Pros And Cons Of Prepaid Funeral Plan [You Need To Know These]

Thinking of death is surely a feeling that gives chills down the spine. But do you know what’s worse? It’s the aftermath the family and loved ones go through. The demise of a person not only breaks the heart but also takes them down financially.

Did you know that the average cost of a funeral in the USA is around $7000 to $10,000? So, instead of letting your family members suffer, it is better to have a prepaid funeral policy.

However, there are some pros and cons of prepaid funeral plans to help you make the right call.

What Is Prepaid Funeral Plan All About?

So you are healthy and alive. Life is also going in the right direction. Nevertheless, as strange as it may seem, this is could be the ideal time to plan everything related to your funeral.

Of course! The topic is not pleasant at all, but would you like to see your family members worried about your funeral bills? Not at all, right? So you must start thinking of purchasing a funeral plan.

A prepaid plan, as scary as it may sound but a boon in reality for most people, is the final favor you can do to your parents, spouse, or children.

It is a kind of an agreement between a particular funeral home and you, where you are required to pay advance payments to receive funeral services when you leave this world.

These payments usually cover all the expenses, allowing your loved ones to pay their respect without being distressed about the finances.

So, as you plan a prepaid funeral, make sure that you choose the funeral home with a lot of care and research.

Remember! Good funeral services will ensure smooth arrangements, eliminating additional stress off your family’s shoulders.

Prepaying For Your Funeral! Is That A Good Idea?

From viewing the facts mentioned above, you can clearly understand that paying for your funeral services in advance has a major benefit.

However, it is vital to see everything through a lens. Prepaid funeral services can help your family members in several ways, but they may also get you in a bit of trouble.

These difficulties are mostly related to finances, which you may need to live with for the rest of your life.

So, before you go for any prepaid life insurance, make sure you read these pros and cons.

Top 10 Pros Of Prepaid Funeral Plan

Following are the advantages of having a prepaid funeral arrangement:

#1. Zero Pressure On The Family

Imagine your family concentrating on expressing love to you at your funeral. Their hearts being sunk as you are departed but silently knowing that even in the final moments, you have played your part well.

So prepaying for your funeral is a great way to release the pressure of funeral arrangements from your loved ones.

Because one of the most disturbing things a beloved family member could feel is the fear of managing the funeral. Next to this comes the stress of accumulating the funds. But prepaid internment is a great way to relieve financial stress.

So, when you decide on your prepaid funeral, then make sure your family members know about the step you have taken. It is better to discuss everything before it’s too late, as you never know if life would allow speaking again.

Many people, despite having advanced funeral planning, don’t bother to shed light on this matter. And as a result, the family members tolerate a lot of problems.

Therefore, once you have made the decision, let your loved ones know about it. Let them realize that you will be always there for them even when you will be gone far away.

#2. No Overspending

When a person is dead, his or her family members are always found to be thinking of making the final day in this world a memorable one. They want the lost member to be remembered forever, and this is why they need everything to be perfect.

In the same way, after you are gone, your family’s priority will be to assure that your burial is administered with great honor.

For sure, it will be their love for you or a way to say the final goodbye. But these are the times when they are emotionally overwhelmed, and they don’t care about how much they spend. While the sentiments are priceless and might help to heal quickly but they could cost a fortune.

So when you have a prepaid funeral, it will save your family from excessive and unnecessary ceremonial customs. Also, it is found that people who plan a prepaid burial for themselves end up saving a lot of costs.

It is because they look at the event as a rule of Mother Nature rather than grief, or a platform to spend thousands of bucks. So a prepaid plan helps restrict the cost overrun, and your family is liberated from borrowing loans.

#3. Resting Besides The One You Love

Losing a loved one sometimes leaves an unfilled gap. No matter what you do, and where you go, their memories always keep you connected with them. And sometimes the bond becomes so rigid that you wish to rest beside the person you love.

Just think, how beautiful would it be if your final resting place is near, around, or next to the dearest people. Wouldn’t that be a relief? Knowing that, after you are gone, you will be still surrounded by the people who have always been close to your heart.

The feeling is priceless, and it provides peace and comfort to the mind. But not everyone is lucky enough to be buried right next to their spouse, mom, or dad.

So, when you decide to have a prepaid funeral, you opt for a cemetery plot of your choice. You are guaranteed by the funeral home that your last abode is going to be a place next to your ancestors.

If you look at this matter from another angle, you will observe that this would also be helpful for your living family members to pay a visit to all the family graves despite visiting multiple cemeteries.

#4. Grip Over Arrangements

An unorganized funeral can be a painful memory. As now you might be in good shape to control and manage all your worldly affairs, so why not take over your funeral arrangements as well?

