Thinking About a Prepaid Funeral? 3 Things to Consider

25 June 2019
 Categories: , Blog


Have you heard of the idea that funerals are for the living? This makes sense, since, regardless of your thoughts about the afterlife, your funeral serves a ceremonial purpose in allowing your loved ones to commemorate your life and process the loss. Many people might opt to spare the living from the financial obligation of paying for a funeral, making arrangements for a prepaid funeral which can then be enacted when the time has come. Some life insurance policies can be utilised to cover these costs, at least partially, but some people might wish to have a specific prearranged plan in order to pay for their own funeral. If this is something you've been thinking about, there are a number of things you need to determine before taking out such a plan.

1. Inflation

While the value of the policy might seem considerable, you may be looking at this figure in terms of the current cost of living. Prepaid funerals are costs that will be claimed years, if not decades, in the future, and as such, an amount that is more than sufficient at the time of purchasing the plan might prove to be lacking when it's actually utilised. Ask about whether the value of the policy is altered in line with inflation.

2. Contingency

Given the potential longevity of your planning, you need to consider the possibility that the prepaid funeral provider might experience some financial woes in the subsequent years. What about if they've gone out of business by the time you need the service you've already paid for? Be sure to ask whether they're underwritten by a major insurer and if there are any other contingency plans in the event of bankruptcy (such as if your plan is simply rolled over to another provider). Underwriting is not a guarantee against bankruptcy, and yet it can add another layer of assurance.

3. Flexibility

There should be a degree of flexibility in the purchase of a prepaid funeral. For example, what if you purchase a plan for both yourself and your spouse, and you later separate? Are you able to get these contributions back, or at least roll them over to your own contributions, which could then be reduced? What about if you move overseas and are likely to be buried in your new country when the time comes? Are you then able to get your money back? Such provisions will generally be outlined in the terms and conditions of the prepaid funeral plan, so you need to read these very carefully, and also seek clarity about anything you might be unsure about as it pertains to your circumstances.

Prepaid funerals are a practical way to spare your loved ones from the financial obligation of paying for your funeral, but you need to make sure that the plan is truly one that is going to work for you.