There are a few different ways you can pay for your final arrangements. One is to buy a burial insurance policy, a kind of life insurance that covers funeral and burial arrangements with no major fuss. Another option is to pay for a prepaid funeral plan that many funeral homes offer. Both options have their pros and cons.
A prepaid funeral plan allows you to lock in the price of your funeral arrangements right away. This can potentially save you a lot of money, both because the funeral home may offer discounts and because inflation will cause prices to go up between the time you make the arrangements and the time you pass on. You’ll also be able to pay the price in installments without having to burden your family with any sudden debts.
However, a prepaid funeral also comes with a few important downsides. Since your contract is with one specific funeral home, chances are you won’t be able to transfer it to a new place if something happens to the business or if you move away from home. It will also be difficult to alter your arrangements if you change your mind later on.
Burial insurance is a form of whole life insurance that you can purchase on its own or as part of a larger life insurance package. Also called funeral insurance and final expenses insurance, this policy pays for funeral and burial costs up to its maximum payout. Unlike other forms of life insurance you don’t need to take a medical exam, and depending on the policy you might not even have to answer any health questions. Burial insurance can also pay the full benefit right from the beginning, but you can get better premiums by choosing a graded policy.
Still, there are a few downsides to burial insurance. While you can take out a policy when you’re terminally ill, the premiums will be much higher than they are if you get your burial insurance while you’re still relatively healthy. You might also end up paying out more than the value of the policy if you live a long time, and the value doesn’t go up over time the way other forms of life insurance do.
The Bottom Line
A prepaid funeral can be a good idea if you know exactly how you want your funeral service to go, if you have zero plans to move outside of your current area and if you trust the funeral home to still be in business and use the money you spend wisely. However, burial insurance is better if moving is even a possibility, if you aren’t sure what your final plans are, and if you want to save your family some money by using life insurance instead of paying out of pocket. Overall, burial insurance is usually a better plan for most families.
There are many burial insurance plans out there. Be prepared to shop around if you decide to get a policy. To make things go faster, be sure to speak to a life insurance agent in your area.