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Featured FAQ: Can I Pay for My Funeral with Life Insurance?

January 1, 2020

Yes, you can pay for your funeral with a life insurance policy, but it’s not always that simple. Many families find that at the time of need, the policy is no longer available or does not cover all the expenses. The most reliable way to secure funds to pay for your funeral is through advance planning with pre-payment of a funeral plan.

Photo credit: Antonio Guillem/

“Whenever I meet with a family considering advance planning, I always lay out all of the options and benefits of pre-payment. Since Massachusetts has very strict regulations about paying for funerals in advance, any funds used for advance planning must be deposited in trust with a third party which provides a huge level of comfort for families knowing that if they moved or if the funeral home went out of business, they could transfer their money to another funeral home. It really is a safe way to protect one’s family from the emotional and financial burden of having to make funeral arrangements after someone has died,” said Joe Reardon, Vice President for Community Development and Advance Planning at Keohane Funeral Home.

While many funeral homes will accept payment through a life insurance assignment, a revocable life insurance policy does not guarantee that you will have the funds available to pay for a funeral. Some people have term life insurance that expires at some point, possibly before death occurs. Other families counting on life insurance to fund a funeral find that the policy has already been assigned to someone else or it doesn’t cover all their expenses due to an existing loan against the policy.  Other insurance policies by their design are not allowed to be assigned to a third party.

Here’s a real-life example from a woman we’ll call Lisa. At the time of her father’s death, Lisa was a young woman without financial means and struggling to pay for her upcoming wedding. Her parents were separated, and her father had been estranged from the family for some time. However, her father, who was ailing, assured Lisa that he had a life insurance policy to cover funeral expenses. He gave his daughter the policy number and the contact information for the life insurance agency.

At the time of death, Lisa did not worry about the cost of the funeral as she was confident that $10,000 would be available through the life insurance policy. However, when she contacted the insurance agency after the funeral, she found out that the policy had already been cashed out by someone else.

“After the fact, I had to borrow money from a family friend to pay for the funeral,” said Lisa. “If I had had a funeral policy, nobody would have been able to touch it.”

What Do I Need to Know About Advance Planning?

Advance planning can save money through our cost protection program and through the irrevocability option protecting the funds from the high costs of long-term healthcare. Also, an irrevocable funeral trust to put aside funds to pay for funeral and burial expenses are exempt assets toward Medicaid eligibility.

Keohane has been on the forefront of the advance planning movement for many years. We are fortunate to be the only funeral home on the South Shore offering a full time Certified Preplanning Consultant who has extensive experience with long term care and Medicaid issues.

Many people ask: “What if you go out of business?” Great question!

“First, we are fortunate to have the trust of many families on the South Shore so Keohane is a firm that is growing not shrinking. That being said, we live in a very mobile society, so it is not unusual for people to move out of the area. All funds for advance funeral planning are made payable to an independent financial partner which holds it in trust for the purchaser. This allows the purchaser to transfer the contract to any other funeral home. Advance funeral planning is a very smart and safe way to protect one’s family, wishes and money,” said Reardon.

To discuss pre-planning or our cost protection program with one of our knowledgeable funeral directors, please contact Joe Reardon, Vice President for Community Development and Advance Planning at Keohane Funeral Homes at (617) 773-3551.


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