Can a Funeral Home Be My Beneficiary?

With final expense, no, a funeral home cannot be your beneficiary, though it can work with a preneed policy. You will probably, however, still want a final expense policy—here’s why.

What is a Beneficiary?

A beneficiary is the person you, as the policyholder, choose to receive the death benefit of your life insurance plan. This person is then responsible for that money, using it to cover the costs you had agreed upon while still alive. Clearly, this is a very important agreement requiring trust and clear communication.

Choosing a beneficiary, then, is extremely important to the success of your policy. After all, you want your money to go to the right place. More often than not, potential policyholders choose a family member or close loved one as their primary beneficiary, then another as their secondary beneficiary.

Death Benefits and Beneficiaries with Final Expense

What does this look like with the final expense? The death benefit for these policies range anywhere from $2,000 to $50,000, so you may have a bit of wiggle room for how to use it. Typically, the main use of the final expense death benefit is funeral planning. You can also use it for medical bills, credit card payments, estate taxes, and anything else that fits within the policy.

Whatever you decide to do, make sure you choose a beneficiary who is willing and able to do it. These policies follow the traditional beneficiary method for most life insurance, described above. So, be sure to have all of this in mind.

What is Pre-Need Insurance?

Pre-need insurance, on the other hand, does not allow you to choose your own beneficiary, apart from choosing a funeral home, of course. Pre-need policies are purchased through a funeral home directly, meaning that they are the technical “beneficiary” of the death benefit. In reality, it is a payment plan for your funeral expenses that you pay ahead of time.

The Problem with Pre-Need

What’s the issue, then? If you are planning to use your final expense policy to pay for your funeral anyway, why not choose a funeral home as your beneficiary with a pre-need policy? Here are a few reasons:

  • You’re trapped: This may sound ominous, but, with a pre-need policy, you are locked into your funeral arrangements with little room for changes. With final expense, you have more flexibility to make changes to your funeral, as the death benefit will likely allow for it. If the price of your funeral changes, you will still have to make the same premium payments, and your loved ones won’t see any of the money returned to them.
  • No additional uses: With a final expense policy, you and your beneficiaries can use the death benefit for any costs you like that fit within its budget. With pre-need, you are completely limited to funeral arrangements.
  • No additional help or options: With pre-need, you are limited to the help that the funeral home has to offer. If you are looking for an insurance policy, this guidance will not be nearly as useful as an actual insurance company or agency. With final expense, you can get extra help, with careful guidance on choices and, yes, beneficiaries.

Call Final Expense Direct

Interested in learning more about final expense insurance? We’re the experts you have been searching for. To get advice for you, call Final Expense Direct at 1-877-674-0236.


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