One of the most relevant parts of end-of-life planning is making arrangements for the cost. It's all too common for families to be left scrambling to cover funeral costs when a loved one passes away. This is why many people take matters into their own hands and take out a pre-paid funeral plan or funeral insurance. But what's the difference? And which is best for you?
Broad or Specific
It's helpful to think of funeral insurance as broad and a pre-paid funeral plan as specific. What does this mean? If you took out a funeral insurance policy, it would be much like any other insurance. You will pay a monthly premium, and when the time comes, your family will receive a lump sum payout, intended to pay for the funeral. The cost of premiums will vary, depending on your age when you took out the plan, and the projected payout.
Detailed Allowances
A pre-paid funeral plan also requires ongoing premiums, and it will cover a funeral to a certain overall cost. The difference is that the plan will have detailed allowances, covering the cost of specific aspects of the average funeral. This includes funeral director fees, the cost of burial or cremation, the coffin, the venue, flowers, and so on. A pre-paid funeral plan is intended to protect you from the inevitable price increases of inflation. For example, what you might have to pay for a coffin now can be considerably lower than what you would have to pay in several decades. A pre-paid funeral plan locks in prices at today's costs, whereas the payout from funeral insurance will be used for goods and services at prices that might be higher than when you took out the insurance.
Cost-Effectiveness
In terms of cost, you will find that the monthly premiums of a pre-paid plan can be comparable to funeral insurance. Given the structure of each of these methods, you might find that a pre-paid plan is more cost-effective, if only for the fact that it allows you to avoid potentially higher funeral costs in the future.
It's unwise to take out funeral insurance or sign up for a pre-paid funeral plan without weighing up the pros and cons of each, and being fully aware of the benefits and obligations. It's not really a case of one automatically being better than the other, and it's more a case of deciding which one is better for you.
Share13 July 2021
Irving Berlin famously sang, "The song is ended, but the melody lingers on..." Anyone who has been in charge of funeral arrangements knows the importance of striking the delicate balance between reverence and celebration which helps us remember the true heart of a person. We admire incredible examples of funerals that faithfully commemorate a person's life such as those for Nelson Mandela and Joan Rivers. Unfortunately, funerals for our own loved ones often end up being generic or "cookie cutter" because sadness overwhelms us. This blog is designed to help by outlining the ways that funeral directors can personalise a service and providing imaginative ideas.