Purchasing a life insurance policy to fund your pre-planned funeral expenses can relieve your family of the expense of purchasing a funeral at the time of need. Funeral insurance offers protection against inflation, tax advantages, and the flexibility to choose any funeral home or cemetery. We offer specially tailored funeral insurance policies through Homesteaders Life Insurance Company and United Funeral Benefit Liability Insurance Company. Because Phil, Wendy, and Brandon are all licensed insurance agents, these policies can be purchased directly from us.
Your funeral insurance policy will designate a person of your choice as the primary beneficiary. This person will be entitled to any benefits in excess of the funeral cost, as well as being responsible for any deficiency. Your insurance policy will be assigned to the funeral home for payment of your final wishes.
It’s important to note the differences between funeral insurance and regular life insurance policies, such as term life insurance. Term life insurance stays in force as long as you are paying your premiums. Once you stop making premium payments, the policy lapses and the coverage ends. If you want to use a term life policy to cover your funeral costs, you must keep the policy in force until you die. And of course, the premiums typically increase as you get older.
Unlike term life, funeral insurance premiums are paid either in an initial lump sum amount or under 3-year, 5-year or 10-year payment plans. Once you have paid the premiums in full, the funeral insurance policy remains in force until you die. Also, the policy benefit amount grows over time at a rate set by the insurance company to offset increases in funeral costs due to inflation.
Whereas interest income on trust accounts is taxable, the growth in death benefits on a funeral insurance policy are not subject to income tax. In addition, funeral insurance is not considered a personal asset, so as long as it is irrevocably assigned to the funeral home by you, it does not affect your ability to qualify for assistance from social service programs, such as Medicaid.