Can I Cancel My Funeral Insurance Policy or Trust?

The ability to cancel your funeral insurance policy or trust depends on the terms outlined in your agreement. You will find that funeral trusts can be revocable or irrevocable, which affects whether you can cancel the trust and receive a refund. Revocable trusts allow you to request cancellation and a refund, while irrevocable trusts are permanent and do not offer this option. Funeral insurance policies typically have fewer restrictions on cancellations; however, you need to continue paying the premiums for your coverage to remain in effect.

If you choose an irrevocable funeral trust, it will restrict access to the trust’s assets until you have passed away, allowing your beneficiaries to receive these assets only after your death. 

When you set up an irrevocable funeral trust, the assets are owned by the trust and managed by a trustee, which could be a bank, funeral home, or a company specializing in trust management. This arrangement prevents you from canceling the trust, as you do not retain control over the assets. In contrast, with a revocable trust, you maintain control of your assets and can modify or dissolve the contract, leading to cancellation.

It’s important for you to review the documentation associated with your funeral policy or trust to understand the cancellation processes, if applicable, as well as any potential fees or penalties related to your decision. Typically, cancellation fees are more common with revocable trusts than with funeral insurance. If you are considering canceling your funeral insurance policy or trust, it’s advisable to contact your insurance provider or trustee to discuss potential alternatives, understand the financial implications of cancellation, and determine the best course of action based on your needs.

Sources

“Complete Guide to Prepaid Funerals: Plan, Costs, Pros & Cons”. Lincoln Heritage Funeral Advantage. https://www.lhlic.com/consumer-resources/how-pre-paid-funeral-plans-work/#irr 

“The pros and cons of funeral trusts”. Bankrate. https://www.bankrate.com/insurance/life-insurance/funeral-trusts/