Why plan ahead? Our complete guide to prepaid funeral plans
Funeral planning in a time of immediate need can be overwhelming for a grieving family, as they need to make time-sensitive arrangements under pressure. Buying a prepaid, or pre-need, plan ensures your family can spend more time together and less time with a funeral director. By taking care of details ahead of time, you gift your loved ones the chance to say goodbye without the burden of making arrangements.
What is a prepaid funeral plan?
A prepaid funeral plan is an arrangement you make with a funeral home today for services they provide after you pass away. The funeral home uses the funds you pay today to cover the cost of the services you have outlined in your agreement.
Prepaying funeral plans offers you and your family peace of mind.
- Ease the burden on your family: Planning today spares your family from making important decisions in a time of grief. They won’t have to sift through countless funeral options and overpay for expensive services.
- Make your own decisions: Make sure your final wishes are honored and nothing is left to chance. Pick which services are important to you, so your end of life arrangements are tailored to you. Your family will know the services were planned exactly as you wanted them.
- Make financially sound decisions: In the past ten years, funeral costs have nearly doubled. By arranging today, you lock in today’s prices, saving thousands of dollars. You also have time to learn about all of your options in a relaxed environment on your own time and can compare prices from different funeral homes to get the best deal.
Decisions to consider
If you are researching funeral plans, you may be wondering where to begin. Before making your arrangements, think through the following decisions to find the best plan for you.
- Burial vs cremation: First, you will want to choose between burial and cremation. This will affect your budget, the type of memorial you can have, the timeframe of a service, and more. Read more about burial and cremation here. For a simpler, more affordable option, read up on direct cremation.
- Funeral provider: Take your time finding a provider that understands your needs. Compare prices and services, and make sure to check what’s included in each package. Ask for a General Price List to get a breakdown of the services to make sure you’re only paying for what you need. Costs can vary dramatically between providers, so do your research to find the perfect fit.
- Travel protection: Most prepaid funeral plans only offer you protection within a certain distance of your home. If someone passes away from home and they didn’t purchase travel protection, families have to make costly arrangements to bring their loved one back home. Purchasing travel protection along with your plan ensures you are covered anywhere in the world.
- Memorial services: You may want to set aside time to consider how you’d like to be remembered. Memorial or celebration of life services can be as traditional or unique as you’d like. If you choose a more traditional funeral home, they will likely include a one-size-fits all memorial service before the burial or cremation. If you opt for direct cremation, you will have complete control over your memorial service. Talk to your loved ones about the memorial service that you would like, and consider leaving directions along with your prepaid plan.
- Final resting place: If you have a preference for your final resting place, share your thoughts with your family. If you choose burial, then you can find a cemetery or mausoleum in advance and prepay for the space. If you choose cremation, then consider if you would like your ashes scattered, kept in an urn and entombed in a burial plot or mausoleum, or divided between family members. With direct cremation, many families choose to scatter the ashes in a place that is significant to them. Ashes can also be made into jewelry, incorporated into soil to grow a tree, molded into man-made coral reefs, and more. You may also want to designate a person who receives your ashes when you pass, and they can choose to honor you in a way that is most meaningful to them.
How do I know my money is safe?
If you are researching prepaid plans, you may be wondering if your money is safe with a funeral home. This is a common concern for families who are planning ahead. Below are two safeguards for your plan.
- Trust accounts: Prepaid plans are highly regulated by most states and funeral homes are required to put your money in a state-regulated trust. A funeral trust is created when you contract for prepaid arrangements with a funeral home. State laws ensure your money is safely stored in the trust under your social security number and the funds can only be accessed upon your death. If you later decide you prefer a different funeral home, the money in your trust can always be transferred.
- Guaranteed plan: When making prepaid funeral arrangements, ask if your funeral services are guaranteed. Funeral home prices increase every year, so if you prepay an arrangement today that you don’t plan on using for some time, the service could be worth more than double the price you were originally quoted. A guaranteed plan ensures that all services included at the time of payment are honored when the services are needed, regardless of how much the services and funeral goods have increased in cost. Non-guaranteed plans function more as a down payment, and do not guarantee full services at the point of need. When you pass, someone will have to pay the difference.
Understand your options:
As you research, you may notice alternatives to prepaid services in the funeral industry. It can be confusing to sort through your options. Before settling on a decision, make sure you understand the basic differences.
- Pre-planning: This is an umbrella term for all funeral planning that occurs in advance. General pre-planning is a much less formal process than prepaying funeral plans. Some people pre-plan their funerals without making formal payments, hoping their life insurance policy will cover funeral costs. Unfortunately, most life insurance policies take time to take to cash out, and funeral expenses will usually have to come out of pocket. While it is an important first step, pre-planning won’t afford you many of the benefits of a proper prepaid agreement. Depending on how you plan, the details may not not be final, and there is a chance your wishes won’t be fulfilled. Without a formal contract, the payment may still fall on your family members.
- Funeral Insurance: Funeral insurance is not much different from life insurance, except the cover is for a much lower amount. Also called burial or final expense insurance, funeral insurance is designed to be a small policy ranging from $5,000 to $25,000 that is paid to the family member responsible for making final arrangements when the insured person passes. There is no oversight for how the money is spent or legal obligation to use the money for funeral arrangements. Unlike prepaid plans, there is no guarantee that the money will go toward funeral arrangements. If you are on a limited income, funeral insurance may not be your best option. Premiums tend to go up over time and coverage does not increase proportionally. If you can’t afford your premium and cancel the policy, all of your previous payments will be lost.
- Payable on Death Account: This is an account set up through a bank that allows a beneficiary to receive the money once the account owner passes away. Because it functions as a regular bank account, the owner of the account can do as they please with the funds during their lifetime. Once the account owner passes, the beneficiary can withdraw the funds in the account without the need for probate. POD accounts tend to be very informal and can contradict existing estate plans. If you have many children or family members and only name one beneficiary, it may cause trouble down the line and delay the retrieval of the funds. While there may be expectations for what the beneficiary does with the money, they have no legal obligation to follow these directions. Like funeral insurance, POD accounts do not capture any of the financial benefits of a prepaid funeral arrangement.
How much does it cost?
Prepaid funeral plans usually cost slightly more than if you needed the plan today to account for inflation. The average cost of cremation with a service is about $6,000, while the average burial is about $8,500. Direct cremation is a more affordable cremation option, averaging about $2,300. Some providers have prepaid plans as low as $950.
Tulip’s prepaid package is a third of the price of the other well-known cremation brands, without any of their hidden fees. We’re known for our exceptional customer care, with 95% of families who have used us recommending us to their friends. Our Family Care Team of experienced funeral professionals is available 24/7 to answer any questions and help you make arrangements online or over the phone in minutes.. Call (844) 942-4909 to plan your prepaid plan today.