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The Pros and Cons of Prepaid Funeral Plans

Prepaid funeral plans have become increasingly popular in recent years. By prepaying for your funeral, you can ensure that your loved ones will not have to bear the financial burden of your funeral costs. If you're considering prepaying for a funeral, here are some common prepaid funeral plan questions and answers to get you started during your research.

What is a prepaid funeral plan?

A prepaid funeral plan is a way to pay for your funeral in advance. It is a contract between you and a funeral provider, whereby you pay in advance for your funeral services. In return, the funeral home or provider guarantees to cover the cost of your funeral at today's prices, regardless of how much prices may rise in the future. Prepaid funeral packages can be a good choice for those who want to lock in today's rate and make sure their family doesn’t incur costs when they pass.

How do prepaid funeral plans work?

Prepaid funeral plans are pretty straightforward:

  1. Research prepaid funeral plan prices for funeral homes in your area to ensure you're purchasing a plan from a reputable source. Pay special attention to prepaid funeral plan reviews and the experiences other families have had. This is also an important time to compare prices between prepaid funeral plans.
  2. Choose the funeral home or provider you want to work with.
  3. Sign the contract or prepaid funeral plan agreement with said funeral home.
  4. Make copies of your prepaid funeral plan agreement and give copies to your executor and to trusted family members so that everyone is aware of your intentions (and is able to use the prepaid funeral plan when the time comes). You can use Ever Loved’s free key information checklist to share this information with your loved ones.
  5. When the time comes, your family will just need to contact the funeral home you chose.

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Pros and cons of prepaid funeral plans

Given the straightforward nature of prepaid funeral plans, you may be curious as to the pros and cons of prepaid funeral plans. What are the benefits? What are the downsides?

What are the benefits of prepaid funerals?

There are several benefits that come with prepaid funeral plans. One of the biggest advantages is that it can save your loved ones money and stress during an already difficult time. When you pre-plan and prepay for your funeral, you are essentially locking in today's price for future services. This means that your loved ones will not have to worry about funeral costs rising in the future, as they will have already been paid for. In addition, prepaid funeral plans can help to take the burden off of your loved ones when it comes to making funeral arrangements. By pre-planning your funeral and prepaying for it, you are essentially doing much of the work in advance, so that your loved ones won't have to. This can be a huge relief for them during what is sure to be a tough time.

What are the disadvantages of prepaid funerals?

While there are several advantages to prepaid funeral plans, there are also some potential disadvantages that you should be aware of. One of the biggest potential drawbacks is that if you move to a different state, your plan may not be valid. This is because each state has different laws and regulations regarding prepaid funeral plans. So, if you move to a new state, you may need to cancel your current plan and start a new one. Additionally, if you decide to change funeral homes or providers, you may not be able to get a refund on your prepaid funeral plan. So, it's important to be sure that you are happy with your choice of funeral home or provider before you commit to a prepaid funeral plan. Furthermore, it's important to think about the longevity of the funeral home. If your chosen funeral home is no longer in business when you pass away, your family will be out of luck and your plan will no longer be valid. It's also highly unlikely they'll be able to get a refund or get those funds back, which means it’s money that's wasted. Lastly, funeral plans lock in your funds and service choices -- this means that if you change your mind, want to change providers, want to change services, etc., you may not be able to do so.

Alternatives to prepaid funerals

With all that being said, a prepaid funeral plan is not the only way of doing things or preparing for the end of life! There are several other options available to you.

Funeral insurance

Funeral insurance is a type of life insurance that is specifically designed to cover the costs of your funeral. With this option, you typically pay monthly payments throughout your lifetime. Then, when you pass away, your beneficiaries will receive a death benefit that can be used to cover funeral expenses. Funeral insurance can be a good option for those who want to have their funeral costs covered, but don't want to lock in their service choices ahead of time.

Keep in mind that with funeral insurance, there is typically a waiting period before the death benefit is paid out. This means that if you die within the first few years of having the policy, your beneficiaries may not receive the death benefit.

Also, it's important to remember that funeral insurance is a type of life insurance. This means that the premiums can be high, especially if you are older or have health issues.

Lastly, with funeral insurance, your beneficiaries will receive the death benefit regardless of whether or not they use it to cover funeral expenses.

Setting money aside in a savings account

Another option is to simply set money aside in a savings account specifically for your funeral expenses. This way, you can put away as much or as little money as you want each month. Then, when you pass away, your loved ones can use the funds to cover funeral costs.

One of the biggest advantages of this option is that it's very flexible. You can start and stop saving at any time, and you can adjust how much you're putting away each month based on your budget. Additionally, the money is accessible to your loved ones immediately after you die, so they won't have to wait for a death benefit to be paid out.

Of course, one of the biggest disadvantages of this option is that it requires you to have the self-discipline to actually save the money! If you're not good at saving, or if you tend to spend everything you have each month, this probably isn't the right option for you.

Another potential drawback is that your loved ones may not know that the money is meant for your funeral expenses. This could lead to them spending the money on other things, and then not having enough to cover your funeral costs. To avoid this, be clear about what the funds are set aside for and what they should be used for. Have these clarifications in writing to make it easy and clear for your loved ones to follow when you pass away.

Lastly, if you pass away unexpectedly, your loved ones may not have access to the funds right away. Depending on how the account is set up, they may need to go through probate in order to access the funds. This could take months or even years, which can cause them to have to pay for the costs of the funeral upfront.

Create a will

Creating a will is an excellent way to get your wishes down in writing and have proof of what services you're interested in and what your expectations would be for your services after you pass away.

Additionally, a will can help to ensure that your family or loved ones are not left with the financial burden of your funeral expenses. You can designate a specific amount of money to go towards your funeral in your will, and you can even name a specific person who will be responsible for making the arrangements.

Of course, one advantage of prepaid funeral plans over a will is that the funds for a prepaid funeral are typically available much sooner after your death. With a will, your loved ones may have to go through probate before they can access the money you've left for your funeral.

Talk to your family

If a large part of the reason you are interested in prepaid funeral packages is to have your services planned out ahead of time, another option is to simply talk to your loved ones about your wishes. This way, they will know what you want and can make arrangements accordingly.

This option is especially good if you have a close relationship with your family and you know that they will be able to follow through on your wishes. Additionally, it can be much cheaper than a prepaid funeral plan, since you won't have to pay for the services upfront.

Of course, one of the biggest disadvantages of just this option is that it leaves the financial burden on your family (unless you pair this option with a different option that covers the financial aspect).

However, this is still better than having no information for your family or loved ones to go off of! You can record your wishes regarding funeral arrangements (and much more) on Ever Loved's key information checklist. This checklist is easily shared with friends and family who can ensure your wishes are carried out when the time comes.

At the end of the day, it's important to do what feels right for you and your family. There is no wrong answer when it comes to prepaid funeral plans -- it's simply a matter of personal preference and due diligence.

Ready to start contacting funeral homes that offer prepaid funeral plans? Browse Ever Loved's database of funeral homes today.

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Last updated June 24, 2022
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