Should You Pre-Plan Your Funeral through Your Current Insurance Provider?
If you’re getting ready to pre-plan your funeral, you’ll soon discover that there are many different kinds of providers and services out there. These days, you can choose from specialty businesses that only sell funeral pre-package plans, cemeteries and funeral homes, and insurance companies for all your pre-plan needs. To make matters even more complicated, the benefits themselves vary from insurance payouts upon death to entire funerals planned down to the last minute.
Because most Americans already have some kind of insurance (home, auto, life), it’s often easiest to explore funeral planning options through existing insurance companies. However, before you make any final decisions, it’s a good idea to know the pros and cons of this option.
Benefits of Funeral Insurance Providers
When you purchase a funeral plan through an insurance company, chances are you’re talking about funeral insurance rather than a pre-plan package. Funeral insurance, like life insurance, is a policy that pays out at your time of death. You name a beneficiary and the funds are disbursed almost immediately, which means that the beneficiary can then use that money to pay for the funeral. Pre-plan packages, on the other hand, typically ask that you pay for a funeral upfront (or on an installment plan) and make decisions regarding casket types, burial plot, and other specific arrangements.
The primary reason why people go through an existing insurance provider for funeral benefits is because of the guarantees. Advance funeral planning companies have gotten a bad reputation in recent years because of one or two businesses that preyed on the elderly, taking their money and not providing the promised funeral in return. While the majority of companies are reputable, there is some comfort in knowing that you are taken care of by an insurance provider. Because you already trust these companies with your auto, home, or life policies, it’s not that much of an extension to include funeral insurance.
There is also the benefit of choice. Unless your funeral insurance provider is affiliated with a specific funeral home (or if you name a funeral home or director your beneficiary), there are few restrictions regarding how and where the money is used to plan your funeral.
Drawbacks of Funeral Insurance Providers
Of course, funeral insurance isn’t for everyone—and you may find that you prefer the options offered through pre-plan packages at specific funeral homes or via third-party funeral planning organizations.
If you would rather pay for a funeral upfront (thereby locking in prices and making decisions regarding the exact details), it’s typically best to explore pre-plan options beyond insurance. This is also a good idea if you want to ensure that the funds you set aside will be used in the manner you intended.
You might also find that you can get better rates if you look beyond your insurance provider. As is the case with all funeral-related items, comparison shopping is your best bet if you want to save money and get the best deal.
No matter which route you choose, however, it’s a good idea to start your funeral planning around the same time you handle other insurance and estate matters. For just a little extra money today, you can reduce the entire burden of your funeral in the future—regardless of where that funeral planning comes from.