What you need to know
Most funeral directors allow people to ‘prepay’ their funeral, with the cost calculated on the choices that the person selects, such as the style of coffin and the type of service. These funerals are in ‘today’s dollars’ and can be paid as a lump sum or in instalments.
This is important if you have strong cultural reasons for wanting a certain type of funeral or certain features. If you want to pay for the funeral up front but don’t want to be faced with all the details yet, you can pay for the funeral and leave the details for your relatives to decide later.
However, the truth is that it is usually not wise to pay ahead. No matter how attractive the funeral home makes it sound, there are serious drawbacks to pre-paying that the funeral director will not tell you about. For many of the family members of those who have prepaid their funeral, they often misunderstand the contracts, are unaware of them, or find themselves surprised that there are additional fees to be paid.
In addition, many states have inadequate laws protecting funds in pre-need plans, and money invested there could be at risk. There have been some companies have been fined for misleading advertising and aggressive sales tactics, and offering little customer protection for their investment if they wish to change funeral directors.
What are the Pros of prepaid funerals?
- The cost stays the same – Costs are fixed in today’s dollars even if your funeral is not for many years.
- You choose what you want – You can control funeral arrangements if you want to (such as casket, flowers etc).
- Payment options are available – You can pay in instalments over time.
- Cheaper than other funeral products – Can be a lot cheaper than a funeral bond or funeral insurance if you live for another 5-10 years.
What are the risks of prepaid funerals?
– For you
- If you cancel, move or change your plan, you may not get your money back.
- In many states, part or all of the interest earned on your account may be withdrawn each year by the seller.
- The cash-out value on an insurance policy is almost always much less than you originally paid.
- The money you pay for funeral arrangements now won’t be available for emergencies later.
– For your family
- Many insurance companies will not pay the full benefit—or anything at all—during the first few years the premiums are being paid.
- Money spent today may not cover future funeral costs, which could result in the use of cheaper merchandise or requests for additional money.
- Family members may not be aware that funeral costs have been paid, and may pay at a different funeral home.
- If you die out of town and your family employs another funeral home there, it may be difficult to get a refund.
- By the time of your death, the funeral home may have a poor reputation, or be out of business entirely.
Are there safer alternatives?
Yes! Preplan your funeral without prepaying.
By pre-planning and comparison shopping with eziFunerals, you can make reasonably priced funeral arrangements, without setting aside large sums of money or prepaying anything. Get detailed price lists from several funeral homes—online, over the phone or in person—and compare prices. You’ll see big price differences for essentially the same goods and services. Visit several independent funeral homes, and choose the one you like best. You might even fill out a pre-arrangement form and leave it on file there.
Most importantly, be sure to tell your family about your choice. Appoint a funeral guardian and walk them through every detail. Give them copies of any contracts or written wishes right away. Do not put them in a locked safe. Do not simply tell your children, “Everything is taken care of.” Your family will have to make choices after you die; you cannot prepay the future away. You and your family will enjoy peace of mind, knowing that the important decisions have been made and thoroughly discussed.
Where can you go to get more information?
Some states require prepaid funerals to be registered. The following state fair trading offices can help you with more information about prepaid funerals.
- NSW – Fair Trading: Contributory and pre-paid funerals
- Queensland – Fair Trading: Funerals
- South Australia – South Australian Government: Planning ahead for a funeral
- Tasmania – Consumer Affairs and Fair Trading
- Victoria – Consumer Affairs: Pre-paid funerals
What do we recommend
We strongly recommend advance funeral planning, which allows comparison-shopping and makes the arrangements easier for your family. But if you decide to pay for your funeral in advance, be very cautious. You should speak to and evaluate multiple funeral homes before signing any agreement for future delivery of funeral goods and services. eziFunerals can help you with the research. The final decision is yours, so choose wisely.
eziFunerals is a free consumer advocacy and funeral planning platform that supports individuals and families cope with end of life decisions, death and funerals. We are an independent, Australian-owned and operated company, and are not a subsidiary of any other corporation. We are not part of any other funeral company. Founded by consumers frustrated by how difficult it was to get independent information, eziFunerals supports consumers plan a funeral, compare prices and select the right funeral director anywhere, anytime.