It is better not to count on your family members for perfect funeral management. The sadness and grief they will survive through on the day of your demise may not permit them to think intently.

In all the haphazard, there are increased chances that they might take wrong decisions, and squander money on inessential formalities. And as a well-wisher, you would never want your family members to regret their actions later in life.

So, prepaying for your funeral means taking things in your own hands. You won’t be answerable to anyone, and you will be the one to decide what rituals to include and what to eliminate. And most importantly, you will lessen the responsibility of your family members.

As a result, a prepaid funeral will help you give control over all the expenses and arrangements. Also, it will help you leave a sweet reminder about your existence on earth that your family members will never forget.

#5. Locked Prices

Dying can be expensive. Do you know that the Bureau of Labor Statistics data revealed a rise of 227% in funeral cost in the US between the years 1986 to 2017?

Many people do not pay attention to these statistics. And, at the end of the day, the family members left behind, become tensed, as it gets really difficult for them to pay the price for every necessary funeral product.

So from paying for a tombstone to the casket, they try their best to manage things but usually end up in taking loans due to the ever-increasing prices. For sure, you don’t want to see that from the heaven above.

Making the lives of your loved ones a living hell, won’t let you sleep peacefully in your grave. And this is why one of the biggest pros of a prepaid plan is a fixed price.

For example, ‘A’ bought a funeral plan in January 2017. At that time, he fixed the price for the casket to $2000. In 2018, the price for the same casket rose to $2500.

However, in the middle of the year, ‘A’ died and was buried decently in the selected coffin without paying those extra five hundred bucks. Even his family members were not liable to pay any amount.

Therefore, a prepaid funeral helps you in locking the costs.

#6. Emotional Stability For The Family

One of the heaviest things to the hearts of loved ones is to hear about the sudden death of their beloved family member.

Keep in mind that a physical wound is much easier to heal, but emotional injuries take years to be cured. So, the unforeseen death news emotionally breaks them down and makes it extremely difficult for them to come out of the trauma.

But do you know that a preplanned funeral can banish the agony of losing a dear one? What happens is when you decide for the prepayment of your funeral plan; you elect to be mentally prepared for the unfortunate truth.

Once you accept the fact, you pronounce your choice to your family members and close friends. Consequently, they recognize and respect the reasons for you to take such a decision, and their mental state begins to adjust to the hard fact.

And when the day comes, your family accepts your death with honor, as they have been already prepared for a while. The picture you draw in their minds on telling your prepaid plan news gives them survival stamina.

#7. Installment Facility

In general, you will find the funeral homes demanding the entire fees at once. But sometimes it is impossible to pay for the services right away.

There could be several grounds for not going for the lump-sum payment option, such as a tight budget, a fixed income stream, or anything.

This is one of the major reasons why most people ignore prepaid plans. So make sure you don’t count yourself into those. Why? It is because a sensible person would never overload his or her family members with financial trials.

And when backing off is not an option for a brave person, then Mother Nature helps in numerous ways. Thereby, the doors are always open for the installment plan. Many funeral services offer prepaid funerals in 1 to 3 years of installments.

So if a prepayment installment plan for your funeral is providing a full-court press over your financial fears, then there is no reason to retreat.

Therefore, the installment plan can help you gear up for your next journey with comfort.

#8. Nil Payables

Many people think that funeral insurance is better than a prepaid funeral program, and some people even consider both terms singular. Nevertheless, both are different things with distinct terms and conditions.

The greatest benefit of a funeral plan is the tranquility that it provides, and unlike any funeral insurance, a prepaid plan covers all the expenses at the time of your burial.

So, it doesn’t matter how much the prices for funeral services inflate in the future, you will only have to pay the amount you agreed upon.

On exhibiting the death certificate, your funeral will be ready to go; hence, taking away all the hassle and stress for those who will be organizing it.

Also, when you choose a funeral plan, you already pay the dues in advance. So even if the tenure ends, and you die after a gap of several years, there won’t be any liabilities left to be paid.

On the contrary, in some cases the funeral insurance, your family members may not receive the desired amount. And even if they do, then they might need to add more funds to it due to an increase in the funeral organizing prices.

So, a prepaid plan is better than any other policy, as it ensures that your family members don’t worry about any due payments.

#9. No Estate Tax Required

As a good citizen, you must pay state taxes. It helps in creating a better homeland. However, it can be hard to pay taxes for every other transaction you make.

But another best feature of a prepaid plan is that the money you pay for it, whether a lump sum amount or installments, is free from the estate tax. This means that whatever the amount you pay will be free from any hidden charges or government fees.

#10. Satisfaction

One of the pros of a prepaid plan is satisfaction. As you emancipate your family members from paying for your funeral, you finally get huge mental ease.

