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A funeral director requested that I make my life insurance policy payable to the funeral home. Should I do this?

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Naming a funeral home as the beneficiary of your life insurance could be a good idea in some instances but they may just want you to use their services when the time comes. There is a special type of life permanent life insurance that is set up for exactly that, but most other types of life insurance policies would be best left to other named beneficiaries.

Final expense insurance is a type of permanent life insurance designed expressly to handle your funeral and interment needs. Rather than paying to your own named beneficiaries, this type of policy usually pays directly to the location which will handle your final needs. Final expense policies tend to be less expensive than traditional permanent life policies. An added advantage is that final expense life insurance is often available to people with preexisting conditions, and often without a qualifying medical exam.

You can achieve the same goals as a final expense policy as well as provide for your survivors. Instead of a final expense policy, purchase a whole, universal, or variable policy instead. You will have to take a medical exam, and the rates are a bit higher, but they not only solve your primary insurance needs, a policy can also give you a financial tool to use while you are living. As the policy matures, it develops a cash value in addition to the face value, and you can borrow against that cash value with a credit check or collateral.

With most types of permanent life insurance, you can purchase coverage in higher amounts, and then name any number of beneficiaries to the proceeds. For each beneficiary, you can specify the amount they will receive, or put the money into a trust to be doled out as needed. To cover your final expenses, simply name a funeral home as one of the dependents, along with a pre-agreed amount to cover costs into perpetuity.

Speak with a life insurance agent to go over your options with you.

answered Oct 14, 2013 by anonymous
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