Is a Funeral Plan Worth It: 2022 Pros vs. Cons Analysis


Setting aside money to cover the cost of your funeral may seem like the most responsible and forward-thinking thing to do, especially because funerals can be extremely costly and come at unexpected times. You can do this by purchasing a prepaid funeral plan, but you should be well-educated on the pros and cons of these plans before deciding if it is worth it and the right choice for you. 

Funeral plans have some benefits, including relieving your family’s burden, securing a price, and making arrangements. However, there are significant disadvantages, such as a lack of control over your money and potential scams.  

In the rest of this article, I’ll explain what a prepaid funeral plan is, and I’ll talk you through the advantages and disadvantages of purchasing one. By the end, you’ll have a better idea of whether or not a prepaid plan is right for you. 

What Is a Funeral Plan? (PPA)

A funeral plan is a deal made with a funeral home before someone has died. With a funeral plan, a person can pay for their funeral and make arrangements ahead of time so their loved ones are relieved of the burden. 

Funeral plans are attractive options for those who want their funeral to be a certain way and want to have their say even after they’ve passed. 

If you opt for a prepaid plan, it’s also a large financial relief to those who are left behind, as they won’t have to pay for the funeral themselves or look for funding. 

Types of Funeral Plans

When you make an arrangement with a funeral home, there are two routes you can take

Unfunded 

Unfunded arrangements are a less risky and less effective route when preplanning a funeral. 

They’re “information-only,” meaning no funding is on the table. This kind of plan is simply a written record of what you’d like your funeral to look like when you die and any archived photos or video footage you’d like to be included in the service. 

However, these plans are not legally binding on the survivors. In most states, funeral instructions are only legally binding if there is payment accompanying the instructions. 

These plans are free and create a connection between you, your family, and your funeral home of choice. If the funeral home is important to you, you may wish to pursue this option. However, this is an uncommon arrangement, as most people prefer to leave the funeral homes out of it if they are not paying in advance and simply talk to their loved ones about their wishes instead. 

The more common type of arrangement, and the type I’ll be discussing throughout the rest of this article, is the other: 

Prepaid 

Prepaid funeral plans include information on how you’d like your funeral arranged and funding to cover the costs. 

Prepaid plans can be quite costly, with the average price tag ranging from $10,000-$25,000. In most cases, people choose to pay this amount over time, with a three, five, or ten-year plan. 

However, it is possible to pay in full upfront if your financial situation allows you to do so. Additional fees usually pop up with these plans, such as administration and maintenance fees. 

There are several different types of contracts you can enter with a funeral home: 

  • Revocable. You can terminate a revocable contract at any time before you die. You can get a full or partial refund, according to the law and the contract terms. 
  • Irrevocable. Most prepaid funeral plans are irrevocable, meaning you cannot terminate the contract once you’ve signed it. You can transfer your contract to a different funeral home in some states, but this is a lengthy and often confusing process. 
  • Guaranteed. A guaranteed contract locks in the funeral price, and the home promises that they will provide the services and merchandise you select for the cost that you agreed to at the time of signing. Your family won’t have to pay any extra for your funeral. 
  • Non-guaranteed. In this type of contract, the cost of your funeral will be whatever the price is for services and merchandise provided at the time of your death. Your family will have to cover the difference in cost if there is one. For example, if you select a casket that costs $2,000 when you sign the contract, and by the time you die, the cost has gone up to $2,500, your family will have to pay the $500 difference. 

When you purchase a prepaid funeral plan, the money is stored somewhere for safekeeping until you die. Your money is placed in a trust account or a specialized insurance policy. 

You can select different packages at various funeral homes that cover different parts of the funeral, but a standard package typically includes: 

From there, you can decide how much or how little of your funeral you’d like to arrange and pay for ahead of time. 

Now that you have a better idea of what a funeral plan is, let’s take a look at the pros and cons of purchasing one.  

Family in guard of honor at funeral, only torso of people to be seen

The Pros of Creating a Prepaid Funeral Plan

There are many reasons why purchasing a prepaid funeral plan might be worth it. Here are some of the most important benefits of these plans: 

You Can Relieve Your Family’s Burden

When you leave this life, your family will be grieving and overwhelmed. One way you can make this time easier for them is by relieving them of the stress of planning and paying for a funeral. This is no small gift to your loved ones, as funerals can be extremely costly. For more information about the cost of funerals, check out my article on why funerals are so expensive.  

Furthermore, by making your own arrangements, you can ensure that your wishes are honored, and there is no fighting amongst your family members about what kind of casket you’d like or where you should be buried. 

