Planning your end-of-life ceremony can be a daunting process.
With emotional support from your loved ones and the help of a good funeral home, funeral pre-planning doesn’t have to be a cumbersome experience.
Over recent years, prepaid funeral plans have become a popular option among many individuals who want to ease their loved ones from the stress and financial burdens in the event of their passing.
It’s important to note, however, that pre-paying for a funeral isn’t always a smooth process, and might leave your loved ones having to cover extra costs.
If you’re considering prepaying for your funeral, take a look at the types of plans, and the benefits and limitations that come with prepaying for your funeral to help you find the most suitable plan.
What are the types of prepaid funeral plans?
Funeral plans are catered according to your requests and requirements. Once you’ve made your decision on what the funeral should entail, you’ll have to sign a contract and your money will be set aside with a third party, like an insurance company.
This is to ensure that your money is safe and secure and is reserved only to prepay for the funeral. Here are the types of plans you can opt for:
- Pre-need insurance policy: This is where you can pay premiums for 3 to 10 years. As long as your payments are up to date, the policy remains in effect and continues to be paid to the beneficiary, which is your choice of a funeral home.
- Revocable trust: This is where the money is placed in a trust with a beneficiary that you can change. The trust can be cashed out or canceled whenever you want while the benefit is paid directly to the funeral home.
- Irrevocable trust: This is when the money that’s placed in a trust can’t be canceled. The process of changing a beneficiary is far more complicated. Just like the previous two options, however, the money goes directly to the funeral home.
What does a prepaid funeral plan cover?
When preplanning a funeral, your wishes can be personalized. You’ll work closely with a funeral director or planner provided by the funeral home you choose. You’ll be given a range of options included in the plan:
- Funeral directors and staff will attend to every detail to ensure a smooth service. From floral arrangements to appointing clergy, and handling catering services, all staff will provide their fullest support
- Burial and cremation services will be carried out according to your wishes. From providing caskets that vary in quality to urns that hold cremated remains, you have full control over your choice
- Venue for the funeral; whether you choose a chapel, a tasteful reception area, a spacious outdoor patio, or a lawn with tents, a prepaid plan will prioritize the location you have chosen
- Burial vaults can be reserved if you choose to proceed with an in-ground casket burial
What doesn’t a prepaid funeral plan cover?
While most funeral homes provide a range of services in a prepaid plan to assist bereaved family members, some aspects aren’t included in the plan, such as:
- Goods and services provided by third parties such as celebrant fees and musicians
- Opening and closing costs of the grave
- Cemetary markers or monuments
It’s always best to set some money aside for additional expenses such as those listed above, to ease the financial burden for your grieving loved ones.
Will you be able to cancel a prepaid plan?
If you have funded your plan through an insurance policy, you can go ahead and cancel the plan. The premiums you have paid, however, won’t be refunded.
If you have funded your plan through a revocable trust, you can cancel the plan and get a partial refund.
If your funeral plan is funded through an irrevocable trust, you won’t be able to cancel the plan or get a refund. But it can be transferred to another funeral home.
What does a guaranteed prepaid plan entail?
While most prepaid plans are a good guard against inflation, your family will still have to bear the costs of any additional services that aren’t covered by the plan you choose.
An advisable decision would be to proceed with a guaranteed plan rather than a non-guaranteed one, as it’s a more secure option. The key features of both plans are:
- A guaranteed plan ensures that the specific goods and services you have requested for your funeral are fulfilled at a fixed price that will not change even during a price increase—this way, you don’t have to worry about your loved ones having to pay on the day of the funeral.
- A non-guaranteed plan won’t provide any protection against rising prices. Any choices you make today might be double the value on the day of the funeral, which means your family will have to pay extra to bridge the gap.
Make a prepaid funeral plan when you feel comfortable
There’s absolutely no rush when preplanning a funeral. It can be an overwhelming process for many, and it’s not an easy topic to be discussed with your loved ones.
Make sure you take your time and have the necessary support from your family as well as a professional funeral service to make the process easier.