Why Funeral Pre-Planning Should Be Part of Your Financial Plan – And How to Make The Tough Decisions

By Camille Johnson

Most people approach finances with their future in mind, but while focusing on your life goals is an essential part of financial planning, there’s also the tough stuff to think about. These decisions impact your financial picture too, which is why it’s so smart to make plans for your own funeral. You know exactly how the costs will be handled, and you’ll be confident that your funeral won’t be an added worry for your family.

The “Why” and “How” of Funeral Planning

Deciding to pre-plan your funeral is a gift because it means your family won’t have this added stress during a time when they’ll already be grieving. Making decisions about your own final arrangements means that family members don’t have to wonder what you would want, or even worse, end up arguing if loved ones have different ideas about what they think you would want.

Pre-planning your funeral doesn’t necessarily mean you pre-pay, but you can make financial arrangements as part of your plan. Along with making financial decisions, the main thing you do when you pre-plan is choose a funeral home and other key details, like the type of service you want.

Making Financial Arrangements

Funeral expenses certainly aren’t cheap, but the good news is that you can find options for every budget. Start by understanding that the average funeral costs several thousand dollars, how that is broken down, and then set a budget that you feel comfortable with. You’ll also have a better idea of what costs to expect once you find a funeral home and start making decisions.

Once you have a rough estimate of costs, the next step is to explore ways you can pay for your funeral. One option is to purchase burial insurance, which is affordable for most people and has several advantages. Besides providing a way to cover funeral expenses, burial insurance can also be used to pay any debts you leave behind, such as medical bills.

Burial insurance is often a good choice for seniors who are making end-of-life plans. Rates vary depending on several factors, such as your age, sex, health, and the amount of coverage you choose. Overall, seniors can expect burial insurance costs to be anywhere from $18 up to $286 per month.

The most important thing is to find the best plan for your circumstances. For example, ValuePenguin notes the Funeral Advantage policy from Lincoln Heritage Life Insurance is ideal for someone younger than 70 who doesn’t have any serious health conditions. However, burial insurance may not be best for someone who has health problems or who is looking for coverage of more than $20,000.

As an alternative to insurance, some people set up a pre-payment plan through their funeral home. While doing this may seem like the easiest choice, there are also potential downsides. As The Motley Fool explains, having that money tied up in funeral plans isn’t the best use of your hard-earned dollars, and there is always the risk of the funeral home misusing the funds or even going out of business. Another way to set aside money for these costs is to use a special savings account, such as a payable-on-death account or a private trust.

Making it Personal

Working with a funeral home is typically the best way to get started because they will guide you through the essential decisions and help make the process more comfortable. And while a funeral home can be extremely helpful, you don’t have to do everything by the book. AARP points out how new trends for funerals are making them more personal, such as eco-friendly burial options and funeral homes that have therapy dogs.

For example, biodegradable coffins come in a range of types and prices, starting at $50 and going up to $1,500. Not only can they be more affordable than other options, they are a practical choice that’s kinder to the earth.

These are the kinds of special touches you can choose for your funeral by pre-planning. While thinking about it is certainly emotional, it’s also practical. And as upsetting as it can be to contemplate, knowing that you’re relieving both the financial and emotional burden on loved ones is a gift you can’t put a price on.

About Jimmy

James Miller is the founder of Baobab Wealth Management, and offers advisory services through Intervest International Inc., an SEC registered investment advisor. With 20 years of experience, Jimmy works with individuals and families to create financial plans that address their individual situations. He has a bachelor’s degree in business administration and holds the CRPC (Chartered Retirement Planning Counselor) and the CMFC (Chartered Mutual Fund Counselor) designations from the College for Financial Planning. When not working on a financial plan, you will usually find Jimmy with his wife, Sonja, and his son, Hendrik, or his clients enjoying the great outdoors! Jimmy is an avid fisherman, hunter, scuba diver, mountain climber, sailor, and world traveler! He also enjoys volunteering his time with the Boy Scouts of America as a troop leader. Learn more about Jimmy by connecting with him on LinkedIn. Find out more about Jimmy here.

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Photo credit: Rawpixel

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