What Is a Pre-Need Funeral Plan and How Does It Work?
Understand pre-need funeral plans: learn how to arrange and pay for future services in advance, ensuring your wishes are met and easing family burden.
A pre-need funeral plan enables individuals to arrange and pay for their funeral or cremation services in advance. This proactive approach allows for personal preferences to be documented and financial provisions to be secured. By establishing a pre-need plan, individuals can ensure their final wishes are honored, while potentially alleviating emotional and financial burdens on their loved ones during a period of grief.
Understanding Plan Inclusions
A pre-need funeral plan details services and merchandise that can be pre-selected. The basic services of the funeral director cover administrative duties, staff availability, and coordination of arrangements. This often includes initial consultation, service planning, and obtaining necessary permits and death certificates.
Preparation of the body is another common inclusion, offering options such as embalming, cremation preparation, dressing, and cosmetology, based on the chosen disposition method. Ceremony and visitation provisions allow for planning events like viewing periods, funeral services, memorial services, and graveside ceremonies.
Merchandise selections are integral to a pre-need plan, encompassing items such as caskets, urns, and outer burial containers. Other merchandise might include prayer cards, memorial folders, and acknowledgment cards. Transportation elements specify arrangements for the transfer of remains to the funeral home, to the ceremony site, and to the place of final disposition. Miscellaneous items like death certificates and obituary placements can also be included, with all specific inclusions outlined in the contract.
Funding Arrangements
Pre-need funeral plans are financially secured through trusts or funeral insurance. With a trust, funds are placed into a trust account, often managed by a third party. These funds are held until services are rendered, and any accrued interest typically contributes to the plan’s value or offsets administrative costs. The funeral home accesses these funds to cover agreed-upon services when needed.
Alternatively, a pre-need plan can be funded through a funeral insurance policy, which is a form of life insurance. The funeral home is often designated as the beneficiary, or the policy’s benefits are assigned to cover the costs of the pre-arranged services. The policy’s value generally grows over time, which can help mitigate the impact of future inflation.
Payment options include a lump-sum payment or installment payments spread over a defined period. Plans can be guaranteed or non-guaranteed. Guaranteed plans lock in the price of selected services and merchandise at purchase, meaning no additional payment is required at the time of need, regardless of inflation. Non-guaranteed plans may require additional payment if costs increase beyond the initial amount paid and accrued.
Process for Establishing a Plan
Establishing a pre-need funeral plan involves several steps. First, research funeral homes to identify reputable providers that offer pre-need arrangements and align with your preferences. Then, schedule a consultation with a funeral director to discuss specific needs and options.
During the consultation, discuss your preferences for services and merchandise to tailor the plan to your wishes. After selecting services and merchandise, the funeral director will review funding options, guiding you through the choice between a trust or funeral insurance to secure the plan’s finances.
A formal contract is then prepared, outlining all agreed-upon services, merchandise, total costs, and the chosen payment schedule. Review this contract carefully, paying attention to clauses regarding cancellation terms, transferability, and any guarantees on pricing. Once signed, initial payments are made according to the selected funding arrangement. Finally, keep copies of all signed documents and policy information in a secure, accessible location, and share them with trusted family members.
Managing and Adjusting Your Plan
Once established, a pre-need funeral plan can be managed and adjusted to reflect changing circumstances or preferences. Periodic reviews, perhaps every few years, are advisable to ensure the plan aligns with current wishes and any significant life changes. This review process provides an opportunity to reassess selections and confirm the plan’s relevance.
Should personal preferences evolve, the plan allows for changes to service or merchandise selections. This flexibility ensures arrangements remain current. It is also important to update personal information, such as changes to address, contact details, or designated next of kin, to ensure records are accurate and accessible when needed.
A pre-need plan offers transferability, allowing the arrangement to be moved to a different funeral home, especially if relocating. Understand any associated fees or limitations that may apply. Plans can be canceled, though the process and potential for refunds, including administrative costs or penalties, vary based on contract type and state regulations. Revocable contracts offer more refund flexibility than irrevocable ones.