To Prepay Your Funeral or Not?

Posted by Pekin Insurance on Dec 09, 2015 in Funeral Preplanning

Explaining the Benefits and Risks of Funeral Prepayment

Funeral planning is never easy. But if you choose funeral preplanning and prepayment, you take some of the hardship off your family and ensure your celebration will reflect your personality and wishes. Before you make this decision, however, here are a few questions you should explore:

ThinkstockPhotos-122563300.jpgCan I preplan without prepaying?

You can decide to preplan your funeral without paying for it in advance. The funeral director will simply file it away until it is needed. However, if you don’t prepay, your estate will have to pay for your services at the rate being charged when your funeral is held.

What advantages are there to prepaying funeral arrangements?

The biggest benefit is that at the time of need, your family doesn’t have to come up with the money for your funeral. Funds to cover expenses have already been set aside. Plus, when you sign a Pre-Need Agreement with the funeral director, answers to important matters such as how final expenses will be determined, what happens if the merchandise selected is no longer available, and what do to if more money is needed or if there is money left over have already been decided.

Are there any red flags about funeral prepayment?

Any financial transaction has its own set of risks. Funeral prepayment is no different. You’re handing over cash for someone else to manage. That’s why it is a good idea to compare funeral homes and make sure you go with one that has a solid reputation as well as competitive prices. Here are a couple of other tips to follow when entering a prepaid funeral arrangement:

  • Make sure you have everything in writing.
  • Inform those managing your estate or someone you trust that you have prepaid your funeral arrangements and where the arrangements have been made.
  • Know where your money is being deposited and that it is secured.
  • Make sure your plan is flexible enough that it can be moved to another funeral director.
  • Get a receipt and keep it in a safe place with your important papers.

What is the funeral home required to give me if I prepay?

Before making a decision, the funeral home will provide you with a general price list for their current services and merchandise.  Upon agreement, you should receive a Pre-Need Itemization Statement and a Pre-Need Agreement. The itemization statement will list everything you’ve selected, the facility you chose, and the price of each. The Pre-Need Agreement will outline the terms of your arrangement as well as all of your rights as the purchaser. This includes how the principal and interest will be applied to the cost of your funeral.

What happens to my funeral prepayment funds?

When a person decides to prearrange and prepay for funeral expenses, the funeral director is required by law to place the money in “trust.” That could be an interest-bearing trust account, a government-backed investment, or an insurance product like Pekin Insurance’s Pathway.®

What questions should I ask the funeral director before choosing to prepay?

Because you have several methods available to pre-pay for a funeral, you’ll want to come armed with a few questions so you can determine which option is best for your situation. Ask your funeral director:

  • Who receives the interest on the account?
  • Who pays the taxes on the interest?
  • Can I get a refund on my funeral pre-payment funds?
  • Can I use a different funeral home?
  • What happens if the funeral home goes out of business or is sold? 

For more information about funeral preplanning and prepayment, talk to one of your local funeral directors and remember to check out the Pathway® insurance products from Pekin Insurance. 


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