Pre-financing (prepaid) funerals require a great deal of investigation and understanding prior to making that type of financial commitment. With the amount of money required for this type of investment, it should be considered as part of your financial portfolio.
There are many things to understand before signing up for this type funeral plan, and please use a great deal of CAUTION! For example:
What parts of the funeral plan are “price-protected”, or guaranteed to remain at the current contracted price? Items that are not price-protected against inflation may require more money invested into the funeral plan at the time of death, which could be months or years later, as it is a pre-financed plan.
Which items are classified as cash advances which are not price protected (guaranteed)? An example would be the cost of the death notice in a newspaper.
If you move to another area or change your mind and want to cancel the prepaid funeral or final disposition plan, find out how much money will be returned to you if you cancel the plan prior to death, and whether you will earn interest on it. This should be clearly defined in the pre-financed contract, along with how long it will take for you to receive the money back.
What happens to your money if the funeral home, cemetery or mausoleum facility is sold, goes out of business or bankrupt? Investing your money into these type businesses is not like putting money into a savings account at a bank. If the bank fails, your money is generally protected. It may not be so here! The prepaid agreement should clearly define this area so you know how your money is protected.
I will discuss Totten Trusts and how a bank account controlled by the consumer can help pay for funeral arrangements in a future blog.
Consider your options and contact me with questions, or to share your experiences in this area. I’m here to help! Email firstname.lastname@example.org.