When a death occurs, decisions need to be made quickly, but most families don’t know their loved one’s end-of-life wishes. Planning a meaningful service or celebration of life without any guidance can lead to emotional and financial stress for those left behind.
According to the National Funeral Directors Association, while most Americans recognize the importance of pre-planning, only 17.3% of Americans age 40 and older have preplanned and prepaid for their funeral. If you haven’t started, this guide will help.
Whether you’re exploring options for yourself or preparing on behalf of a loved one, this article will walk you through the essentials of funeral pre-planning. You’ll learn how pre-paid funeral plans work, the benefits they offer, and how they fit into a broader end-of-life plan.
What is a Prepaid Funeral Plan?
A prepaid funeral plan, also called a preneed funeral plan, is a contract in which you choose your funeral or cremation services now and pay for them in advance, in one payment or installments. By setting up a prepaid funeral plan, you ensure that your wishes are clearly outlined and paid for, sparing your family from a last-minute scramble or unnecessary emotional strain. This allows the funeral home to act swiftly when the time comes.
Pros of Prepaid Funeral Plans
1. Paid Upfront
By planning, you ensure your wishes are paid for, alleviating the financial burden on your family. And when the time comes, your loved ones will know exactly what you want. This is particularly helpful for those who prefer a viewing and burial, as time-sensitive arrangements often require quick decision-making.
2. Complete Paperwork in Advance
Preparing all necessary documents helps streamline the funeral process when you pass. You can complete the paperwork now, enabling the funeral home to obtain permits and death certificates on your behalf later. This ensures those left behind can properly grieve without focusing on paperwork.
3. Reduce Stress on Loved Ones
Families are rarely equipped to handle the many decisions and actions required following a death, whether expected or sudden. Having a plan in place can mitigate potential family conflicts, allowing loved ones to focus on supporting each other during this challenging time.
4. Fixed Price
With funeral costs steadily increasing year after year, a pre-paid plan locks in current prices. Many funeral homes offer a range of plans and payment options to fit various budgets.
Disadvantages of Prepaid Funeral Plans
1. Limited Refunds
You may not get a full refund if you cancel, and refund rights vary by state. The Funeral Consumers Alliance advises choosing a plan that allows a full refund with little or no penalty. Get the cancellation terms in writing.
2. Life Changes
Occasionally, life changes may alter your end-of-life plans. For example, a couple who pre-arranged to be buried together might need to adjust their plans if one spouse passes away and the surviving partner remarries. Alternatively, someone may choose to be laid to rest with their new spouse instead of in the family plot.
3. Facility Closure
Though rare, a funeral home may shut down for various reasons. Researching reputable funeral homes and understanding their policies is essential to mitigate this risk.
4. Location
If you plan your funeral while living in one location, your chosen funeral home may no longer make sense if you move. Changes in circumstances may make your initial plans inconvenient later on.
How Much Does a Pre-Paid Funeral Cost?
The median cost of a funeral in the United States is $7,848. This varies depending on your choice of burial or cremation, location, and services. Year after year, funeral costs continue to rise, but when you pre-pay for a funeral you can lock in current pricing. For comparison, Better Place’s Complete Cremation Package starts at $3,495.
How to Pre-Pay for a Funeral
There are a few ways to fund a funeral in advance. Each method has its advantages and disadvantages. Take a look at some of the most common options below.
- Advance Payment: Pay outright to a funeral home or crematory. This is the simplest option using cash, check, or credit card.
- Funeral Trust: A funeral trust is a legal agreement that ensures that the funeral home is paid for your funeral upon death. The agreement is between three parties—the trustor (planner), trustee (bank or funeral home), and beneficiary (funeral home).
- Life Insurance: An insurance policy purchased to provide financial compensation to your loved ones upon your death. Unless your pre-need contract guarantees the costs of a funeral, your survivors may need to pay some of the expenses.
- Preneed Funeral Insurance: a policy tied to a specific funeral plan, with the provider named as beneficiary. Whether it covers every cost depends on whether the contract guarantees prices.
- Savings Account: A bank account designated to pay for funeral expenses. Make sure you tell your family that this account exists and provide the information for them to access and use the funds.
Is your money safe in a prepaid funeral plan?
Your money is as safe as your state’s rules and your contract make it. State law governs prepaid funeral money, and some states require the funeral home or cemetery to place a percentage of it in a state-regulated trust or to buy a life insurance policy with the benefit assigned to the provider. Ask what happens to your money and any interest it earns, whether you are protected if the firm closes, and whether you can cancel for a full refund. Source: FTC, Planning Your Own Funeral. For insurance-funded plans, see what preneed funeral insurance is.
Questions to Ask Funeral Providers
- Are there any costs not covered in the contract that would need to be paid later on? If so, who’s responsible for them?
- Are the prices in the contract guaranteed at the time of service?
- Can the arrangements be transferred to another funeral home or cemetery if I relocate?
- What happens to the contract if the funeral establishment closes or is sold?
- Who manages the pre-need funds, and how can I contact them?
- Is it possible to cancel the contract, and if so, what are the penalties?
Veteran Prepaid Funeral Benefits
Veterans are entitled to VA burial benefits that include allowances to help cover burial, funeral, and transportation costs. According to the U.S. Department of Veterans Affairs, spouses and dependent children are eligible too. Veterans are entitled to burial in a VA National Cemetery as well or a private cemetery.
- VA National Cemetery: Includes opening and closing of the grave, a government-provided burial liner, headstone, and perpetual care of the gravesite in a National Cemetery.
- Private Cemetery: Receive a government-provided headstone, marker, or medallion, a burial flag, and a Presidential Memorial Certificate.
You can also apply to VA for a preneed burial eligibility determination, so your family knows before a death whether you qualify for burial in a VA national cemetery.
Prepaid funeral or prepaid cremation?
If you already know you want cremation, a prepaid cremation plan is usually simpler, with no casket, embalming or burial plot to price. Better Place’s Complete Cremation Package starts at $3,495 for flame cremation. Compare options in our guide to prepaid cremation plans, or read how to preplan cremation in California.
How to Find a Funeral Provider
While Google is a common starting point, results may be influenced by ads and algorithms rather than quality. Here are two alternative ways to find reputable pre-paid funeral plan providers.
1. Better Business Bureau: The BBB offers accreditation and ratings for businesses, providing confidence in their ethical practices. Search the BBB for cremation providers near you and check their ratings from A+ (highest) to F (lowest).
2. Consumer Advocacy Groups: Organizations like the Funeral Consumers Alliance (funerals.org) offer plain-language guidance on prepaying.
FAQs
What is not included in a prepaid funeral?
Anything the contract does not list in writing. Before you sign, ask which items are excluded, which prices are guaranteed, and whether any costs, such as cemetery charges or extra death certificates, would fall to your family later.
