2024 PREPAID FUNERAL – Pros and Cons

Knowing prepaid funeral pros and cons is essential to determine if it’s right for you or if there are better alternatives to prepare for the inevitable. This article will help you explore your options to make a wise buying decision.

Experts have different opinions on prepaid funeral funds, but they all agree that we must preplan. Preplanning your funeral lets your family put your specific plans into action, knowing they are acting on your wishes.

Planning your funeral may not only offer relief to your family in a time of grief, but it may also help them preserve assets while determining their eligibility for government assistance. While they are good ideas to alleviate problems for your family, there are some disadvantages that you need to be aware of.

Like all investments, prepaid funeral pros and cons should be carefully considered before fully investing in funeral plans. Once you understand the pros and cons, you can make a better decision.


What Is A Prepaid Funeral Plan?

Prepaid Funeral Plans are usually sold by funeral homes to allow you to pay for the funeral in advance.

You can choose where you want to be buried and what kind of funeral you will have. Payment can be made through a lump sum or installments. The funeral home either puts your money in a state-regulated trust fund or buys a life insurance policy with the death benefit assigned to them.

Prepaid planning takes the stress off your family members upon your passing.

All of your burial details are planned and ready to go on the final day. Prepaid contracts lock in today’s funeral rates, and you don’t have to worry about inflation. You effectively freeze the cost at today’s prices, and your funeral will be protected from future price increases.

How Do Prepaid Funeral Plans Work?

If you choose to prepay a funeral home, you will either pay a lump sum or installment payments to the funeral home or the plan provider. They invest your money through:

  • A trust fund to earn interest to keep pace with inflation and cover the funeral’s future cost.
  • In a life insurance policy, the payout will be used to pay for the funeral when death occurs.

These methods will safeguard your money until it is needed, ensuring that the money is used to provide the funeral you have paid for.

Should you pay for your funeral in advance? 

Prepaid Funeral Pros And Cons


Look at the prepaid funeral pros and cons to see if it’s right for you.

  1. Surviving family doesn’t have to make decisions about the funeral arrangement at an emotional time right after your passing. It can also help to avoid arguments among family members.
  2. You can make your wishes known to your family, and having a plan will ensure they honor them. Prepaying for your funeral can guarantee that you will get what you want. Notably, the cemetery plot, the cemetery plot location you desire today, may not be available in 10 or 20 years.
  3. Preplanning a funeral lets you choose the casket, urn, headstone, burial plot, clergy, funeral facilities, and services. You can have the final say on everything from floral arrangements to the last resting place. You can even arrange for unique services more fitting to your specific needs.
  4. You can negotiate the funeral arrangements you want and pay for them now, locking the cost at today’s prices. Doing this will protect your loved ones from the rising funeral cost. Prepaying will result in a lower cost because you pay for tomorrow’s funeral at today’s prices.
  5. It could take some time to arrange for money to be released to pay for the funeral costs. Your survivors will never have to deal with this hassle because the funeral is paid for in advance.
  6. The money you paid into your prepaid funeral plan is not included in any calculations to determine Medicaid eligibility. The prepaid funeral plan lets you set aside reasonable burial funds that would be exempted from Medicaid.
  7. Prepaid funeral alleviates stress during the grieving process. Knowing the funeral is already paid is comforting during a difficult time. The plan will provide detailed instructions on the funeral arrangement you want at the time when your loved ones are not prepared to see those details.
  8. Making funeral arrangements in advance lets you and your loved one talk about the plan and makes the decisions together.
  9. Prepaid funeral plans are easy to get, and it doesn’t require a medical exam, health screening, or age limit to qualify.
  10. Many payment options are available; some may require you to pay the sum in a single payment, or you can make regular monthly installments. You can choose a prepaid funeral plan suitable for your financial circumstances and make the total cost of the funeral more affordable.


To complete your research about the prepaid funeral pros and cons, let’s take a look at the disadvantages of Prepaid Funerals:

