What Happens If You Pass Away Before A Funeral Plan Is Paid For?

27 April 2021
 Categories: , Blog


Funeral pre-arrangement plans are designed to spare your family from the financial burden of paying for your funeral when the time comes. And it can be a financial burden, with a funeral (including burial) easily costing $10,000 or more. Making regular contributions allows your plan to cover the costs of your funeral when needed, so your family doesn't have to find a significant amount of money with very short notice. However, before committing to such a plan, you might be wondering — what happens if you pass away before the plan has been paid off?

Different Plans With Different Terms and Conditions

There are many different types of funeral pre-arrangement plans on the market, and the terms and conditions can vary significantly from one plan to another. If the policyholder should pass away prior to the plan being paid in full, the terms and conditions will stipulate the outcome of the partially completed plan. In short, be sure to carefully read these terms and conditions before committing to the plan, as you need to be sure that it meets your needs in any eventuality. Ask the plan provider if you need any clarification. There are a few general considerations that can be applicable.

The Remaining Balance

The entirety of the plan may not have been paid for when the policyholder passes away, but this doesn't mean that the amount already paid will be forfeited. Sometimes, in order for the plan to be utilized when needed, your estate will need to pay the remaining balance. This is less than ideal; however, the required financial outlay will be significantly less than having to pay for the entire funeral. A portion of your life insurance can possibly be used in order to make up the shortfall.

How Long You've Held the Policy

Some plans may offer a full payout, even when the policyholder passes away prior to the plan being completely paid for. This is a reasonable outcome since many pre-arrangement plans are designed to be paid for over the course of numerous years. However, it might be stipulated that you have held the plan for a predetermined period of time, and it will be necessary that you were entirely up to date with your payments. 

There's no general answer about what happens if a policyholder passes away before their funeral pre-arrangement plan has been paid for, which is why it's so important to find this out before you actually take out such a plan.

For more information about funeral pre-arrangements, contact a funeral home.