Planning Funerals

Why Preplanning and Prefunding Your Funeral Makes Sense

Many people today are planning all or part of their funeral services ahead of time because without preplanning, many questions are left unanswered for our loved ones. For example, how much should we spend on the funeral? Should we go with a traditional burial or cremation? What options would she have liked? What kind of flowers? As more and more people decide to plan ahead, families are better able to create meaningful and personalized tributes to their loved ones. The staff at LakeRidge Chapel and Memorial Designers is dedicated to helping families celebrate the life of their loved ones. As a service to our community, the funeral home offers complimentary funeral planning guides to assist families in planning ahead and alleviating some of the emotional and financial stress at the time of need.

The first step to planning ahead is putting your wishes in writing. Your plan should clearly state where important documents such as life insurance policies, birth certificates, marriage license, military records, and credit obligations can be found. Your file should also contain important biographical information for the obituary notice. All this information saves your family time and added stress. Your plan will also include your preferences for funeral services--whether you want a traditional or non-traditional service. You can include your preference for flowers, music, readings, even down to the type of casket you'd like.

Once you've made your selections, you will be able to receive a free funeral cost estimate. Knowing what your funeral would cost today helps you plan ahead for final expenses so your family doesn’t have to. Added to the intense grief of loss, anxiety about financial concerns can be devastating for a family. You can help to ease the financial burden that falls on loved ones at the time of death by planning ahead.

One option is to fund the funeral in advance through a payment plan. There are many factors that should be considered when one is thinking about funding a funeral in advance. For example, will the funds grow over time to offset inflation and rising funeral costs? And, what are my family’s options if I don’t take care of this now?   

There are basically three ways to prepare for funeral costs in advance. One is to set aside the money in a bank account or CD. The problem with these is that CDs require taxes to be paid on interest earned every year, drastically decreasing net return. Bank accounts offer little to no growth, and certainly don’t keep up with inflation and rising funeral costs over the years. Another option is life insurance. While it is possible to assign life insurance to the funeral home to pay for funeral costs, there is a fee involved; additionally, life insurance proceeds don’t increase over time—they stay the same, while the rest of the economy grows. So, your $5,000 policy today will not have the same buying power tomorrow. Every year, your policy loses value.

There are financial solutions available that are specifically tailored to preparing for funeral costs in advance, and these offer the greatest protection for funeral funds. A prepaid funeral contract is a special funding vehicle that is maintained by a third-party prepaid funeral insurance provider. The contract can be paid in installments or all at once. Each contract is completely portable should you move. It also grows over time to keep pace with inflation. Finally, taxes are paid by the insurance company that maintains the policy, not the consumer. Here are some other interesting facts about prepaid funeral contracts:

·              Structured properly, prepaid contracts can be set up as a Medicaid-exempt asset.

·              By meeting a few simple health qualifications, your plan can be backed by insurance so that the contract is covered from your first payment.

·              Individuals with health concerns, in most states, can qualify for a guaranteed issue plan that provides coverage regardless of health.

·              Graded death benefit plans can offer Accidental Death coverage that will provide full benefit should an accidental death occur prior to being paid in full.

·              Your funeral insurance policy will grow tax-free, while regular funded annuities grow tax-deferred.

·              Your plan is transferable to another funeral home should you move away.

You can give your loved ones peace of mind by taking care of a few simple steps now to prepare for the future. LakeRidge Chapel partners with Funeral Directors Life Insurance Company (FDLIC) to provide rock-solid prepaid funeral contract options to our families. FDLIC is committed to protecting our families’ investments as if they were our own mothers' or grandmothers' money. With an A- (Excellent) rating from A.M. Best Company, FDLIC has proven to be one of the most financially stable funeral insurance companies in the industry. Call or come by LakeRidge Chapel to pick up your free funeral planning guide, even if you don’t think you can afford to pay in advance. A written plan is better than no plan at the time of death, and your family will be grateful that you can in some way be there for them when they need you the most.