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How To Pre-Pay For Funeral Arrangements With Funeral Insurance

A funeral insurance policy can be purchased, which locks in the prices when you pre-plan your funeral.

This way, upon your death, the funeral home will receive the payout from the policy and can use those assets to fund your funeral.

Understanding The Terms Of A Funeral Insurance Policy

If the money you are paying the funeral home will be going into an insurance policy, be sure to fully understand the terms and restrictions of that policy. For example, if you change your mind about the pre-arrangements you’ve made and decide to cash out the policy, how much of your investment will you be getting back? How long after the policy is established will the policy pay the full benefits? And if you are late or miss a payment on the policy, will the entire policy be invalidated? If there's money left over after the funeral is fully paid for, who gets that money?

You may also want to take the time to do a little math: does the cost of the funeral insurance policy you’re purchasing actually outweigh the cost of the funeral you’re planning? Do the premiums on the policy cost more than the funeral you're planning?

How To Set Up A Funeral Insurance Policy

The funeral home you are working with will likely be able to sell you the insurance policy directly. Most Life Insurance companies and policies do not offer coverage for funerals, so if you don't want to purchase the policy from the funeral home you will likely have to search for a smaller insurance company that sells funeral insurance.

Communicating With Your Family

If you are setting up an insurance policy to pay for your funeral, be sure to tell your family about the arrangements you've made. Let your family know the name of the funeral home and the funeral director you've worked with, and be sure your family knows where the paperwork for the insurance policy and the agreement with the funeral home is located. By communicating with your family you can make it easier for them to handle your funeral arrangements when the time comes.

To learn more about how to store important documents for your survivors, see our article Estate Planning Documents to Organize and Share.

Other Ways To Pre-Pay For Funeral Arrangements

There are a number of other ways to pre-pay for funeral arrangements. The most common include:

  • Funeral Planning
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