Preneed Insurance

Preneed Insurance: Reassurance, Security, Peace of Mind

There are a number of possible methods for funding final expenses, but a preneed insurance policy is one of the safest, most secure and most versatile options for funeral prearrangement. Often the benefits of prearranging and pre-funding funeral expenses with insurance are not mentioned by consumer advocacy groups.

We at LakeRidge Chapel and Memorial Designers work with Funeral Directors Life Insurance Company (FDLIC), rated A- (Excellent) by A.M. Best, which indicates a high degree of confidence in FDLIC’s financial stability for today and the future.  Our relationship with FDLIC allows families who preplan with us to rest assured that their arrangements will be taken care of just as planned.

There are basically three possibilities for funding your prearrangement: a separate personal account with a designated beneficiary, a trust set up by the funeral home, and finally, a preneed insurance policy. Preneed insurance, above all other methods of prearrangement, provides more benefits and layers of protection that allow you to say with confidence, “It’s all been taken care of.”

Firstly, all payments are made directly to the insurance company and are not processed by the funeral home, as with trust payments. This protects you and your family from the possibility of your funds being mishandled. Furthermore, insurance companies are tightly regulated and audited frequently for consumer safety. This is simply added protection for your preneed policy.

The insurance policy premiums are invested in stable, low risk investments that protect your policy’s growth from the ups and downs of the financial market. The investment strategy at FDLIC produces growth on the policy that far exceeds the return on local savings accounts, protecting you from inflation.

For your convenience, by contract, your preneed insurance policy is transferable to any funeral home you desire, so it is just as portable as a personal account or trust, and a much safer and more secure option.

For the safety of your preneed funds, the policy’s proceeds are paid to the funeral home or your designated beneficiary only when acceptable proof of death is provided. This is added protection for your family because the funds are not entrusted to the funeral home until it is time for services to be performed.

And finally, your preneed insurance policy is irrevocably assigned for final expenses, which means that your funds can only be used for the specific purpose you intended. Bank accounts, CDs or investment accounts may seem at first glance to be practical options, however, any type of personal account is subject to certain risks like tragedies and emergencies. There is always the temptation to dip into the fund for an emergency, with the intention of paying it back, and later not being able to. These funds are also at risk for being allocated to other unforeseen circumstances. Placed in a preneed insurance policy, your funds are protected from unscrupulous funeral homes or family members, civil judgments, bankruptcy, divorce, health emergencies, or long-term care expenses.

Irrevocable assignment also allows the policy funds to be exempt from your total assets, which makes it easier to qualify for Medicaid. Though qualifying for Medicaid may not be a prime concern for you today, according to the U.S. Department of Health and Human Services, 9 million people over 65 will require some kind of long-term care, which only about one third can afford without Medicaid. Knowing that your preneed insurance policy is considered an exempt asset for Medicaid purposes is an important consideration when prearranging a funeral.

The most important thing to us at LakeRidge is to provide you with accurate and timely information that will assist you to plan ahead for one of your family’s most difficult days: the loss of a dearly loved one. We know this is important to you as well. When you plan ahead, you have all the reassurance that everything is taken care of; all the security of knowing that your financial matters are well in hand; all the peace of mind knowing your family will be spared the pain, doubt, and financial strain that a planning a funeral service during a time of grief can bring.