Will Funeral Homes Wait on Payment From a Life Insurance Policy?

Life insurance provides funds to pay for your funeral costs after you die. When the policy's death benefit is used for this purpose, you won't have to worry about how you are going to come up with the money to pay the funeral home. Most funeral homes will wait for payment from a life insurance company since the insurer must pay the death benefit.

Potential

Funeral homes may be understanding in regard to the payment of your funeral bill. Life insurance companies typically pay their obligations unless the company is in financial trouble. However, even then, all states have a state guaranty corporation to ensure that life insurance claims are paid.

Significance

The significance of a funeral home waiting for payment from a life insurance company is that the funeral home may want you to make temporary arrangements for payment. For example, the funeral home may ask for a partial payment if it must wait up to 30 days for payment from the life insurance company.

Benefit

The benefit of a funeral home that is willing to wait on payment for services is that you don't have to worry about where you will come up with the money to pay for the funeral. You also don't have to worry about what to do with the deceased's body during this time. As a practical matter, funeral homes have to be flexible with you in regard to payment even though there is no legal requirement for them to do so.

Warning

If you fail to pay your funeral bill within the agreed-upon time, the funeral home may send you to collections. Funeral homes are generally willing to work with you if you are waiting for payment from an insurer. However, if you take advantage of the generosity of the funeral home, the company can collect the debt in the same way any other debt is collected from a debtor.

Considerations

Consider discussing a prepayment arrangement with the funeral home. Many funeral homes provide pre-payment contracts. If you pre-pay for your funeral service, you don't have to worry about paying the funeral bill for a loved one when they die. With a prepaid funeral service, you do take the risk that the funeral home may go out of business, or your loved one may move to another state or area that is far away from the funeral home.

References

  • "Life Insurance"; Kenneth Black Jr., Harold D. Skipper Jr.; 1994
  • "Practicing Financial Planning for Professionals (Practitioners' Edition), 10th Edition"; Sid Mittra, Anandi P. Sahu, Robert A Crane; 2007
  • "Ernst & Young's Personal Financial Planning Guide, 5th Edition"; Martin Nissenbaum, Barbara J. Raasch, Charles L. Ratner; 2004

About the Author

I am a Registered Financial Consultant with 6 years experience in the financial services industry. I am trained in the financial planning process, with an emphasis in life insurance and annuity contracts. I have written for Demand Studios since 2009.