Pros and Cons of Final Expense

When purchasing a pre-need plan, you will normally select choices such as:

•Either burial or cremation.

•A casket or urn

•A cemetery plot

•Flowers

•Headstone.

•Service types, such as watching or visitation.

•The cost of excavating and filling a grave.

According to the National Funeral Directors Association, the national median cost of a funeral with burial and viewing was $7,360 in 2017, while the cost of cremation with viewing was $6,260. Flowers, memorials, monuments, and obituaries are not included in these fees.

Purchasing A Last Expenditure Insurance Policy

Final expenditure plans are a type of whole life insurance. Payment options frequently include a single lump sum payment as well as three-pay, five-pay, seven-pay, or ten-pay installments.

Final expenditure policies may contain a "cash surrender" value, which means you may get money if you opt to cancel the policy during your lifetime.

Is There An Age Restriction For Purchasing Last Expenditure Insurance?

Final expenditure insurance plans often specify "issue ages" for purchasing. They may have a minimum age requirement of 36 or 40 and a maximum issue age of 80 or 90.

Is It Necessary For Me To Have A Pre-Need Plan Or Insurance?

There are various possibilities for last expenditure insurance if you wish to contribute cash for your funeral. There are benefits and drawbacks to last expenditure insurance that should be considered. Here are a few examples of the most prevalent.

Pros

You Make The Choices. Your family will not have to pick up quickly or negotiate costs later if you choose your own funeral arrangements, and the final expenditure insurance reimbursement will go directly to the funeral home. This can help reduce tension and uncertainty in your household.

Prices Are Almost Always Guaranteed. If the cost of your preferred arrangements has risen, your family will not be required to pay up the difference. Alternatively, if prices have dropped, you are still locked in at the original price.

Some Things Are Replaceable. If an item of your choice, like a coffin, is no longer available when you need it, your insurance may replace it with one of comparable style, quality, and value.

Your State Could Have A "Free Look" Period. Many jurisdictions enable consumers to cancel last expenditure insurance (as well as other forms of life insurance) and obtain a full return if they do so within a set deadline. This timeline varies by state. Florida, for example, permits 14 days but California only allows 10 days.

Some pre-need contracts are not covered by Medicaid. If the pre-need plan places your money in a Medicaid-exempt trust, it is not counted as an asset for Medicaid eligibility. However, not all pre-need plans are Medicaid-eligible.

Cons

There Isn't Much Leeway With Pre-Need Arrangements. Your demands may change over time, and being bound into a contract might make changing plans difficult. Furthermore, because the last expenditure insurance reimbursement goes directly to the funeral home, your family will not be able to use the money for other expenses.

Not All Pre-Need Plans Are Portable. If you relocate to another state or select a different funeral home, your coverage may not follow you.

Your Health Status May Influence Which Plan You Are Eligible For.Health issues might influence the type and cost of pre-need insurance.

Your Policy May Provide For Graduated Death Benefits. Your beneficiaries may not get the entire death benefit if you die during the first few years of the policy.

A Last Expenditure Policy May Not Be Transferrable Or Refundable. If you cancel after your state's free-look time, you may not be able to transfer your plans to a different funeral home or to another individual, and you may not be able to obtain a refund.

Not Everything Is Certain. If the last expenditure policy is not paid in full by the time of death, the death benefit may not be guaranteed, depending on your state and insurance firm.

Changes To The Arrangements Might Render The Last Expenditure Insurance Coverage Null And Void. If your survivor makes any modifications, such as purchasing new services or items, your coverage may become null and invalid, and your family may be forced to pay current funeral costs.

Families Must Be Aware Of A Pre-Need Strategy. If you purchase a pre-need plan, you must notify your family about the funeral home that carries the plan and the terms. Otherwise, your family may wind up paying for a funeral somewhere without knowing you had had plans.

Understand What Will Happen If The Funeral Home Goes Out Of Business. Many things can happen between the time you purchase a pre-need plan and when it is needed. Read the contract to find out what happens if your preferred funeral home goes out of business.

Pre-Need Funeral Planning Advice

•Request a pricing list from the funeral director. Funeral directors are required by the Federal Trade Commission to provide you with price information. The FTC has provided a funeral cost and price checklist.

•Compare prices at many funeral homes. According to a 2017 NPR study, prices for equivalent services might vary dramatically.

•Look into funeral homes. How long has the funeral home been open? Is their reputation good? You should check with the Better Business Bureau.

•Obtain a detailed summary of arrangements and retain a copy of the final spending policy or contract. It's a good idea to tell your recipient where to locate it.