  1. Funeral directors can go bankrupt or embezzle funds to pay for your funeral. There is no guarantee that all your money will be returned to you.
  2. Prepaying doesn’t always guarantee that the plan will cover all future funeral expenses. The funeral home does not control some funeral expenses, particularly those purchased from outside vendors, such as obituaries, flowers, crematory fees, and other related costs. Your loved ones will need to pay the difference or substitute something less expensive.
  3. The prepaid funeral plan is not portable. The plan can’t be moved. You cannot use the plan if you move out of state or if you decide to be serviced by a different funeral home. You would need to pay an administrative fee or penalty if the funeral home allowed you to transfer the plan.
  4. Your money is tied to the funeral home. When you prepay, the funeral home puts your money in a trust you cannot withdraw if you have a family emergency.
  5. The funeral home might cancel the prepaid funeral plan if you are late with one monthly payment.
  6. When you prepay, the funeral home puts your money in a life insurance policy and designates their company as the beneficiary. The remaining funds from your life insurance policy should go to your family, but the funeral home may add additional fees and services to keep the remaining funds for themselves.
  7. You can’t make any alterations to your prepaid funeral plan. Some funeral homes won’t allow you to create specific requests once the plan is in place. You can’t make any changes even if you own the contract.
  8. You cannot get all your money back if you decide to cancel the plan. If you had put $7,000 into the plan and changed your mind, you could lose 50% of your investment. Most states don’t require full refunds if you cancel a prepaid funeral fund.
  9. You may be stuck with a funeral plot you don’t want.
  10. Prepaid funeral plans are not a good investment. They make very little financial sense because their interest is minimal. You have little control over where the money is invested.


  • Extra refrigeration cost if there are delays
  • Cost of receiving remains from another funeral home
  • Additional embalming costs because of an autopsy or organ donation
  • Expenses if death occurs away from home
  • Special cosmetic procedures are needed because of the body condition


The funeral home does not control the costs of these items because they may be purchased from outside vendors:

  • Grave vault or liner
  • Opening and closing of the grave or niche
  • Newspaper obituaries
  • Cemetery charges for funeral setup
  • Floral arrangements
  • Certified copies of the death certificate
  • Honoraria for celebrants, clergy, or musicians
  • Cost of an outside facility for service
  • Third-party crematory fees
  • Engraving charges for monument or niche
  • Memorial Tribute Video
  • Catering costs for a reception
  • Hearse or Limousine costs
  • Motorcycle escorts

Questions To Ask The Prepaid Funeral Provider

  1. What is included in the plan, and what potential costs are not included?
  2. Are any funeral expenses that are not covered by the plan? What happens if there are?
  3. Can you cancel the plan if circumstances change, for instance, you arrange your spouse’s funeral, but you separate later?
  4. Are there any cancellation charges?
  5. What happens when the funeral director goes out of business?
  6. Can you choose the funeral director?
  7. What happens if you die abroad or away from home?
  8. How long will it take if I pay in installments? Do I need to pay interest?
  9. Do you have the freedom to change the details of your funeral plan?
  10. What happens if there are outstanding installments at death?
  11. Can the funeral director arrange a funeral with a different standard than the one I choose?
  12. How will the funeral director know about the plan holder’s death?

Other Ways To Prepay For Funeral Expenses

Joint bank account

You establish a joint bank account with your beneficiary to pay your funeral expenses. You can fund the account with the amount you estimate to cover the cost of your funeral. When you die, the joint account holder can pay the funeral expenses using the money in the account.

The main advantage of a joint bank account as prepayment is immediate access to the funds in the bank account. The money is more secure since the funds are deposited in the bank covered by the Federal Deposit Insurance Corporation (FDIC).

The main disadvantage of this method is that people often find it difficult to be diligent in saving money on a steady schedule over time to build these funds up.

Totten Trust (Payable on Death Account)

Payable on death account is a bank account that allows you to name a beneficiary on your bank account. You can fund the account to be used for your funeral. Your beneficiary can immediately access the funds when you’re gone. Your beneficiary has the right to the funds and can use it to pay the funeral expenses.

This method takes planning and diligence to properly fund this account over time to cover all your burial expenses.

Associated Life Insurance Contract

You purchase a prepaid funeral plan, and a burial insurance plan funds the plan through a life insurance carrier associated with the funeral home. The funeral director is your beneficiary. When you die, the entire death benefit of your life insurance will be paid to the funeral home to cover the prepaid funeral plan.

You can plan your funeral and lock in the cost of services at today’s prices. Your money is protected from loss since the insurance company and the funeral home is separate entities. If the funeral home went out of business, your insurance payout would still be available to pay for the funeral cost. However, you could lose the locked-in cost-benefit of your prepaid funeral plan if the funeral home goes out of business.

The Best Way To Prepay For Funeral Expenses

Burial insurance is the best way to prepay for funeral expenses. Think of it as a prepaid funeral plan with benefits. A burial insurance policy is similar to prepaid funeral plans in a way that helps you prepay for your funeral expenses.

You can take out a burial insurance policy to cover the cost of your funeral and other final expenses at the time of your death. You can leave a funeral plan that outlines your wishes for funeral services to your loved ones that they need to carry out when you’re gone.

