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If you want to prepare your loved ones as much as possible for your death, you can preplan your cremation using your life insurance policy called a preneed life insurance policy. This allows your loved ones to grieve without the added pressure of ensuring your final wishes are covered.

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It works a little differently than if you were just to leave your life insurance proceeds for your loved ones. Here’s what you should know.

The Steps to Preplan Cremation with Life Insurance

senior couple in conversation
  • Decide what you want

Before you plan your cremation, decide how what final arrangements you want. Do you want a service before cremation? Would you like a memorial service after cremation? What do you want from the service?

These are things you should think about before planning your services. What would allow you to die peacefully, knowing your loved ones were able to get closure?

  • Choose the right prepaid life insurance plan

Instead of naming a beneficiary on your policy, you’ll name a funeral director as your beneficiary. This is the funeral parlor where you want to have your services. Make sure the insurance covers as much of the final arrangements as you wish to preplan and cover.

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Most policies are for $10,000 – $25,000, but it varies by the funeral parlor and the cost of the services you want.

  • Decide if you want a guaranteed or non-guaranteed plan

You can choose from two types of pricing – guaranteed or non-guaranteed. Guaranteed pricing means the price of all the services and details you choose will remain fixed from the day you select the plan. Even if prices increase, your final arrangements will be at today’s prices.

A non-guaranteed plan costs less but also doesn’t guarantee the prices. If prices for your services and details increase, your loved ones may have to pay the difference.

  • Decide how you’ll pay for the plan

You can pay the plan in one lump sum or spread the payments over a few years. If you spread out the payments, there might be service fees for handling the administrative aspects.

  • Have everything in writing

Even though you’re prepaying for your cremation and services, ensure all your final wishes are in writing and kept safe. The funeral director should have a copy of your wishes, but it’s a good idea to give a trusted loved one a copy too.

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Can funeral expenses be paid with life insurance?

grave burial

Your beneficiaries can do what they want with the proceeds of your life insurance, including paying for your funeral expenses. If you wish to be cremated or have a full funeral service, your life insurance proceeds can cover the cost.

You can either buy traditional life insurance, and your loved ones can make a claim when you die, or you can purchase prepaid cremation life insurance, and all of your arrangements are handled before you die, making it easier on your loved ones.

What types of deaths aren’t covered?

Most causes of death are covered by life insurance, except for the following:

  • Suicide
  • Criminal acts (you were doing the criminal act)
  • Act of war
  • Any high-risk activities

Does the beneficiary of a life policy have to pay for the deceased’s funeral costs?

Beneficiaries aren’t obligated to pay the deceased’s funeral costs, but that might be what they intended. Always read the deceased’s final wishes to find out how they planned for loved ones to cover the funeral expenses. It’s also a good idea to have the conversation while the person in question is alive so everyone is on the same page.

How much does a prepaid cremation cost?

The cost of cremation varies by location and what other services you want. Cremation itself costs anywhere from $4,000 – $8,000. If you also want burial and/or funeral services, the costs may increase by $10,000 – $12,000 more.

If you lock in the cremation costs today with guaranteed coverage, your loved ones won’t have to pay anything for your cremation. If you don’t, though, they may have to cover the difference in cost.

Is prepaying for a funeral a good idea?

Prepaying for a funeral is different than buying preneed insurance. Prepaying for a funeral means paying the funeral parlor for your services upfront. Preneed insurance is a policy you pay premiums to or pay in one lump sum to cover your final expenses.

Prepaying for the funeral can be a bad idea because you don’t know if the funeral parlor will still be in business when you die. But buying preneed insurance gives your loved ones proceeds for your prearranged final arrangements. If the funeral parlor closes or you move, your insurance policy may be portable – prepaying for a funeral isn’t portable.

Final Thoughts

If you want to be cremated, you can plan your final arrangements for your loved ones, so they don’t have to. You can even pay for the services, so everything is ready for your loved ones upon your passing.

The best way to do this is with preneed life insurance versus prepaying for cremation. You’ll have an insurance policy that your loved ones can use to pay for your final arrangements.

If you prearranged them and it works out, your loved ones don’t have much to do. If you moved or the funeral parlor no longer exists, your loved ones can use the proceeds to handle your final arrangements elsewhere.


Meet Aaron H., a senior life insurance agent from California with 15+ years of experience. With a major in finance, excellent analytical and communication skills, and a passion for helping clients find personalized solutions, Aaron is a trusted advisor in the industry. He stays up-to-date on the latest trends and developments by attending webinars and workshops, reading industry blogs, and writing informative blog posts on this website. Aaron also has a keen understanding of SEO and online marketing, which he uses to help his clients reach a wider audience and get the coverage they need. He cherishes spending quality time with his wife, two children, and elder parents.