Final expense insurance is a type of permanent life insurance originally intended to cover funeral expenses. The death benefit may be used to pay for final medical bills and other end-of-life expenses.
A one-time lump-sum death payment of $255 can be paid to the surviving spouse if he or she was living with the deceased; or, if living apart, was receiving certain Social Security benefits on the deceased’s record.
If there is no surviving spouse, the payment is made to a child who is eligible for benefits on the deceased’s record in the month of death.
Keep in mind, you will not receive a survivor benefit in addition to your own retirement benefit; Social Security will pay the higher of the two amounts only. Therefore, you may need life insurance to offset the deduction in income.
What happens if the deceased received monthly benefits?
If the deceased was receiving Social Security benefits, you must return the benefit received for the month of death and any later months.
For example, if the person died in July, you must return the benefits paid in August. How you return the benefits depends on how the deceased received benefits:
- For funds received by direct deposit, contact the bank or other financial institution. Request that any funds received for the month of death or later be returned to Social Security.
- Benefits received by check must be returned to Social Security as soon as possible. Do not cash any checks received for the month in which the person dies or later.