Pre paid Funeral Plan: What are they and how do they work?

Last Updated July 11, 2024
A brass Funeral Home sign on a wall. Morticians, funeral directors

If you’re reading this article, chances are you’re starting the process of planning your funeral or the funeral of someone you love. Chances are, you’re curious about what a prepaid funeral plan is, how much it costs and whether or not it’s the right option for you.

Well, I have good news. We are going to cover all of that and more.

In today’s article, we take a deeper look at what a prepaid funeral plan is, how it works, and all of the benefits and risks so you can decide whether or not this is the best option for you and your family.

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What is A Prepaid Funeral Plan?

A pre-paid funeral is an agreement with a funeral home that allows you to plan your funeral ahead of time. They’ll offer you a total price for your plan and different payment options. Typical payment options include paying it in full upfront or over the course of three, five, or ten years.

Prepaid funeral expense plans safeguard against inflation, which is one of its most appealing features.

You’ll notice elements in the agreement that are “guaranteed,” which implies the cost of your plan is assured to be completely reimbursed regardless of future costs.

Funerals that are pre-paid succeed at addressing two major difficulties.

First and foremost, it is to guarantee that your family is not forced to make vital decisions at the most emotional period in their lives. They won’t have to figure this out because you’ve already planned your entire funeral.

Second, it’s to make sure your loved ones aren’t burdened by the financial costs of your funeral. Payment for the funeral is included in a funeral plan. The cost of the funeral is covered, whether you pay in whole or over time, so your family doesn’t have to pay out of pocket.

How Much Does a Prepaid Funeral Plan Cost?

The cost of a prepaid funeral plan varies based on your age, location, and personal wishes for your final arrangements.

The typical cost of prepaid funerals is broken down further below, depending on how you wish to be remembered:

$2,000-$5,000 for direct cremation (no funeral service).
$6,500-$9,000 for cremation with a funeral.
$3,500-$5,000 for a direct burial (no funeral service).
$8,000-$15,000 for a burial with a funeral.

As you can see, the sort of funeral you want will have a significant impact on the cost of your pre-paid funeral plan.

What are the payment options for a prepaid funeral plan?

There are a few different payment options for prepaid funeral plans. You can pay in full upfront, or you can make monthly or yearly payments. You can also set up a trust fund or insurance policy to cover the costs of your funeral.

If you want to pay in monthly payments, you may anticipate paying anywhere from $200 to $500 each month, depending on the total amount, age, and length of the repayment period.

What happens if the funeral home goes out of business?

You may not have even thought to ask this question because the local funeral home has been around for over 50 years.

Well, both local and large companies (Toys R’ Us, Radioshack for example) go out of business every day. If you’re putting $10,000 of your hard-earned money into something, you’d better be sure it’s safe.

"Never, under any circumstances make a payment directly to a funeral home."

Here is a few links of disaster stories:

The most critical thing to consider before executing a pre-paid funeral plan is, “Where will the money be held?” This question can only be answered in one of two ways.

A bank or a life insurance company must hold the funds for a pre-paid funeral.

If you pay a single premium in cash, the money will be put into a bank trust or a life insurance policy, both of which will generate interest.

If you choose to make a monthly payment, the money will be paid to a life insurance company. The beneficiary of this plan would be the funeral home meaning the benefit amount you chose would go directly to the funeral home.

So, you may be asking yourself, “Why wouldn’t I just pay the insurance company myself and assign someone I trust more (A spouse or child perhaps) to handle my final arrangements?”

Well, that’s a great question and if you want our opinion, that’s exactly what we’d recommend you do.

What are my options to pay for funeral expenses?

Our experts here at recommend finding the appropriate final expense life insurance plan for your needs. This not only puts you in control to ensure your final arrangements are handled by someone you trust but also can be done at a more affordable monthly premium.

Click here to learn everything you need to know about final expense life insurance


We’ve reviewed the truth about prepaid funeral plans, and the risks they pose and educated you on the right actions to take when planning your final arrangements.

As always, we are happy to help and continue to educate you on all your options. If you have any questions or would like to learn more about your options to pay for your final expense, give us a call at 1-866-311-4338.

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