Social Security is an insurance program set up by the government to provide a safety net of income at retirement. However, this safety net extends to other benefits. At death, your beneficiaries receive a death benefit from Social Security and they may qualify for an additional income benefit on top of that.
Social Security pays a one-time benefit of $255 to your beneficiary. This death benefit is not taxed. Your beneficiary may use this to help pay for your burial costs and other costs associated with your funeral services. An additional income benefit may also apply if your spouse was eligible to receive a benefit payment based on your earnings record at the time of your death. If your spouse is deceased, your child will receive the benefit payment.
The death benefit helps pay for funeral expenses. The additional income payment is not a death benefit, technically, but can be used to help defray costs over time if your beneficiary has a lump sum of money to give to the funeral home and cemetery. The beneficiary payment may replenish the savings used to pay for the cost of the funeral services and burial.
The burial amount is small. Your funeral will likely cost more than $255, though, this depends on whether you are buried or cremated. This benefit is also a one-time payment, so there are no other death benefits associated with Social Security. The beneficiary income payment is distributed over the beneficiary's lifetime. If the beneficiary doesn't have a lump sum of savings to begin with, then this income payment doesn't really help when the funeral and burial bill come due and is payable in full.
You should consider buying life insurance. Life insurance provides additional death benefit protection, which will provide enough money to pay for all of your final expenses. Additionally, life insurance provides money for your spouse to live on if Social Security benefits are not sufficient to replace your previous income and any retirement savings left over after your death. Life insurance also may provide living benefits to you if you purchase cash value life insurance. Cash value life insurance is life insurance that builds a cash reserve. This policy type allows you to build a savings, which you may use during your lifetime for any reason. If your spouse predeceases you, this cash value could be a valuable asset and you may recover all of the money that you've paid into the policy.