Seeing them happy and financially well after you are being conveyed to another world by death is an inestimable feeling.

The Cons

The advantages of a prepaid policy are magnificent. But as every rose has a thorn; therefore, there are also a few disadvantages, which are:

#1. Additional Financial Obligation

One of the major cons of a prepaid plan is an upset budget, although it’s an advantage as well. But due to the lump-sum payment or installments, you might need to decrease other expenses.

For instance, you might need to cut down your semi-annual vacations. And only take trips once all year round to save the money for the installments, or to manage the funds in your bank account, as you have paid the total funeral payment in advance.

Also, prepaid funeral services can be of no use, if you have already taken any life insurance policy. The money that will be received by your beneficiaries after your death can be used for organizing your funeral.

So, if this is the case, then it’s like paying for comparable services, which can be a waste of money. Therefore, prepaying for the funeral can be similar to overcharging yourself.

Instead of prepaid plans, considering your age you can choose the following life insurance options:

Life Insurance for Seniors Over 85

Life Insurance for Seniors Over 80

#2. Threat Of Losing Investment

Despite funeral homes offering vital services, they are, after all, business entities with a goal of increasing their profit. Also, to compete with other funeral service providers, they need to administer their income accurately to be successful.

So, going for the prepaid funeral policy is like giving your heart and soul to funeral homes. They use your money for the sake of their business expansion, and competition. This means your investment is utilized to pay their bills. So anything can happen.

For instance, if the funeral services go bankrupt, then it is nearly impossible for you to retrieve the investment. And even if you would plan to fight for your right, then you may end up paying huge amounts to the legal bodies.

And there are major chances of you losing the investment, as you would have already signed the terms and conditions of your preferred funeral home. This signifies that you agree to the non-refunding policy.

#3. Inflexibility

Once you have prepaid for the funeral to a particular service provider, you cannot change the funeral home or demand for extra services. Also, you cannot ask for your money back, in case you have changed your mind.

So, a prepaid funeral can limit your boundaries, which leaves you with two options.

Option 1: Stick to the same funeral home.

Option 2: Break the agreement and lose all the investment.

4. No New State Coverage

If you are planning to move to another state, then the chances are that you may not be covered by the funeral services, although you have paid every cent. This is another huge disadvantage of a prepaid policy, but most people are unaware of such restrictions.

So, for example, if you have moved to another state, and your life ends up there, then your family members will have to pay for all your funeral expenses. They cannot claim any amount from the funeral home, as the day you decide to shift, will be the last day of your agreement.

Nevertheless, a few prepaid plans may offer transfer benefits, but not all services possess such policies. This is why make sure to read the agreement before going the prepaid way. If you will be lucky, then the funeral director might help you out in this matter.

Otherwise, there is no other way. A policy is a policy! So think twice before changing your state if you have a prepaid one.

#5. Painful Thought

Thinking about your funeral, especially when you are healthy and happy in life, can be extremely depressing. And the next worse thing is, planning it on your own.

In some cases, people have become Obsessive Compulsive Disorder and Panic Disorder patients as they can’t stop thinking of their death.

So, a prepaid option means that you will be paying for your post-death services. The pain of leaving your children, spouse, and parents is undeniably heartbreaking. The thoughts can provoke psychological distress that can trouble you for the rest of your life.

Moreover, it can also disturb your personal, professional, as well as, social life, as you might keep having ideas about how your family will manage after you will be deceased.

Read Also: Best Cremation Insurance

Confused About Getting A Prepaid Funeral Plan?

Here’s What You Should Do!

Now you know all the major ups and downs for paying in advance for your funeral services. Possibilities are that you might still be confused about whether or not you should choose a prepaid burial plan.

So, it is essential to seek advice before taking any decision.

Here’s what you need to do:

  • First things first, let your family know about your intentions. Tell them why you think you must go for the prepaid plan. These people will always give you the best advice.
  • You can consult your relatives and seek their recommendations.
  • Let your friends be a part of this huge decision. You can always ask for their guidance.
  • Lastly, make sure you survey most of the funeral services in your state to understand the difference between their policies.
  • And when the decision is finally taken, your family must be the first one to know about it.

To understand anything in-depth, it is necessary to look for its pros and cons. And especially when it is about making big choices in life, you can’t just go with instincts. A prepaid funeral has numerous positive effects, but there are also some flaws.

So, to ensure its benefits to you and your family members, it is vital to take decisions by knowing all the facts.

Linda Chavez

I'm a burial & senior life insurance expert, independent agent, Founder & CEO of Seniors Life Insurance Finder. I have been working in this sector since 2004 and established my own company in 2014. I have a team of seven members, and we are trying hard to share the knowledge we've gathered. We know how difficult often it is to find an affordable policy. Hence, we are doing our best to help you.