Should You Pay In Advance For Your Funeral?


You can save your loved ones a lot of trouble by taking steps to plan your funeral in advance. However, is it truly a good idea to go with a prepaid plan?

Are you thinking about planning your own funeral? It’s not likely. Most of the time, we don’t even think about our funeral, much less sit down and plan the whole thing out. The thought is uncomfortable even for personal finance advisors.

However, if this is something you are considering, the good news is that your advance plans will make it easier for your surviving family members.

Include some information that will make it easier for them to compose your obituary. Funeral homes and memorial societies provide forms just for this purpose. While they are good, they are not comprehensive so you’ll want to add additional notes.

Once you’ve taken care of the obit, the next step is to list your instructions for organ donation, cremation, and burial. Your family attorney, spouse, and other trusted friends or family should get a copy of this file.

Prepaid Funerals:

The option exists for you to select the funeral home you wish to use years in advance of your need for it. Funeral homes sell these preneed plans and allow you to pay for your funeral in installments or with a single lump sum payment. You have the chance to make arrangements for your casket and the type of service you want.

However, it’s important to be sure that the price you’ve contracted to pay will cover the services you want. A final expense funding fee is sometimes included within the contract. This fee covers the difference in cost that may occur between the time that you contracted for the services and the time of your demise.

There are additional questions you must consider:

  1. What happens if you decide you no longer want the plan? Will you get a refund?
  2. If funeral prices increase, what will happen? Will your family be required to pay more if the services you contract for wind up costing more when you need them?
  3. If you have an insurance policy in place to cover the cost of your funeral, how long will it be before it pays off?
  4. What happens if you relocate? Is the plan transferable to a different funeral home in the new state you live in?
  5. Will your investment be protected if the funeral home closes? If they are bought out, will the new owners of the funeral home honor the contract?
  6. If you’ve paid more than the cost of the funeral, will the funeral home keep the difference or will they refund it to your heirs?

How do You Pay Ahead A Better Way?

The idea of having a prepaid plan to cover the cost of your funeral is reassuring to many. This type of plan is convenient and reduces the toll on your family at this emotional time. They won’t have to make the big decisions or come off with the money to cover the costs since you have already taken care of it. However, you can do better from a point of view that is strictly financial.

For example, life insurance policies are available that can be set up for use directly for the expense of the funeral. Unfortunately, you’ll be hard pressed to get an insurance premium that will be economically feasible in order to qualify for a sufficient amount of money to cover the expenses associated with a funeral.

On the other hand, a very simple solution is to set up your own trust fund to cover the cost of your burial. A Totten trust can be established at a credit union or bank although they are not strictly speaking an actual trust. Instead, they designate an inheritor to pay out to in the event of your death and they are simply a regular bank account. You can easily set up a friend or relative as the beneficiary when the account is opened. Once you put the money into the account, it sits there and accrues interest.


John Orlando