There’s no way around it: funerals are incredibly expensive. The average funeral costs $7,000 – $10,000. Many Americans choose to plan for that inevitable moment ahead of time by purchasing some form of life insurance. If you don’t qualify for life insurance, though, you still have options available to you, one of which is pre-need insurance. Here are 10 things you should know about it.
10 Things to Know about Pre-Need Funeral Insurance
- Pre-need insurance is bought directly from the funeral home before the death of the purchaser occurs.
- Some funeral homes guarantee prices, meaning they won’t change over time due to inflation. However, some funeral homes may not guarantee prices, and you family will need to pay the difference. For example, you may purchase $10,000 of pre-need insurance but inflation makes your funeral cost $13,000 at the time of service, your family will need to pick up the extra $3,000.
- Prices are set directly by the funeral home and vary between funeral homes, so call around and ask for prices before committing to one.
- Pre-need insurance allows you to pay for your funeral and burial ahead of time.
- This type of insurance assures that your exact wishes are followed for your funeral and burial.
- Pre-need insurance is not as flexible as final expense insurance; final expense insurance has a cash payout and is not dependent upon the funeral home.
- Pre-need insurance requires you to pay for everything up front, so you won’t be able to invest that money or draw interest on it.
- Pre-need insurance is paid directly to the funeral home and has no tax consequences for you or your family.
- If you move, some funeral homes may allow you to take your pre-need funeral insurance policy with you. However, this is not guaranteed and you should check with your funeral home.
- You don’t have to pay for it all at once. Many pre-need insurance companies allow you to pay in monthly or quarterly installments.
Funerals can be incredibly expense, but purchasing pre-need insurance can help you remove the financial burden from your family. If pre-need insurance isn’t for you, you may prefer final expense insurance. Search here to get a quote for final expense policies in your area.