Pre-Planning Funeral Options

WHEN IS THE BEST TIME TO PREPLAN YOUR FUNERAL?

The best time to begin making your prearrangements is now, while you're thinking about it. While some people in their 40's and 50's may think it's too early to preplan, people who do say that prearranging their funerals is smart financial planning and gives them added peace of mind knowing they aren't leaving this burden to family members. By taking time now to collect cost information and calmly making choices related to your own funeral arrangements, you'll be protecting your family against the stress of having to make these decisions at a time of extreme emotional stress. This way you can carefully choose specific items you want and need ... and pay for them now. Prepaid Investments through funeral homes allows families to fund their funerals in advance through different investment vehicles.

BENEFITS OF PLANNING AHEAD

When a family or individual pre-arranges and pays for a funeral service, the professional services and merchandise of the funeral home (this includes all services of the funeral home, the casket and burial vault or cremation container and urn), are guaranteed at the cost at the time of the pre-arrangement.

Once these services and items have been paid for, they cannot be charged for again. They are guaranteed completely.

Items such as newspaper notices, cemetery fees, and honourariums may be pre-paid, but because the funeral home does not control the costs, these items are not guaranteed. Yearly interest would be applied to the amounts set aside to offset these costs at the time of need.

The funds are placed in either a trust fund, or an insurance based product called Funeral Plans Canada. These funds will gain interest on the principal amount. This interest will offset the cost to the funeral home of providing the services and merchandise at a latter date. If the interest does not cover the difference, the funeral home cannot ask the family or individual to pay the difference.

The money that is held in trust or in insurance does not belong to, nor can it be used by the funeral home. The funeral home only has access to these funds when the death occurs, and proof of death is provided to the trust or insurance company.

In the Province of Alberta, an individual has a 30 day period in which a prepaid funeral service in trust can be cancelled without any penalty. This period begins from the date of the prepayment. If a prepayment is cancelled after this 30 day period, the funeral home can keep up to 15% of the amount as an administrative fee. The remaining 85% is then returned to the family. With insurance, the cancellation period without penalty is extended to 60 days. After this time period, the purchaser will be paid the Cash Surrender Amount of the plan at the time of the cancellation.

If an individual pays monthly on a pre-arrangement, the funeral home may guarantee the prices, however it is not obligated to do so. There may also be an interest fee on the monthly payments.

Funeral pre-arrangements may be paid in one lump sum, monthly, semi-annually or yearly, over a one to ten year period. With Standard Coverage, full funeral benefits would be paid even if only one monthly payment had been made. With Non Standard Coverage, the benefit would be the amount paid in plus 10%, in the first year, the amount paid in plus 6% in the second year, and full funeral benefits thereafter. These plans can be paid monthly for as little as $24.00.

When an individual does not prepay the services and merchandise but only makes prearrangements, the prices are not guaranteed by the funeral home.