You Get to Make the Decisions

Suppose you have strong ideas about what you’d like your funeral to look like. In that case, a prepaid funeral plan might be a great choice because you can select what casket, flowers, funeral home, cemetery, clergy, facilities, and other arrangements you’d like. 

With a plan, you are in complete control, which might make the prospect of dying a little less frightening or uncertain. 

You Can Reserve Your Resting Place

Prepaid plans almost always include a burial plot. So, by purchasing a plan, you can ensure that your final resting place is reserved and that you’re buried where you want to be. However, you don’t necessarily have to purchase an entire prepaid plan to reserve a plot because you can purchase one separately. 

If you need help selecting a cemetery, I provide tips and guidance in my article on choosing a cemetery

You Can Secure a Price 

If you purchase a guaranteed plan, you lock in the prices as they stand when you sign the contract. Funerals are getting increasingly expensive: the median cost increased 6.4% between 2014 and 2021. Therefore, to save your family money, a prepaid plan allows you to secure today’s price, even if the cost goes up.  

Additionally, some funeral homes offer discounted rates on their services and merchandise if you pay in advance through a plan. Overall, a prepaid funeral plan can ensure that your funeral is more affordable than it would have been without a plan. 

Some Prepaid Plans Are Tax Deductible

Funeral expenses are not tax deductible unless the estate pays for the costs, such as in a prepaid plan. However, you should work with a tax professional before claiming a deduction, as these situations are complicated, and you could risk parts of the estate if you make a faulty claim. 

There are many benefits to purchasing a prepaid funeral plan, so it may be the right choice for certain people.

The Cons of Creating a Prepaid Funeral Plan

Before purchasing a prepaid plan at a funeral home, you must understand the disadvantages and risks of this choice. Here are some of the most important cons to consider: 

The Money You Put in a Prepaid Plan Is Tied Up

Once you put money in a prepaid plan, no one can access that money until you die, and it’s time to start covering funeral costs. 

This may seem like a benefit, as the main idea of purchasing a plan ahead of time is to cover the costs of the funeral. However, you may have other expenses arise before you die that might be more important or urgent than funeral expenses. In this situation, you can’t use the money in the plan to help you, even in an emergency.

For example, if you have other end-of-life expenses (such as medical costs), you and your family won’t be able to use the money in your prepaid plan to cover these. For some perspective, in the United States, if you die in a hospital bed, your out-of-pocket medical expenses for the last month of your life will average around $32,000. 

Ensuring you get the funeral you want is certainly important and worth an investment, but it may not be the most important thing as your life ends. You may desire more financial freedom, which a prepaid plan does not allow. 

Funeral Scams Are Not Uncommon.

The Association of Certified Funeral Fraud Examiners states that most funeral scams occur around prepaid plans. If a funeral director embezzles your funds or the funeral home goes out of business, there isn’t a guarantee that you will get your money back. 

For this reason, if you are interested in purchasing a prepaid plan, you must pick the right funeral home. You can read my article on some best practices for choosing the right funeral home for guidance.  

Most Plans Are Not Transferable 

If you were to move locations and want to be buried near your new home, but you already prepaid for a plan at a funeral home in another location, you might be out of luck. Some funeral plans are not transferable at all. 

If the funeral home does allow you to transfer your plan, they will likely charge you an administrative fee or a penalty for doing so.

Leftover Money May Not Go to Your Family.

Some funeral directors name themselves the beneficiary of your life insurance policy under the conditions of your contract. If this happens, and there are leftover funds in the policy after the funeral is paid, they may add additional fees so they can keep the money instead of giving it to your family.   

It is important that you carefully consider these disadvantages before purchasing a plan. 

When a Funeral Plan Can Be Worth It

A funeral plan may be worth it to you if you have specific ideas of what you’d like your funeral to look like, are confident in where you’d like to be buried, have a funeral home you trust, and want to relieve your family of the financial burden of your funeral costs. 

However, unless you are certain of the details of your funeral and the trustworthiness of a funeral home, a prepaid plan may not be worth it. By purchasing a plan, you are sacrificing control over your money and taking a significant financial risk. 

Most importantly, remember that a prepaid funeral plan isn’t your only option for covering costs and having input on your funeral before your death. For more information, read my article on five different ways to pay for a funeral

Final Thoughts 

Funeral plans are not worth it for everyone because although there are many attractive advantages to purchasing one, there are also significant disadvantages and risks associated with these plans. You must carefully consider the pros and cons before determining if a funeral plan is worth it for you.

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Alex Noel

Hi there! I'm Alex Noel and live in Indianapolis, Indiana. I started this website to share my experience. My goal is to provide Americans a more fulfilling goodbye.

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