Pre-Need Insurance

    Pre-Need Life Insurance: Should You Pay For Your Funeral In Advance?

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    Funeral costs can reach thousands of dollars, so it's best to have plans in place to make sure that your loved ones don't have to pay out-of-pocket when you pass away. In this guide, we'll discuss how you can prepare for your funeral by buying preneed life insurance. We'll also compare pre-need plans with burial insurance to see which one is best for your needs and current situation.

    Understanding Pre-Need Life Insurance

    Pre-need life insurance allows people to pay for their funeral-related expenses in advance. This type of insurance is unique because you don't purchase it from a life insurance company. Instead, you buy it directly from the funeral home that will be in charge of hosting your memorial service.

    Getting preneed funeral insurance can help you save money because you're locking in current-day prices for funeral expenses. According to the National Funeral Directors Association, prices for funeral home services tend to increase by 7.3% each year. If you live for several years after getting a preneed plan, you will be able to take advantage of much lower prices.

    How Much Does A Funeral Cost?

    Before buying a preneed policy from a funeral home, it's best to familiarize yourself with the median funeral costs. Here are some of the most common funeral-related expenses, according to the National Funeral Directors Association.

    Keep in mind that the rates below do not include the cost of buying a cemetery plot. Burial plots can cost $5,000 to $10,000.

    Below are sample rates that funeral homes typically charge for traditional funerals as well as funerals with cremation:

    ItemBurial & CasketViewing & Cremation
    Non-declinable basic service fee $2,195$2,195
    Transfer of remains$350$350
    Other preparation of the body$255$255
    Facilities/staff for viewing$425$425
    Facilities/staff for a funeral ceremony$500$500
    Service car/van:$150$150
    Printed materials$175$175
    Metal burial casket$2,500-
    Third-party cremation fee-$350
    Cremation casket-$1,200
    Note: Keep in mind that these are just standard funeral industry rates. Rates may vary depending on your chosen funeral home, location, type of memorial service, and other factors.
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    You should always check which services are guaranteed by the funeral home. The funeral home is contractually obligated to cover these services, regardless of how much their prices increase in the future. Any non-guaranteed services may still increase in price, and your loved ones will have to shoulder the excess balance.

    Pre-Need Insurance vs Final Expense Insurance Policies

    Although preneed and final expense insurance are both designed to cover funeral-related expenses, there are some key differences.

    For preneed life insurance, the payout of your policy goes directly to a funeral home. In comparison, life insurance companies give the death benefit for final expense insurance (a.k.a. burial insurance) to your beneficiary, like your spouse.

    So if you lock in a contract with a specific funeral home, you can’t hold a memorial service at a different funeral home in the future. If you move to a different state, for example, your family will need to return to your original funeral home to hold your memorial service.

    Compare that with a final expense policy, where the life insurance company pays out the death benefits directly to your beneficiary. The beneficiary will be in charge of picking out the funeral home and arranging the services.

    Another key difference between a preneed insurance policy and a burial insurance policy is how the remaining money can be spent. For example, let’s say you have a preneed insurance contract that provides $10,000 for your funeral. However, your family members end up spending only about $8,000. The remaining $2,000 will not be returned to your relatives.

    With a final expense insurance policy, your beneficiary has the freedom to spend the remaining balance as they wish. They can use it to take some time off work or pay off any of your outstanding debts. Final expense policies can have a face value of up to $25,000, giving families enough funds for most purposes.

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    Who Should Buy Pre-Need Insurance?

    Seniors who don't have enough savings to cover funeral expenses should seriously consider getting a preneed funeral insurance contract. This will help ensure that they don't leave their loved ones with a financial burden after they pass away.

    Even if you have active life insurance policies, it's still good to consider purchasing funeral plans. That way, your loved ones can spend the full death benefit for their own needs instead of using it to cover your funeral expenses.

    Benefits Of Buying A Pre-Need Plan

    Getting a preneed life insurance plan comes with several benefits. Aside from locking in present-day rates for funeral services, you can gain the following advantages:

    Put Less Stress On Your Family

    Funerals are difficult to organize. By getting a preneed life policy, you'll take the pressure off your family. This allows them to focus on the grieving process instead of stressing about funeral arrangements.

    Gain Peace Of Mind

    Getting a preneed life insurance plan can put your mind at ease because you know that you won't leave your family with a financial burden. You can focus on your daily life instead of worrying about saving up to cover the cost of your funeral.

    Make Your Own Funeral Arrangements

    Many people like making their own funeral arrangements because it gives them a sense of control. If you're buying a preneed life insurance policy, you can start talking to funeral homes and organize exactly how you want your memorial service to go. You'll often be able to choose your funeral director, music, and program.

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    Final Thoughts

    It’s tough just thinking about saying goodbye to your loved ones, but a preneed life insurance plan can make it easier. By paying for your funeral in advance, you know that you won’t leave your family with a financial burden once you pass away.

    For more information on preneed life insurance, get in touch with Wesley Insurance, LLC. We can help you come up with the best financial strategy for your end-of-life expenses in the future!

    Written By Cameron McDowell
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