The Benefits and Costs of Prepaid Funeral Arrangements

Americans are not good at end-of-life planning. Studies show that 68 percent of Americans don’t have a will and only about a third of us make plans for medical care. And most don’t think about their funeral planning choices, leaving family members to make their best guess at what someone would have wanted.

But if you are reading this, you are presumably already thinking about funeral planning and end-of-life advanced planning, so congratulations, your actions will make things easier for those left behind. 

Though preplanning your funeral service may seem difficult, it can offer you and your family peace of mind and ensure that all of your wishes are understood and fulfilled upon your death. 

When funeral planning, most people don’t know what to look for, what prices to expect, or where to start. This uncertainty can be especially paralyzing for grieving families and lead people to overpay for services they may not need. Prepaid, or pre-need, arrangements protect your family from making rushed decisions later. 

Rather than shying away from planning ahead, know what to look out for so you can make the best decision for yourself and for your family. Read on to understand the benefits of prepaid plans, mistakes to avoid when planning ahead, alternatives that let you plan but save money in a bank account or life insurance policy and questions you should make sure to ask your funeral home before making any purchase.

Benefits of Prepaid Funeral Plans: Ensuring Peace of Mind

1. Make Things Easier for Family  

One advantage of prepaid funeral plans is that it spares your loved ones from making important decisions in a time of grief. Your family won’t have to sift through countless funeral options and overpay for services. When you pass, they can spend more time together and less time planning with a funeral director. 

2. Have it Your Way 

Make sure your final wishes are honored and nothing is left to chance. Pick which services are important to you, so your end-of-life arrangements are tailored to reflect the real you. You can pick favorite religious or non-religious readings, poetry, songs or even touches of humor for your service and decide which disposition you want (cremation, burial, traditional, “green” etc.) Your family will know the services were planned exactly as you wanted them. 

3. Hedge Against Rising Prices 

In the past five years, funeral costs have gone up more than six percent. By arranging today, you lock in today’s prices, saving thousands of dollars. You also have time to learn about all of your options in a relaxed environment on your own time and can compare prices from different funeral homes to get the best deal. 

Navigating Prepaid Funeral Planning: Common Mistakes to Avoid

Though planning in advance can save money and ease the burden on your family, the wrong plan won’t guarantee many of the benefits and could actually cause difficulties for your family down the line. Like every major purchase, a little research goes a long way. If you know the risks, you can make an informed decision that works best for you and your family. How to prepay for a funeral? Make sure you arrange the best plan and consider the following when prepaying your funeral: 

Comparison Shop 

When planning ahead, take advantage of the time you have and do your research. One of the biggest mistakes people make is rushing into a decision without comparing prices and services. Funeral homes can charge dramatically different prices for similar services. Compare prices and package details before settling on one provider. 

Consider Alternatives for ‘Extras’ 

The cost of urns, caskets and other merchandise may be higher at a traditional funeral home. For some, the convenience and familiarity with that option makes it a good choice for many. But the federal Funeral Rule allows you to buy your own items if you prefer. If you are purchasing a plan with merchandise, check the breakdown on the price list to see how much the funeral home is charging. You can often find most merchandise online for a lower cost from retailers like Costco, Amazon, Walmart, or other sellers including direct-to-consumer alternatives. 

Make Sure Your Plan is Guaranteed 

One of the benefits of purchasing a funeral arrangement in advance is locking in today’s price for services that will be more expensive once you pass. A guaranteed funeral plan ensures that all services included at the time of payment are honored when the services are needed, regardless of how much the services and funeral goods have increased in cost. When a funeral home sells you a plan that isn’t guaranteed, someone will have to pay the difference once you pass.  

Never Pay Until You See an Itemized List 

Always ask the funeral home to provide a breakdown of the services and cost before you pay for anything. By law, funeral homes need to have a General Price List available to you upon request. Don’t feel pressured to buy an all-inclusive package if there are services you do not need included. Check the funeral contract and make sure you are comfortable with everything you are paying for.

Key Questions to Ask Before Prepaying Your Funeral Arrangements

According to the FTC, if you are considering pre-paying, you should ask these questions:

• What are you paying for? Are you buying only merchandise, like a casket and vault, or are you purchasing funeral services as well?
• What happens to the money you've prepaid? States have different requirements for handling funds paid for prearranged funeral services.
• What happens to the interest income on money that is prepaid and put into a trust account?
• Are you protected if the firm you dealt with goes out of business?
• Can you cancel the contract and get a full refund if you change your mind?
• What happens if you move to a different area or die while away from home? Some prepaid funeral plans can be transferred, but often at an added cost.

Your chosen funeral provider should be able to help you answer these and other questions. Each state has their own laws which govern the funeral business, so your state website is another good resource to explore.

Alternatives to Prepayment 

Another option for making funeral arrangements without purchasing a plan is to put money aside in a “payble upon death” bank account. Those types of accounts name a beneficiary who can get the funds more quickly than life insurance payouts and can use them for funeral and other end-of-life costs.

You can also purchase funeral insurance, which is a type of life insurance that can be used for those same expenses. Additionally, some services can take all your information ahead of time without needing money so that when the time comes, there will be less paperwork to deal with.

Whether you prepay for your funeral plan or do a DIY approach, you should write down notes for your family members or trusted friends about what it is you would like for your final goodbye.

Things to share with them might be:

• Who you would like invited to a gathering
• What music to play
• Whether you’d like a religious or secular service or just a Celebration of Life or scattering
• If you prefer cremation or burial
• Where you’d like your final resting place to be

These notes can be gathered in a blank notebook or a book that’s been published for the purpose of gathering your end-of-life wishes like “I’m Dead, Now What?” or similar publications. You can also download our free Guide to Funeral Preplanning.

You can find more consumer tips on the Funeral Consumer Alliance website or the Federal Trade Commission’s Funeral Rule pages. 

For some, prepaying is worth every penny knowing that their ending won’t burden others and will be exactly what they chose. For those who want to plan ahead, but not pay ahead, there’s options there, too. The key is having a plan that gives you the final chapter that best fits you and lets your family concentrate on thinking about you and your legacy, not spending their time having to scramble to choose a fitting ending.

Afterall can assist with funeral preplanning. Find a nearby location here. If you'd like to learn more about planning ahead, explore our Plan Ahead page and download your free copy of the Guide to Funeral Preplanning.