It is a grim subject, planning for one's death. Thankfully, pre-need insurance gives people the option to not only write their wills and buy life insurance, but also plan and pay for their funeral in advance.
Considering the current economic climate, should you consider buying pre-need insurance? And if so, how should you go about purchasing it?
Pre-need insurance is money set aside to specifically cover the predetermined costs associated with a funeral, cremation or burial. It can cover a whole host of products (casket, hearse, flowers) and services (embalming, digging and filling the grave).
It's helpful to have because it simplifies the funeral and burial process, and gives families peace of mind during their time of grief. Rather than having to scramble quickly to make the proper arrangements under stress, it locks in all costs at the time of purchase and avoids burdening loved ones with unexpected expenses.
"Many consumers find that they want to control how their lives and deaths are going to go," says Dean Lambert, VP of Marketing for Homesteaders Life Company in West Des Moines, Iowa. "They figure out what the funeral costs is today, and they pick a plan that will grow over time to cover costs. People don't want to leave financial and other burdens to their loved ones when they die. [Also], it avoids conflict. When the family does get together, they can reflect on the life that was lived instead of fighting over the details of death."
Typically, pre-need insurance coverage policies can cover funeral expenses ranging from $500 to $25,000 on a single-premium payment. Premiums are a function of the total cost of the purchased funeral products and services. The rates will depend on the age of the person, several underwriting questions, the price of the funeral plan chosen, and the mode of pay. An individual or family can select a plan that features a single premium, or they can pay in installments of three, five, seven and 10 years.
According to the FTC, traditional funeral costs can run anywhere from $6,000 to $10,000 or more. Going through a funeral home first allows you to sign a contract and know the specific costs of the funeral and burial, instead of forking over thousands of dollars to an insurance company without knowing if it will fully cover all costs.
There are things to be wary of when shopping for pre-need insurance. When meeting with the funeral director, be sure to investigate the insurance company with which they are affiliated. Inquire about what kind of company they are, if they specialize in funeral funding, how they invest their premiums. Companies like Homesteaders Life, Assurant Solutions and Forethought Life Insurance Co. are the industry leaders.
As the pre-need insurance market has grown, the FTC has implemented new rules and regulations to reign in unscrupulous funeral directors who oversell naïve customers. "The Funeral Rule", among other things, "requires funeral directors to give you itemized prices in person and … over the phone." It also asserts your right to buy individual goods and services, as opposed to a package.
Life Quotes provides access to comparative quotes for auto, life, health and business insurance quotes so that busy consumers and business owners can save time and money. Life Quotes is dedicated to providing impartial insurance information.