Talking about funeral plans while you’re alive can seem a bit preemptive or like you are “jumping the gun.” It may even feel like you are somehow jinxing yourself by bringing up the topic! However, what it actually does is provide financial security to your family, allowing loved ones to properly grieve, and providing security and peace of mind to the people you love the most.
What is preplanning for the future? Preplanning for the future is talking about the things that most people avoid talking about. It is shedding light on worst case scenarios and an unfortunate inevitable. It also includes talking to professionals who can gently and expertly step you through your options so that you can make a supported and fully informed decisions regarding your pre-planning. Planning for the future means having a solid plan that helps you and your family fee secure and protected during and after life.
Top 5 Things to Know About Prepaid Funeral Planning
- What is a prepaid funeral policy?
Most funeral homes offer a Whole Life Pre-Need Policy, which is used to pay for the funeral when the time comes. Unlike a traditional Term or Whole life Policy, this policy is connected to a funeral contract and it sets aside and protects money for your funeral in the future.
- Who qualifies for a Pre-Need Policy?
Anyone under the age of 91, regardless of health, will qualify for some type of preneed policy. For anyone over the age of 90, funds will be placed in a preneed annuity. Fun fact: This is the only type of policy an incarcerated person qualifies for, as they will only qualify for traditional Whole Life and Term policies three years after their release.
- Can I get a policy for my mom, dad, or another family member?
Yes! You can get a policy for an immediate family member, but the policy will be graded if that person doesn’t sign the application, unless you are their power of attorney or legal guardian.
- What does it mean if my policy is graded?
Just like in a traditional Term or Whole Life policy, there is a suicide clause that says, “the insured must live for two years for the full death benefit to be paid out,” excluding unexpected causes of death such as a car accident. Similarly, a graded funeral preneed contract will not provide the full death benefit amount of the funeral contract if the insured person dies within two years but instead will pay the total of your payments plus the accumulated growth. If the contract is not graded and the insured dies after one payment, the family will receive the full death benefit.
- What happens if I want to change funeral homes?
Your policy is portable to any funeral home in the United States; however, the prices will not be guaranteed. Your family can use the entire policy value towards the services they choose from that new funeral home, but the funds might not go as far.
As a financial educator and preplanning specialist, I work closely with individuals and families who are interested in learning more about prepaid funeral planning. I work with them to explain how the process works, what the short and long term benefits of such planning are, and to identify the best path forward for each unique situation. Please never hesitate to contact me with additional questions!
Elizabeth Brown
Financial Educator/ Preplanning Specialist