Historically, end-of-life issues, especially death and funerals, were the last topics people wanted to discuss. With more information and resources available, it seems that Americans are more at ease having these conversations. And they are willing to plan for these events in advance!
Recently, I had a client ask me about pre-paid funeral/cremation plans and whether these were something she should consider. In doing some research on the topic, I found that there can be pros and cons to these types of plans:
- Prepaying for your funeral can ease the burden on already grieving family members when the time comes, and you are able to choose the options you want.
- Using a prepaid plan can provide peace of mind. If you choose the right method and plan, you can feel confident that there are funds available to pay your final expenses.
- A prepaid funeral plan is a non-countable asset if you need government assistance for long-term care expenses down the line (Medicaid or VA Aid & Attendance Benefits).
- Purchasing a pre-paid funeral plan directly with a funeral home can be risky. If the funeral home goes out of business or misappropriates the funds, you could be out the money invested.
- You must carefully read any contract to ensure that there will not be added costs later on (i.e. the casket that was chosen is no longer available and the replacement model is much more costly).
- If you purchase a plan with a specific funeral home, you may not have the flexibility you want/need later on if you need to relocate and wish to change funeral plans.
There are pre-paid funeral insurance plans sold by insurance companies that provide the flexibility of using any funeral home in any state. The policies ensure that the premium you pay will cover the costs you plan for when the time comes. Again, it is important to read the fine print and consider the costs for any type of pre-paid funeral plan. Additional information and FAQs can be found in the Federal Trade Commission’s publication “Funerals: A Consumer Guide”.
There are many ways outside of the pre-paid funeral plans to ensure that your plans are in place and that the funds are available. Discuss these and other important issues with your financial planner.
The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does don constitute a recommendation. Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.