This page explains what a prepaid funeral plan does and doesn't guarantee. For a checklist of questions to ask before you pay, see Prepaid funeral plans: questions worth asking.
Does "prepaid" mean the whole funeral price is locked forever?
Not always.
A prepaid arrangement can help because it lets someone choose services and set up the money before a death.
But the word prepaid only tells you when the money is paid.
On its own, it doesn't say which future charges are guaranteed.
The contract does.
Preplanning and prepaying are different
You can plan:
- direct cremation;
- a burial;
- a religious service;
- a memorial;
- an urn;
- a cemetery preference;
without paying anything today.
That's preplanning.
When you fund or buy specific future services, you're prepaying.
After.com's current preplanning resources also treat planning ahead as a separate choice from waiting until a death happens. See After: Benefits of Pre-Planning Your Funeral.
What can a price guarantee actually cover?
That depends on the contract.
A guarantee might cover:
- professional services;
- transportation within a set area;
- cremation;
- a specific casket or urn;
- use of the facility;
- chosen merchandise.
It may not cover future increases in:
- cemetery charges;
- government filing fees;
- clergy or celebrant fees;
- flowers;
- newspaper notices;
- transportation outside the agreed area;
- other cash-advance or third-party items (things the funeral home pays others for on your behalf).
Ask the provider to mark each line as guaranteed or not guaranteed.
Where does the money go?
This is one of the questions that matters most.
Depending on the state and how the plan is set up, a preneed arrangement may use:
- a trust;
- an insurance product;
- another funding method that the law regulates.
Don't accept:
"Your money is safe."
Ask:
"Where is the money held, who owns the account or policy, and what happens if this funeral home closes?"
What happens if you move?
People prepay at 65 and move at 78.
Your contract should answer:
- Can the arrangement be transferred?
- Will another funeral home accept it?
- Is there a fee?
- Do guaranteed prices stay guaranteed?
- Does the new state's law change anything?
- Do you get cash value, or only a credit toward services?
Whether a plan can move with you matters far more than it seems on the day you sign.
What if you change your mind?
Ask before you pay:
- Is there a cancellation period?
- Is the arrangement revocable or irrevocable (can it be undone or not)?
- How is the refund worked out?
- Are administrative charges taken out?
- Does an insurance-funded plan have a surrender value?
- Who gets the money after cancellation?
These questions matter even more if someone may later need Medicaid planning advice. State rules and the effects on benefits can get complicated.
Don't rely on general advice from a funeral home for personal Medicaid or estate-planning decisions.
What does the FTC Funeral Rule cover?
The FTC says its Funeral Rule applies when consumers make funeral arrangements at need or pre-need with funeral providers the Rule covers.
Consumers have rights about price information and about choosing goods and services, within the Rule's scope and exceptions.
See the FTC Funeral Rule.
What should you compare between two prepaid plans?
| Question | Plan A | Plan B |
|---|---|---|
| Total amount funded | ||
| Guaranteed services | ||
| Costs not guaranteed | ||
| How it's funded | ||
| Cancellation terms | ||
| Transfer rules | ||
| What happens if you relocate | ||
| Protection if the provider closes | ||
| Who gets any extra value |
The plan that looks cheapest can cost more if key services are left out.
One rule worth keeping
Never buy a prepaid plan because someone tells you your family "will have no choices" otherwise.
Planning ahead should lower uncertainty. It shouldn't be sold with fear.
Read the contract when you aren't rushed.
Ask questions.
Take a copy home.
Frequently asked questions
Can a prepaid funeral lock in today's prices?
It can guarantee specific prices if the contract says so. Don't assume every future charge is included.
Can you transfer a prepaid funeral plan?
Sometimes. It depends on the contract and the state.
Can you cancel?
Possibly. Read the cancellation, refund, and funding terms.
What happens if the funeral home closes?
That depends on how the arrangement is funded and regulated. Ask before you buy.
Is prepaying better than life insurance?
They solve different problems. A prepaid plan arranges services. Insurance pays a death benefit.
Sources
- FTC: Funeral Rule Consumer Guidance
- FTC: Funeral Industry Practices Rule
- After.com: Benefits of Pre-Planning Your Funeral
- HonestFarewell: State Death-Care Laws