Paying for funeral arrangements in advance can be helpful to loved ones.
Many things are more cost-effective when you plan.
Often costs increase due to inflation or supply and demand.
Additionally, strategically using credit cards or other rewards programs can lead to a better price.
According to a recent Yahoo Life article titled “Should You Pre-Pay for Your Own Funeral as Part of Estate Planning?,” those who begin preparing for their funerals in advance can reduce costs to their loved ones.
Insurance is a common tool used for planning.
When choosing the best insurance for your needs, consider your health and age.
Life insurance and funeral planning insurance may both require health screening.
Even so, funeral planning insurance is available to anyone over age 18 who wants to purchase a policy to finance their arrangements.
The answers to the screening questions will influence the benefit payouts and terms.
Insurance policies for pre-arrangement must be fully paid by age 90.
Those nearer to this milestone may need to make a complete payment upfront.
In some cases, those expecting a shorter life or with specific diagnoses may be disqualified from having a policy or may have alternative payout clauses if accepted.
Full payment may even need to be made upfront.
Life insurance and pre-arrangement policies are different in how and what they cover.
With life insurance, factors like what caused the death can impact the policy’s payout.
States often have their own rules governing companies, policies, and regulations.
What options are available for paying for a funeral in advance if you cannot qualify for life or funeral planning insurance?
Creating a trust as part of your estate planning can be an alternative to paying for funeral planning.
With a trust, the trustee manages the assets held in the trust to benefit the beneficiary or beneficiaries.
With funeral insurance policies, there is typically a clause allowing coverage for the difference between what has been paid and the total costs of the funeral arrangements to be covered if the policy has not been paid in full by the time of death.
With a trust, you can typically add whatever amount you choose over time.
An experienced estate planning attorney will be able to help you navigate the best options for you and your loved ones when it comes to planning and paying for a funeral.
After an estate plan has been created, it should be periodically reviewed.
Your priorities in your 20s may differ when you are in retirement.
Any changes should be communicated to loved ones.
Reference: Yahoo Life (Feb. 17, 2022) “Should You Pre-Pay for Your Own Funeral as Part of Estate Planning?”