and policy number.
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Ask the funeral home to order the death certificate for you. As soon as they arrive at the funeral home (which can take a week), give a copy to the life insurance company, or ask the funeral home if they will do this for you. The life insurance company will not pay out the policy until they receive a copy of the death certificate.
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Try to purchase a funeral package that is less than the amount of the life insurance. If you spend more at the funeral home than the life insurance policy is worth, you will likely be required to pay the difference up front.
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The life insurance company will pay the funeral home directly if you assign the benefits to them (this may vary by state). If there are no concerns about the person's death, the funeral home should receive a check within a few weeks after the insurance company receives the death certificate.
If there are concerns about the manner of death (such as homicide or suicide), the life insurance company may withhold payment longer, and the funeral home may require that you pay in the interim. Discuss this with the funeral home if this is a concern.
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As the beneficiary, you will receive any money remaining from the life insurance policy after the funeral home is paid. Make sure the life insurance company pays the difference to you directly.
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Tips & Warnings
Consider ordering 10 to 20 copies of the certified death certificate right away. These will be required by insurance companies, banks and many other services. In most states it is cheaper and faster to request them up front than to go back later and order more. The cost will vary by state, but average about $5 per copy.
