Common Pre-need Funding Questions: Answered

September 17, 2015 Pre-need Funeral Planning by Alyssa McNab

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Funeral planning comes with many options to consider – which is why planning ahead can be so beneficial for families. Instead of worrying about the practical and financial details at an emotionally difficult time, prearranging allows families to carefully consider their choices without the added stress and pressure of a recent loss.

Once all of the service details have been settled, it’s time to think about pre-need funding options. Here are answers to a few common questions that we receive about this important step in the advance funeral planning process:

What are the benefits of pre-need funding?

According to the NFDA, the median cost of a funeral with casket was $7,045 as of 2012. This number does not include many of the other costs that may be associated with a funeral, such as a vault, celebrant fees, floral arrangements and catering expenses. Funding a funeral in advance helps relieve the financial burden from surviving loved ones.

Making advance funeral plans can also help prevent emotional overspending on funeral arrangements. Advance funeral planning can be done at a person’s convenience and pace, so he or she can make thoughtful decisions under stress-free circumstances.

Why fund an advance funeral plan with an insurance product?

There are many reasons why funeral homes choose insurance to fund advance funeral plans. Insurance products can grow over time, offering protection against inflation. In addition, growth on these policies is not taxable. Insurance funding often allows for payment options, so consumers can select the choice that’s right for their financial needs.

Why would I want another insurance policy if I already have life insurance?

This type of insurance is specifically designed to cover the cost of a prearranged funeral. It can grow in death benefit, and the growth paid on the policy offers protection against inflation. Typical life insurance offers excellent protection to cover a family’s living expenses after the insured person dies. A funded advance funeral plan leaves your life insurance proceeds intact, to be used as intended.

Do I have to pay for the full cost of the advance funeral plan up front?

Payment options will vary by pre-need funding provider. For example, Homesteaders offers options so consumers can select the payment plan that’s right for their needs. The entire Homesteaders policy may be paid up front or, depending on age, the policy may be paid for over the course of multiple years.

What happens if I want to make changes to my advance funeral plan?

When a person wants to make changes to an advance funeral plan, the first step is to contact the funeral home. The pre-need professionals at the funeral home will be able to help make the changes to the funeral plan and ensure that the documentation gets updated. Additions to the prearranged funeral service may alter the funeral cost, and pre-need professionals can explain what impact the desired changes will have.

Will I be satisfied with my decision to prearrange and pre-fund my funeral?

Pre-need policy owners have indicated high levels of satisfaction with pre-need funeral planning. Ninety six percent of respondents to our 2015 survey of Homesteaders policy owners indicated that they are “completely” or “very” satisfied with their decision to prearrange. Nearly all (96%) of policy owners would at least consider recommending prearranging, and more than 40% of policy owners had already recommended advance funeral planning by the time they completed the survey.

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