I’m widowed and wondered if I can take a loan out on my policy to pay for my deceased spouse’s funeral costs?
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UPDATED: Sep 15, 2020
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If you have a permanent (or whole life) policy then you may be able to take a loan out of your policy to pay for your spouse’s funeral and burial expenses. You must have enough cash value accumulated in order to take the loan and must be able to pay it back. Loans that are not paid off can reduce your death benefit so you do need to pay it off in order for your beneficiaries to receive their entire death benefit.
If you do not have enough cash value accumulated to take a loan or if you have a term policy (which does not accrue cash values) then you might consider a life settlement. In a life settlement, you sell the ownership of your policy to an investor and you receive a one-time payment for the policy. The beneficiary is changed and your heirs will no longer be appointed to receive benefits upon your death. A life settlement is not the right answer for everyone, so make sure you understand the transaction fully before you commit to it.