There are many advantages to burial insurance plans compared with a prepaid funeral plan.

First, you can leave money for your loved ones when you pass away. A burial insurance payout is usually a lump sum given to your beneficiary. The payout is not tied to the funeral home; your loved one can use it as they wish. It can be spent to pay for your funeral, and the rest can be used for lost wages or other financial needs.

Having burial insurance gives flexibility to your loved ones since a particular funeral home does not hold the funds. Your family won’t be locked into your funeral choices a decade ago. They can decide where and how to organize your funeral according to your wishes.

Burial insurance is easy to get. You can purchase the policy online or on the phone without being subject to a medical exam or health questions.

You can still qualify for burial insurance if you need coverage but have some medical issues.

Burial insurance policies have flexible payment plans compared with prepaid funeral plans. You can pay monthly, quarterly, or annually. Prepaid funeral plans are rigid in payment, and you can lose the plan if you miss one payment.

Burial insurance is affordable. You can purchase burial insurance in small amounts, such as $5,000 or $10,000 up to a maximum of $50,000. The premium for burial insurance is more affordable because it has a lower face amount.

If you are thinking of ways to cover your funeral expenses, purchasing a burial insurance policy is the best option for your budget and peace of mind. Funeral Funds have helped many people find the coverage they need at an affordable price. We can help you too.

Please call us at (888)862-9456 if you have any questions or fill in the instant QUOTE form on this page to get accurate quotes from different insurance carriers.

Additional Questions & Answers

What is prepaid funeral plan?

A prepaid funeral plan is a contract between you and the funeral home in which you pay in advance for your future funeral. The benefits are peace of mind, knowing that all the arrangements have been taken care of in advance, and significant cash savings because you currently lock in the price.

Are prepaid burial policies a good idea?

Prepaid burial or funeral policies are often only recommended if you want to qualify for Medicaid. We rarely recommend prepaid burial or funeral plans for anyone else because they are often very expensive to purchase.

What are the pros and cons of a prepaid funeral?

The pros are that you know the price in advance and nobody else has to worry about it. You don’t have to talk about your death or deal with all the details. The cons are that prepaid funeral plans lock you into one funeral home for a fixed price which may result in higher costs in the future, they usually involve hidden charges, there is little flexibility, and many funeral homes will not refund your deposit if you change your mind.

Are prepaid funeral plans protected?

No. The FTC – Federal Trade Commission has no laws regulating prepaid funeral plans, so you do not get the same protections from fraud and abuse as you would from an insurance policy.

How do I find out the price of a prepaid funeral plan?

The best way is to get written prices from several funeral homes in your area.

Can you pay monthly for a funeral plan?

Yes, many funeral providers offer monthly payment options. However, some funeral homes require upfront payments.

Can you pay funeral installments?

Not in most cases.

How is installment plans different from prepaid funeral?

Prepaid funerals or burial plans lock you into one funeral home for a fixed price which is not refundable if you change your mind, while an installment plan lets you choose your provider, and your payments can increase or decrease over time depending on the services selected.

What is a preneed funeral contract?

A preneed funeral contract is a contract between you and the funeral home in which you agree to purchase cemetery merchandise (casket, vault, etc…) now for future use. It also includes your wishes regarding how you want the arrangements handled after death, such as burial or cremation.

Can I take out a funeral plan for my mother?

Yes, you can take out a funeral plan for anyone else. The benefit is if something happens to you, your family will have all the arrangements in place, and they won’t have to worry about it.

What happens to a client’s family’s money in a pre-need account if the funeral home goes out of business?

We suggest you ask in writing how your money is protected. State laws require that all pre-need contracts be transferred to the new owner when a funeral home is sold. Other times they are not.

What is a pre-Need plan?

A pre-need plan is a contract between you and the funeral home in which you agree to purchase future funeral service

What pre burial insurance?

Pre-Burial or preneed insurance is a life insurance policy designed for final arrangements.

What happens if you die and you do not have a prepaid funeral plan?

If the deceased’s family does not have a prepaid funeral or burial plan, they must make all the arrangements and pay for them individually. This can include everything from finding the right funeral home and planning the funeral to carrying out all of the arrangements.

What is a prepaid burial?

A prepaid burial plan is an arrangement in which you pay for your casket and/or vault and lock in today’s price for use after death. And your savings can be considerable (up to 40%) compared to purchasing these items from a funeral home later.

What is prepaid cremation?

Prepaid cremation plans are for those who wish to pre-arrange their cremation financially. A family can save an average of $1,700 with prepaid cremation.

