Pre Need Funeral Overview

pre-need-funeral.pngOpting to do funeral pre planning or sometimes referred to arranging a pre need funeral can vary for each funeral home or provider you choose. It’s important to note what is included in the prearrangements for both services and goods but will vary depending on State regulations and local customs.

The term “goods and services” are all the elements included within a service. “Goods” contains items you can purchase such as the casket, urn, flowers, burial containers, headstone, and printed memorials.  Most of the goods are not delivered until the service occurs so you won’t have all of them prior to death but are pre purchased. “Services” may include but are not limited to the basic fee charged by the mortuary, embalming and refrigeration, burial charges, or funeral home care.

The decision to purchase goods and services in a pre need funeral is financial and subjective. It is not a matter of buying a ceremony ahead of time, it is about putting money aside by using some sort of financial tool that is redeemed to provide funds for the purchase of these goods and services. A financial tool is simply the means to arrange for future funds using insurance, trusts, or bank accounts. There are many ways to set funds aside for a funeral, burial or cremation that many people might now be aware of. Each of course, has its pros and cons so weigh and consider them carefully.  It is vital to understand what your commitment is with your provider and also know what sort of contractual commitment they have to you. It is also a good idea to shop around for the best pre planning arrangements if possible. The items included may vary from provider to provider and some being more flexible than others. Get at least two plans to compare which is better for you and your family.

Pricing or Delivery Guarantee

Price guarantee is the goods or service prices agreed upon in the prearrangement that locks in pricing at the time of death. Many pre arrangers choose to do so based on a desire to lock-in costs. Materials in the death care industry can go up within a year’s time depending on the manufacturer and materials used. The price guarantee can give the pre arranger peace of mind knowing that they don’t have to worry unexpected costs or price increases and is placed in writing.

It is important to understand the mechanics of your pre plan so you know how it really works, what really happens, and what you can expect from your funeral professional. There are some items that price delivery is not possible as it is difficult to determine ahead of time the cost for these services given by third parties other than the funeral home. Flowers may be given an allowance because of the price fluctuation depending on the time of year. Not all goods will offer a price guarantee so each item should be discussed to see what is included and what is not. You may also choose to buy your own item outside of the pre planning professional you are working with. Items that are purchased can be the printed memorials such as your funeral program design and other items you might like as a little remembrance hand out. You can choose to obtain your own soloist or florists. If you feel you want to take on getting certain items yourself, let your provider know so you can agree upon what will be included and what is not.  

It’s important to understand that prearrangement isn’t an investment, it is a purchase. So you must realize that canceling a prearrangement might incur some sort of penalty. It could be a loss of money or cancellation fee. You should make sure you understand and discuss cancellation and ask plenty of questions.

Financing A Pre Need Funeral

You must then decide which financial tool you will use to put money aside for the service. You can choose your personal bank account, a trust or insurance. Some funeral homes or providers can work in a prearrangement by making monthly payments as opposed to a lump sum payment should you decide to pay cash for your plan.

If you are using some form of life insurance own the policy, you will control the proceeds and can then determine how and when they can be used. Insurance policies can seem quite complicated so don’t hesitate to ask questions with your agent regarding all the details and how it works.

Trust Funds

A common method of financing is to put your money in a trust. You should check with your state and its requirements on the principles of how they operate.  The general concept is easy. The consumer selects good and services and the prearrangement and trust agreement determines how the trust operates and what will happen at the time of death. It is required that some or all of the money be deposited into the trust as required by law. Although there may be cancellation fees or administrative expenses, most trusts to have provisions for cancellation where the trust holder can get his or her money back should they change their mind.

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