How Prepaid Funeral Plans Work

Many people find estate planning emotionally challenging, and of all facets of estate planning, funeral arrangements are some of the most emotionally difficult.

Looking ahead to one’s funeral can make death seem uncomfortably real. But when you take the time to set up a prepaid funeral plan, you can help relieve the logistical stresses and financial burdens your loved ones may face after your death.

This kind of funeral contract may not be right for everyone, but if it suits your needs, it can be an outstanding way to achieve peace of mind for yourself and your family members.

Prepaid funeral arrangements (sometimes called “pre-need plans”) are plans that allow you to select a funeral provider, create detailed arrangements for your funeral and burial, and pay in advance. If you wish, you can pay in a lump sum, though many people pay in monthly installments.

When you consult the funeral director at the service provider you choose, you can plan almost every aspect of your funeral, including:

Some funeral plans may offer more options than others. Before committing to a particular service provider, you might want to explore what different funeral homes in your area have to offer.

It’s always important to look closely at any contract you sign. Before you finalize a prepaid funeral plan, read the terms and conditions carefully. Here are a few specific questions to ask before you commit:

One of the most important things to look for is whether the plan you choose is “guaranteed” or “non-guaranteed.” If you want to avoid forcing your loved ones to cover unexpected expenses, go with a guaranteed plan. If a given plan is guaranteed, it means that when you buy the policy, you lock it in at today’s prices.

For example, imagine that you choose a casket valued at $10,000 when you pick out your plan. By the time of your funeral, that same casket is priced at $15,000.

If your plan is guaranteed, the whole price of the casket is covered. However, with a non-guaranteed plan, your plan will only cover $10,000, and your loved ones will be responsible for the remaining $5,000.

A prepaid funeral home can sometimes save money over time. However, you should pay close attention to the fees and associated costs. Different funeral homes may structure their plans differently, but often, the total cost of prepaid funeral plans includes expenses like:

Before making your decision, tally up how much you’ll pay over the course of the plan and see if it’s significantly greater than the total value of the services you’re purchasing.

A reputable funeral provider will be transparent when it comes to the fees they charge. If you aren’t sure how to find a trustworthy provider, start by browsing prepaid funeral plans offered for members of the National Funeral Directors Association.

Deciding on a funeral plan isn’t something to take lightly, and it’s important to consider some of the advantages and disadvantages of prepaid funerals.

This kind of arrangement has several potential benefits. For instance:

Of course, every estate planning decision has its potential downsides. Here are some of the possible disadvantages of prepaid plans:

Ultimately, only you can decide whether a pre-paid funeral plan is right for you. It’s wise to discuss your options with an estate planning attorney you trust. If you’re considering a particular type of funeral plan, we can review it and help you determine whether it meets your needs.

Many people like the idea of a prepaid funeral plan but are understandably concerned about the risks. If you prefer, there are other ways to ensure that your funeral expenses are paid so your loved ones don’t have to cover them.

Your bank or other financial institution may allow you to create a payable-on-death account. You’ll name a beneficiary, and upon your death, that person can access the money. Make sure this person is trustworthy enough to use the funds as intended.

Depending on the amount in the account, it may or may not cover the entire cost of your end-of-life expenses. Even so, it’s always better for your loved ones to have some money to put toward your funeral than none at all.

If your life insurance policy has a high enough value, you might be able to ask your loved ones to use a portion of the death benefit to cover your funeral expenses.

However, in many cases, it’s best to purchase funeral insurance (also called “burial insurance,” “final expense insurance,” or “pre-need insurance”). This type of policy pays out a smaller benefit than most life insurance policies because it’s intended to cover funeral and burial costs alone.

While the exact rates will vary depending on the insurance company you use, monthly premiums are generally very affordable.

This may be the simplest option of all. If you have a particular loved one in mind to handle your funeral expenses, you can create a joint bank account in both your names. That way, your loved one will have no trouble accessing the money to pay for your funeral when the time comes.

This option doesn’t involve selecting all the funeral services you want, but you can discuss your preferences with your loved one ahead of time.

Planning your own funeral might sound emotionally draining, but ultimately, it’s an incredible gift to give to your loved ones.

The cost of a funeral can be very high, and unless your loved ones have sufficient means, they might struggle to afford it. When you handle payment yourself, you can choose the kind of memorial service and burial arrangements you want without feeling like you’re imposing on those you care about most.

Is a prepaid funeral plan right for you? The compassionate estate planning attorneys at William C. Roof Law can help you find the answer to that question.

If you choose to go the prepaid route, we’ll help you decide on a funeral provider. If you want to make funeral arrangements another way, we can introduce you to your other options and craft an individualized estate plan that suits your needs. Contact us today to get started with a free consultation.