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What are Prepaid Funeral Services?
Prepaid funeral services are arrangements with a specific funeral home to cover funeral and burial costs now, rather than when a person passes away. Many funeral homes are taking advantage of the slow economy to market these plans, allowing people to save money by purchasing something before they need it, with the added advantage of taking the financial burden away from loved ones. Prepaid funerals allow you to choose the type of service, the casket, and other details and pay for them before death. The money is held in an account, where it may or may not grow interest until death. Many plans allow customers to lock in at today's prices, which are estimated at $6,000, and growing.
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Advantages of Prepaid Funerals
- Prepaid funerals take the financial burden off of loved ones, and pay the bill right away.
- They allow you to be in control of your final arrangements.
- Some plans allow today's pricing, which can save money because prices will continue to rise for years to come.
- Some plans allow interest to accrue, to help cover the pricing difference between current prices and prices at the time of death.
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Disadvantages of Prepaid Funerals
- Some prepaid funeral services do not allow price locking, which means a difference between the amount in the account and the pricing of services at the time of death must be paid.
- Sometimes, the family may not be aware of a prepaid funeral plan, and therefore will pay for the funeral anyway.
- If the funeral home goes out of business or changes hands, the money may be wasted as the new owner may decide not honor the prepaid plans in place.
- Some plans will restrict burial to a certain cemetary, which for some people may pose issue with family plots.
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Things to Consider
When deciding whether or not to purchase a prepaid funeral service, it is important to know the details. Make sure to find out what will happen should anything happen to the funeral home. Will the plan transfer hands with the business? Will you get a refund should the establishment close completely? Make sure your family knows you have the plan and what they need to do when you pass. Be sure you understand all the terms of the plan before signing any paperwork.
If you have any doubts about the prepaid funeral services, open a high yield savings account and make regular deposits, or use a CD to secure funds for the funeral, allowing a designated loved one to remove the funds and utilize them for the final expenses when the time comes.