If you’ve stumbled upon this question because you are planning for your funeral ahead of time, we’re proud of you. Most people avoid the idea because it’s uncomfortable but you’re making a smart decision, a decision that will prevent a lot of emotionally stressful decisions and financial burdens for your family later.
As we’ve mentioned before, funerals are expensive. The average cost of a funeral in the US is $8,755. Unless you’ve got that money secured so it can only be used as directed by a last will & testament, you may need another option.
Pre-need Funeral Plans
Many funeral homes offer pre-need (also known as prepaid) plans that allow you to lock in a current market price (called “Guaranteed”), and pay for it in advance. Some funeral homes will allow you to pay in installments vs. all upfront. Upon your passing, your heirs can contact the funeral home provider and all arrangements will be taken care of per your pre-paid agreement. Perfect! Not so fast, we mentioned “guaranteed” which is a provision in your agreement that stipulates the funeral home will cover the costs no matter how much the costs of services rise between the time you signed up until when you pass.
What if a pre-need plan is non-guaranteed? That means if the cost of services for your funeral has risen since the time you signed up, your heirs are responsible for covering the difference. Keep in mind the “market cost” is decided by the individual funeral home and prices can vary from funeral home to funeral home.
Final Expense Insurance
Unlike a preneed plan, final expense insurance doesn’t dictate any specific services, funeral homes or market prices. It’s simply a financial payout that can be used in any way your heirs want – hopefully, based on your wishes that have been specifically spelled out ahead of time. No surprises, no difficult emotional decisions.
You Can Have Both
If you decide a prepaid funeral home plan may be right for you, make sure you ask lots of questions and don’t sign or pay for anything until you are 100% sure of what’s covered and the total cost. It’s not a bad idea to have a lawyer or trusted advisor review it as well. It’s also a good idea to talk to multiple funeral homes since costs and plans can be very different.
If you’ve found a funeral home and plan you like but it’s non-guaranteed, you could bundle it with a small final expense plan to cover any cost increases that may occur over time.
Whether you choose a prepaid plan, final expense insurance or both, your efforts and planning now will give you the peace of mind knowing your family will be able to celebrate your life without any stressful burdens when the time comes.