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Paying for A Funeral with Preneed Insurance


Consider preneed insurance available through funeral homes to pay for a funeral or memorial service. Basically, a funeral director meets with a client and explains preneed funeral plans and funding.

(S)He'll discuss the services and calculate the cost (which includes a casket and selected services such as embalming, visitation, transportation, etc.), and the client may decide to pay in advance.

"When that happens, we lock in today's prices," says preneed specialist Greg Brown of Gregory Brown Funeral Service in Cincinnati, Ohio. The preneed funds are then deposited in a bank that's federally insured, a requirement of the Federal Trade Commission.

This is to protect the family if ever the funeral home goes out of business. Some say that the client saves money with this guaranteed-price plan. "It's locked in until the day you die," offers Darryl Dick of Gilligan's Funeral Home, also in Cincinnati

"The funeral home will not come back and ask the family for more." Drawback? There's no assurance that prepaid funds are all that safe. There have been cases of mishandled preneed funds.

Another way to fund preneed is by a type of insurance underwritten by such companies the funeral home recommends. Homesteaders Life in Des Moines, Iowa, is one of the more well-known ones.

You buy life insurance in the amount needed to cover funeral expenses, which the funeral home guarantees. When death occurs, it's paid up automatically. It's important that you make certain the total cost is indeed guaranteed.

(Often, extras such as newspaper announcement, flowers, opening and closing of the grave aren't included.) With this plan, you pay a monthly premium based on age, and the money sits and grows to provide for inflation.

If there's money left, it goes to your beneficiary. ( If you move, ask if services and goods are transferable to another facility in the country.)

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