Final Expenses: The Problem We All Face

Earlier this year, a policyholder asked to cash surrender his policy. “I want to pay my final expenses in advance.” Our response was, oh, we can help you with that goal. Without identifying this individual, here are the facts:

  • the fully paid-up policy had a Death Benefit of $10,000
  • the cash surrender value was less than $4,400. (So as we evaluate this client’s policy, his death benefit is almost 2 ½ times larger than his cash value).

“Would it not be preferable,” we asked, “to meet this obligation with $10,000?”

“Okay. How do I do that?” he asked.

Simple. Name your funeral home as your beneficiary.

“Can I do that?”

Yes, you can. We reminded this client that while it his right to use the $4,400 today, this goal can be achieved with $10,000 in the future. Then he asked, “What if the final cost is less than $10,000?”

Simple again. Name a secondary beneficiary for the surplus. In the experience of the SNF (more than 100 years in solving client goals), we have noted that there can be problems when you pre-pay final expenses with cash. Here just a few:

  1. Sometimes your funeral home goes out of business. It may be acquired by a larger conglomerate. When that happens there may be difficulty identifying, with the new corporation, what you paid to the funeral home you did business with. If your funeral home merges, our client could simply change to another funeral home and name it as his new Beneficiary. He remains in control until the very end.

  2. If the cost of our client’s final expense service is less than his $10,000 death benefit, a second beneficiary can receive the balance (as we mentioned before).

  3. For the individual assisting with this client’s affairs, there is no hunt for assets to pay this final expense bill. That is because life insurance provides dollars exactly when needed most.

  4. When a claim form is received by the home office, it must be accompanied by a certified Death Certificate. Who has the responsibility for applying for a Death Certificate? The funeral director. What could be simpler?

In service to our clients, we recommend evaluating your contract(s) compared to your financial goals. What you own through us may be more helpful then ever.

If you would like our help in understanding how your contract(s) with the SNF can serve you, please call us at 412-458-5227 or email us at Thank you.

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