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Paying for a Funeral with Life Insurance

For many, life insurance is a great death-benefit protection for families. When the breadwinner dies, the survivors get the money to help provide for the family. But life insurance can be used for other purposes, including paying for funeral expenses.

Most people purchase a life insurance with a small face-value specifically to cover funeral costs. Yearly premiums are easier to handle, often in monthly installments with carrying charges built into the cost.

Good, affordable for those with limited means. It also grows at the same rate and there's no need to report it on a 1099 since it's not considered taxable income. Some opt for renewable term insurance, which provides the most death-benefit protection.

You can get it for one, five or ten years, according to one funeral director we spoke to. It's inexpensive (compared to an ordinary whole life insurance) and it carries a fixed death benefit, which is its face value.

The drawback is, if not renewed, it lapses and disappears. If you're confused with all the choices, get help from a good insurance broker to evaluate your insurance needs.