July 12, 2004
In a previous piece, I explained why "pre-need" funeral arrangements aren't ideal for everyone. But they might be right for you -- if you find the right kind of plan.
Here are some tips:
- Read all the fine print in whatever you sign.
- Find out what happens if the establishments where you've prepaid go out of business. (Do you get your money back? With interest?)
- Find out what the cancellation policy is and to what degree you can change your mind along the way.
- Learn exactly what you're buying with your money -- what's covered and what isn't. Get an itemized list, with the prices broken out.
- Compare those prices with others. A big benefit of pre-planning is that you have a chance to comparison-shop with a clear head, not while you're troubled with grief.
- Ask where exactly the money will be kept -- in a trust? In the third drawer from the bottom of a filing cabinet? Ask for the name of the bank or insurance company serving as the trustee.
- Don't make any decision about this hastily. If a salesperson is using any high-pressure tactics, then walk away.
- Take one or more friends or family members with you when you talk to a salesperson.
- Don't think of pre-need arrangements as investments. They're conveniences. If you're looking for an investment, you can do much better elsewhere.
- Consider that, as an alternative, you might just take the amount of money you'd spend on pre-need arrangements and park it in a special, separate fund for the purpose of covering death expenses. You could invest that money in CDs or money market funds, perhaps -- and you may well end up faring better than if you'd bought the pre-need plan.
For the record, after I weighed in against these plans, I heard from some who advocated them. Scroll down on this page to read an alternative viewpoint.
Learn more about estate planning topics at Estate Planning Links. Of related interest is info from the Funeral Consumers Alliance and the long but enlightening Funerals and Ripoffs. Also, check out our previous articles on how much funerals cost, what a will can do, and how to plan your will.
By the way, this is exactly the kind of topic that a financial advisor can help you with. Learn how to find one at our Advisor Center -- and perhaps check out our TMF Money Advisor service, which features customized independent advice from a variety of objective financial experts.