Benefits of Pre-planning:
1. Relieve your family from the emotional burden of making the arrangements.
2. Protect your loved ones from the financial burden of paying for the arrangements by pre-funding with preneed insurance & annuities.
3. Pre-planning and pre-funding give you the assurance and peace of mind that every detail has been taken care of just the way you want.
Q. What Exactly is Preneed Insurance?
A. Preneed funeral insurance is an insurance policy whose benefits are assigned to cover the cost of a pre-arranged funeral contract. Funeral contracts typically include standard funeral home services, funeral merchandise, church services and even burial services and merchandise. The purpose of preneed funeral insurance is to set aside funds before the need arises, thereby protecting your loved ones and your financial assets by "locking in" on today's costs, when your funeral home has guaranteed the price of your funeral pre-arrangement
Q. What's the Difference Between a Standard Life Insurance Policy and Preneed Funeral Insurance; Aren't They Basically the Same Thing?
A. The primary distinction actually has to do with "intended purpose." Traditional life insurance is intended to provide for a broad range of your survivors' future financial needs – provide income, cover education costs, pay off a mortgage, and the like. Preneed funeral insurance, on the other hand, is specifically intended to cover only the predetermined costs of a pre-arranged funeral contract.
In addition, there are several other important differences between the two types of coverage. For example:
With regard to benefit distribution at the time of death, preneed funeral insurance is payable immediately to the beneficiary (generally the funeral home) upon the policyholder's death; traditional life insurance policy benefit distributions may require several weeks to be paid by the insurance company.
Q. Do I Actually Need Preneed Funeral Insurance; Can't I Simply Use Some Other Source of Funding?
A. Preneed funeral insurance is a choice, not a requirement. However, it is important to understand the added value of preneed funeral insurance over other sources of funding, such as savings accounts, trusts and final expense insurance.
First, preneed funeral insurance is tied directly to the costs of a pre-arranged funeral. All of the services and merchandise that you select will be completely covered by your insurance if your funeral home has guaranteed the price of your funeral.
Second, there is no tax liability on the death benefit to your surviving family members.
Third, the benefit of your preneed funeral insurance is payable immediately to the funeral home at the time of your death.
Fourth, there is little or no underwriting required to apply for a preneed policy. Decision is typically made within minutes.
Q. How Much Does Preneed Funeral Insurance Cost?
A. Your cost depends on the cost of the services and goods you select for your funeral during the preplanning process. In other words, you control the costs based on what you choose.
As it relates to your insurance payments, you can make a single premium payment and be done with it, or you can spread your payments out over several years. Again, the choice and the control are all yours.
Q. Can I Pre-fund My Funeral Without Preplanning it?
A. At this time, the most effective way to predetermine the cost of your funeral and, therefore, the amount of insurance you will need, is to work with a committed and caring funeral home professional to identify the specific services and merchandise you will want in the future.
Conversely, if you only decide to preplan your funeral, it is also in your own best interest to weigh the financial and emotional advantages of pre-funding your arrangements. If desired, your funeral home professional can guide you through the entire process.