Is prepaid cremation a good idea?

No, we don’t recommend prepaid cremation for several reasons. First, it locks you into a funeral home that may not always be in your area, thus making it difficult to attend services or view loved ones. Second, if something happens and you have to go through a funeral home, they can charge whatever they want without any competition.

Can you pay for direct cremation in advance?

The law varies by state, but most states do not allow you to pay for direct cremation in advance. However, funeral homes may offer “preneed” or “prepaid” direct cremations or burials where the family agrees to arrange and pay for the funerals before the person dies.

What does a pre-paid funeral plan cover?

The money that you pay the funeral home will cover all costs, including:

  • Transfer of remains from place of death
  • Embalming and other preparation
  • Use of facilities and staff for viewing or service
  • Hearse and limousine or other transportation to funeral home

Can I take out a funeral plan for my mother?

Yes, you can take out a funeral plan for anyone else. The benefit is if something happens to you, your family will have all the arrangements in place, and they won’t have to worry about it.

What is a preneed funeral plan?

A preneed funeral plan is a funeral service contract between you and the funeral home in which you agree to purchase certain merchandise for future use.

What is a preneed policy?

A preneed policy is a life insurance policy designed for final arrangements. Premiums are paid while you are living, allowing you to accumulate enough savings to cover all or part of your final expenses.

How much does a preneed funeral cost?

It varies by state, city, and region. You can expect to pay around $3,500 for traditional funeral services.

What is preneed life insurance?

A preneed life insurance policy is special life insurance designed for final arrangements. Premiums are paid while you live, allowing you to accumulate enough savings to cover all or part of your final expenses.

How does funeral insurance work?

People purchase funeral insurance like they would any other form of life insurance. You pay regular premiums, and the company provides a death benefit upon your death.

How do you prepay for a cremation?

You can either buy a package deal that includes the casket, embalming, and other preparation, or you can pay for each service individually.

Can I get out of my prepaid burial plan if I change my mind?

No. It is a legally binding contract and can only be changed in certain circumstances such as death, divorce, bankruptcy, or a case where the Federal Trade Commission – Federal Trade Commission rules that your contract is unfair or deceptive.

Do I have to pay upfront for pre-need funeral insurance?

Most states require the pre-need plan to be paid before burial or cremation can occur, while some states allow installment payments.

Who regulates prepaid funeral plans?

The Federal Trade Commission, however, FTC has no laws regulating prepaid funeral plans, so you do not get the same protections from fraud and abuse as you would from an insurance policy.

Is it possible to get a refund on a prepaid funeral plan?

No. You cannot get your deposit back even if you change your mind or select different funeral arrangements.

How can I compare the prices of prepaid burial plans?

You should obtain written price quotes from at least three local providers and choose the one that offers you the most value.

What are the benefits of a prepaid funeral plan as opposed to an insurance policy?

Benefits of a prepaid funeral plan as opposed to an insurance policy: A funeral home cannot receive payment from your insurance company, only you, the client. There are no cash surrender fees or penalties for withdrawals. You can lock in today’s price for future services.

Can I cancel my funeral plan if it doesn’t suit me?

No. It is illegal to cancel prepaid plans within ten days according to FTC regulations (Titles 16 and 45 CFR 41 Section 101 et seq.), and the funeral home can keep your money.

Do I receive any kind of refund if I cancel a prepaid funeral plan?

No, you forfeit all interest in your funds once you sign the contract. You may even be charged with breaking the contract and be liable for court costs and legal fees.

What should I watch out for when buying a prepaid funeral plan?

When considering buying a prepaid funeral plan, there are several things to keep in mind. First, do not assume that the price you are quoted is final. Try to get written prices from at least two local providers before signing any agreement. Also, make sure they will allow you the right to choose your cemetery and officiate as well as other items such as clothing, flowers, etc. Finally, do not be fooled by promises of “free” memorial folders, prayer cards, or other merchandise.

What other options are available other than a prepaid plan?

Prepaid plans lock you into one funeral home for a fixed price which may result in higher costs in the future; they usually involve hidden charges, there is little flexibility, and many funeral homes will not refund your deposit if you change your mind. Depending on your health situation, a better option may be a life insurance policy with tax benefits and the flexibility to choose any funeral home at any time.

What are the alternatives to prepaid funeral plans?

Life insurance is a better option than prepaid funeral plans because: You can choose any funeral home at anytime. No hidden charges for merchandise such as memorial folders, prayer cards, etc. Flexibility to pay in installments instead of paying the entire plan upfront. There are tax benefits and no penalties for withdrawals or cash surrender fees.


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