Funeral expense insurance is a small permanent life insurance policy, usually $5,000 to $50,000, that pays your beneficiary a tax-free lump sum when you die so they can pay for the funeral, burial or cremation and final bills. Premiums stay level for life, and most plans ask a few health questions instead of a medical exam. The money goes straight to the person you name, outside your estate, so it does not wait for probate.
Government help is smaller than many families expect. The Canada Pension Plan death benefit is a one-time payment of $2,500, with a top-up of up to $2,500 more only for contributors who never received a CPP or QPP pension or disability benefit and left no spouse eligible for a survivor's pension. Funeral costs vary widely by province, funeral home and the choices you make, so a policy sized to the funeral you want closes the gap.
