Have you been thinking about planning for the future so far in advance you’re considering prepaid funeral arrangements? It’s something that more people are doing right along with getting life insurance and creating a last will and testament. But instead of simply stating their funeral wishes, they’re going ahead and lining them up so that funeral services are paid for prior to death.
The good news is planning ahead can help you save on funeral services as long as you work with a reputable funeral home. It also eases the stress and workload for loved ones that handle funeral arrangements, but it can mean incurring the cost of services before you die. Plus, there are some risks in doing so.
Here’s a look at funeral pre-planning costs and payment options so you can be fully prepared.
Preneed/Prepaid Funeral Plans
A preneed or prepaid funeral plan is a contract that spells out the specifics of paying for certain funeral services in advance. The contract is made between a funeral home and an individual.
The rules and regulations surrounding prepaid funeral plans vary by state. It’s important to ensure that the prepaid funeral plan is guaranteed and that this is noted in the contract. A guaranteed plan locks in the prices for the funeral services.
The contract should also spell out:
- What happens if you want to end the contract before your death.
- How the remainder is paid if you die before the plan is fully paid off.
- What protections you have if the funeral home goes out of business.
Funeral Costs That Are Covered by Prepaid Funeral Plans
It’s extremely important that you know what services and fees are included in the prepaid funeral plan. The contract should clearly specify what’s included and the amount. Typically a prepaid funeral plan will include:
- Basic Funeral Service Fee
- Transportation Fee
- Cremation Fee / Burial Fees
- Columbarium Niche / Burial Plot
- Memorial Service Costs
- Casket / Urn
- Flowers
- Fees for Setting Up the Prepaid Funeral Plan
A prepaid funeral plan is highly customizable. You can choose to include a few key funeral costs or every possible cost that might be incurred.
Ways to Pay for a Preneed Funeral Services
A prepaid funeral plan can be paid off upfront, in installments over time or with another policy upon your death.
Final Expense Life Insurance
Paying for funeral services with life insurance is common, it just usually happens after a person’s death. However, today final expense life insurance policies can be bought specifically for preneed funeral services so long as they are guaranteed.
Funeral Insurance
Funeral insurance is a type of insurance plan that is used specifically for funeral expenses only, and it can be used for prepaid funeral plans with the funeral home and/or cemetery named as the benefactor.
Funeral Trusts
A trust may need to be established by the funeral home for collecting and holding the prepayment funds. Some states require that a portion or all of the money be held in a state-regulated trust so that the funds can’t be misused and the services are guaranteed when you die.
Bank-Held Trusts
A bank-held trust is another option that will protect the funds that are used to pay for a prepaid funeral plan.
Savings Accounts
A tried and true method is opening a savings account that is expressly for paying a prepaid funeral plan.
Estate
An estate can be a good option, because the cost of paying for the prepaid funeral plan should be tax deductible.
Want to make advance arrangements for direct cremation? Call or text Direct Cremate to learn more about the process.
