Why Prepaid Funeral Plans Aren’t For You | Every Additional Cost, Secrets & More
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If you’ve been thinking about your funeral expenses, you might have contacted your local funeral home to see if they have prepaid funeral plans. While they might sound like a good idea, we’ll go over why it might not be the best for you. We’ve broken down everything you should know including the hidden fees you may incur.
At Final Expense Benefits, we’re dedicated to helping you find the best way to pay for your final expenses with funeral insurance. Call us at (866) 786-0725 or use our free quoting tool to find the best burial insurance for you and your family.
What Are Prepaid Funeral Plans?
Prepaid funeral plans are agreements made with a funeral home for your funeral. Most prepaid funeral plans will ask that you pay for all the services before you pass, but it gives you peace of mind to know that your family members won’t have to worry about your funeral expenses.
However, there are a lot of stipulations that you should consider when you decide on a prepaid funeral plan. Here’s what you should know before purchasing a plan from a funeral home.
How Much Does a Prepaid Funeral Plan Cost?
| Service | Cost |
|---|---|
|
Nondeclinable Basic Service Fee |
$2,495 |
|
Removal/Transfer of Remains to Funeral Home |
$395 |
|
Embalming |
$845 |
|
Other Preparation of the Body |
$295 |
|
Use of Facilities/Staff for Viewing |
$475 |
|
Use of Facilities/Staff for Funeral Ceremony |
$550 |
|
Hearse |
$375 |
|
Service Car/Van |
$175 |
|
Basic Memorial Printed Package |
$195 |
|
Metal Burial Casket |
$2,500 |
|
Vault |
$1,695 |
|
Total |
$9,995 |
However, with a prepaid funeral plan, you will also be paying for the estimated increase in services, initial administration fees ($100-$200), and additional maintenance fees (around $50-$150) that will last until you pass making it a more expensive option in the long run.
The NFDA states that the average median funeral cost has increased by 6.1% to 8.1% from 2021 to 2023, so funeral homes expect you to pay that difference or more depending on your age or their personal price increase comparisons.
Typically, you will pay more for your funeral in the long run with a prepaid funeral plan. Plus, any additional funds that were not used for the funeral will funnel back into the funeral home, not your family.
How to Pay for a Prepaid Funeral Plan
There are a few ways to pay for your prepaid funeral plans. You can pay the entire cost upfront or gradually add money into a trust. Depending on the funeral home you choose, you might get different plans, but here is what you can expect:
Pre-Need Insurance
A pre-need insurance policy works like final expense insurance. The only difference is that the beneficiary for the insurance is the funeral home. You’ll pay the premiums over time, and it is an official life insurance policy. Like most final expense insurance policies, you will be asked some health history questions that will affect when your coverage starts.
If you’re looking for final expense life insurance, we have many talented agents ready to discuss all your options. Call us at (866) 786-0725 or use our free quoting tool for the most accurate information on your final expense life insurance options.
Revocable Trust
A revocable trust is a fund you can control and change. Funds in this account can get to the funeral home most quickly. However, the money put into the trust is not shielded from creditors and is subjected to estate taxes.
Irrevocable Trust
Irrevocable trusts are permanent contracts that cannot be changed. Once the money is in the account, it must be used for the designated purposes. But there are no taxes enacted on the account after death.
What Are the Disadvantages of a Prepaid Funeral Plan?
While prepaid funeral plans provide a way to ensure that your funeral will get paid for after you pass, it is risky depending on several factors. Here are a few things to consider when you are deciding on a prepaid funeral plan:
Funeral Home Bankruptcy
If the funeral home you made an agreement with went bankrupt, you’ll have to find another home that will either take the trust or attempt to transfer the funds to a different funeral home trust.
Check with your funeral home before purchasing your plan to see if you can get your money back if they go out of business.
More Expensive Than Alternative Options
As stated, prepaid funeral plans are typically more expensive than traditional burial expenses. Multiple factors can contribute to those costs (paying for maintenance fees, estimated interest increases, and funeral home fees), so if you’re looking for cheaper options, a prepaid funeral plan might not be for you.
Looking for alternative ways to pay for your funeral? Final Expense Benefits excels at finding the right final expense insurance for you and your family. Just give one of our agents a call at (866) 786-0725, and we’ll link you to the right funeral insurance for you and your family. You can also use our free quoting tool to look at the plans available to you.
Mismanagement of Funds
Here Are Other Ways to Pay For Your Funeral
Funerals are expensive. If you aren’t ready to take on that expense or don’t want to financially burden your family, final expense insurance is the best way to ensure you and your family are covered. At Final Expense Benefits, we only work with the top and most secure insurance providers.
We’ve got agents on call at (866) 786-0725 every Monday to Friday from 9 a.m. to 5 p.m. to talk to you about your options. You can also use our quoting tool for free to see even more options for you. Here is a list of a few of the providers we work with:
| Company | 50 y/o Male | 50 y/o Female | 60 y/o Male | 60 y/o Female | 70 y/o Male | 70 y/o Female |
|---|---|---|---|---|---|---|
|
$34 |
$27 |
$51 |
$40 |
$73 |
$58 |
|
|
$39 |
$34 |
$52 |
$41 |
$86 |
$65 |
|
|
$30 |
$24 |
$43 |
$32 |
$74 |
$53 |
|
|
$36 |
$30 |
$47 |
$37 |
$81 |
$60 |
|
|
$55 |
$38 |
$68 |
$53 |
$106 |
$80 |
Conclusion
Prepaid funeral plans are an option for you if you are looking to lessen the burden that a funeral can bring. However, there are other options, like final expense insurance, that can cover your costs more efficiently and still leave funds for your family.
We always recommend you consider your options with final expense insurance. You’ll be able to cover all your costs, and there are plenty of options available to you and your family. If you have any questions, our talented agents are here to help and waiting for your call at (866) 786-0725. Want to check out some of your options before speaking with an agent? Our free quoting tool can help you determine what might be available to you.
Frequently Asked Questions
How Much Are Prepaid Funeral Plans?
Prepaid funeral plans can typically cost you around $10,000 to $25,000 depending on where you live and the estimated costs that the funeral home predicts.
Are Prepaid Funeral Expenses Tax Deductible?
Funeral expenses are not typically tax deductible for individuals. However, if an estate pays for burial costs, the estate can use expenses as a tax deduction. Because prepaid funerals are typically paid through a trust, it would be tax deductible depending on the plan you have with the funeral home.
Can You Change or Cancel a Prepaid Funeral Plan?
If you have an irrevocable trust, you won’t be able to change much about your funeral. However, if you decide on a revocable trust, you will be able to make changes and cancel.