Generally, you might not consider the cost of your final expenses. Who knows what a funeral will cost by the time you actually pass away? Besides, you might figure with a life insurance policy, your final arrangements are already provided for. However, funerals can cost several thousands of dollars. And if you want to leave more of an inheritance for your loved ones and reduce their anxiety of properly laying you to rest, while overcoming the grief of losing you in the first place, you might consider arranging for your funeral expenses in advance.
There are a variety of ways to make arrangements for your final act:
- Life insurance
- Burial or final expense insurance
- Prepaid funeral planning
As mentioned earlier, life insurance can provide for your funeral expenses. You can also set up a trust in which some of the assets can be used to cover these final expenses as well. The benefit of a life insurance policy and a trust is their ability to provide for more than just your funeral expenses. These products can cover medical expenses as well as provide an inheritance for your family. They also provide your family with the flexibility that they may require to settle all the remaining expenses of your life.
Maybe you have a trust and/or a life insurance policy but want to make specific arrangements for your final day. A prepaid funeral plan might be worth considering. With a prepaid funeral plan, you can lock in prices and plan every detail of your funeral service. You can pay for it up front or make payments over time to the funeral home of your choice.
However, what you might not have considered is how flexible this plan will be in the future. If you’re not near the end of your life when making the arrangements, what if the funeral home goes out of business or succumbs to scandal? Fraudulent or mismanaged funeral homes, unfortunately, are not uncommon and if it happens with the one you selected, you could likely be out of the money you paid. Even if the funeral home is the most reputable and your family has used its services for generations, what if you move? Such plans generally are not transferrable or refundable.
Finally, there’s the option of burial or final expense insurance, much like traditional life insurance, you’d purchase a policy from an insurer rather than the funeral home and the benefit can be designated to a specific beneficiary you trust to handle your final arrangements. The cost and benefits paid on these policies are generally less than that of life insurance policies as they are generally only meant to cover funeral and other final expenses.
Regardless of whether you think you need to pay for specific funeral arrangements in advance, it’s best to consider such costs and how they will be covered rather than leave that burden to your grieving loved ones at the time of your passing.