It is possible to pre-arrange a funeral.
People have the capacity to plan and prepare for the future.
Sometimes doing so is exciting.
For example, most of us like to prepare for vacations or celebrations.
At other times, planning is more mundane, like when creating a to-do list for work.
According to a recent Yahoo Life article titled “Should You Pre-Pay for Your Own Funeral as Part of Estate Planning?,” people commonly avoid the mundane or even uncomfortable types of planning.
This is especially true of funeral planning.
Although it is understandable to avoid what is unpleasant, planning your own funeral can be cost-effective and stress-reducing.
Those who pre-arrange their own funerals can take advantage of a pre-arrangement funeral policy.
These policies are distinct from traditional life insurance policies.
Although life insurance policies provide payments to protect surviving loved ones from devastating financial loss after the unexpected death of the covered party, these policies can have factors and clauses impacting payouts.
If you pre-arrange a funeral policy through a funeral home, you can remove some guesswork from the costs of burial services.
When a person chooses to make the payment in full at a single time, the prices are locked in, and full coverage is guaranteed without health and time of death affecting the payouts.
Although you can set up a payment plan for three, five, or ten years, these have payout policies often impacted by the health of an individual and the length of the contract.
When you pre-arrange for an extended multi-pay policy, you will find it works similarly to car insurance.
Monthly premium payments and an insurance fee are required.
Consider this scenario.
A healthy individual decides to pre-arrange a 10-year plan.
This person makes payments regularly and yet dies after five years.
When the individual dies, he or she has coverage, and the costs of the arrangements are locked in at the time the plan was made.
If this person lives to the full ten years and completes making premium payments, then whatever funds were paid to the plan and are not used for the cost of the funeral will be either paid directly to beneficiaries named in the policy or paid to the estate.
Why would it benefit you to pre-arrange for funeral insurance?
The costs of the funeral home goods and services will be set at the time the policy is purchased.
Generally, this applies only to fixed costs on services and products provided specifically by the funeral home.
Costs from external sources are not covered in this guarantee.
These can include clergy fees, death certificates, and sales tax.
Your family will not have to worry about paperwork because you took care of this in advance.
Additionally, you will not accrue interest.
While there is an insurance fee, it is possible this will be repaid to beneficiaries if the plan is fully paid.
Is it possible to use a policy with different funeral homes?
With the transient nature of young people in America, many funeral insurance policies allow for the policy to be transferred to providers in other cities or states.
Although it is not fun to pre-arrange and pay for a funeral, it can help your loved ones in the future.
Reference: Yahoo Life (Feb. 17, 2022) “Should You Pre-Pay for Your Own Funeral as Part of Estate Planning?”