Not sure if the funeral home would provide any value in handling the insurance or not but something about that gives me the heebie-jeebies. Like getting a paycheck cashed at the liquor store or something…
I would probably try to deal with the insurance company myself and pay the funeral home whatever was owed them.
They provide value to themselves to insure they get paid. They do know how to handle the paperwork on a claim though.
What a lot of folks don't know is that the insurance belongs to the beneficiary and not the estate and can not be legally required to be used to pay funeral or any other expenses of the deceased. Most would anyway.