How to Transfer Ownership of a Life Insurance Policy to a Funeral Home

Many families wonder whether they can transfer ownership of a life insurance policy to a funeral home. While this is possible in certain situations, it’s important to understand how the process works and what it means for both your estate and your loved ones.

What Does It Mean to Transfer Ownership?

Life insurance policies have three key roles: the insured (whose life is covered), the owner (who controls the policy), and the beneficiary (who receives the payout). Transferring ownership means assigning full control of the policy—including the right to change beneficiaries, borrow against the cash value, or cancel it—to another party.

When you transfer ownership to a funeral home, that business becomes the legal policy owner. They can file the claim and use the death benefit to cover your funeral expenses directly.

When Might Someone Transfer Ownership of a Life Insurance Policy to a Funeral Home?

This type of transfer is most common when someone:

• Preplans their funeral through a specific provider
• Wants to lock in service costs at today’s prices
• Is concerned about Medicaid eligibility and needs to reduce countable assets

However, it’s not a one-size-fits-all solution. While it may simplify arrangements, it also removes flexibility for your family and may create complications if your plans change.

Is It Better to Assign Benefits Instead?

Rather than transferring full ownership, many people prefer to use a beneficiary assignment. This option allows you to keep control of the policy while authorizing the funeral home to receive a portion (or all) of the payout upon your passing.

This approach ensures funeral costs are covered but still allows you to name a backup beneficiary or cancel the arrangement if needed.

Steps to Transfer or Assign a Policy

If you choose to move forward with either a full transfer or a beneficiary assignment, here’s what to do:

1. Contact your insurance carrier and request the appropriate forms
2. Work directly with your chosen funeral home for any pre-need contracts
3. Review all terms before signing—especially if Medicaid is a factor

If you’re unsure whether to transfer ownership, speak with a licensed agent or estate planning attorney who can guide you based on your unique needs.

More Guidance From North Star

At North Star Insurance Advisors, we help seniors and families navigate complex final expense planning decisions every day. Our licensed agents can explain your options, walk you through the pros and cons, and help you find the right policy to meet your goals.

Request a final expense quote now to get started.

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