Funeral Arrangements vs Funeral Insurance?

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Are you currently comparing a pre-arranged funeral and final expense insurance prices? Have you always wondered which one was the best for you? Funeral expense contracts and funeral life insurance are, in fact, two very different products. And nothing prevents you from combining them to serve your personal finances better.

This article will explain the differences and the advantages between pre-arranged funeral arrangements and a final expense insurance contract for funeral expenses. We will also discuss the issue of the Quebec Pension Plan death benefit.

Pre-arranged funerals: is that better?

The provider of your pre-arrangement manages the flowers, the arrangement, the theme, as well as all funeral and burial services selected by you. Be careful about the costs. There are two types of companies that can offer you a funeral services contract: Cooperatives and funeral homes Cooperatives can offer much cheaper solutions, so ask for several prices when you shop around.

Funeral pre-arrangements actually consist of two contracts:

- The funeral services contract,

- The preliminary burial purchase contract.

The funeral services contract includes the transportation of the body, embalming, ceremony, burial or cremation, as well as the material related to the funeral service (casket, urn, tombstone, flowers) that you will have chosen.

On the other hand, a series of expenses will remain uncovered by your pre-arranged funeral arrangements.

- Paperwork that can be very expensive,

- Legal fees in the event of a dispute over your inheritance,

- Current bills or debts that you may have overlooked,

And always be careful as your health insurance plan may not cover the costs of medical expenses related to your health condition.

 

On the other hand, the burial contract covers the use and maintenance of a place (cemetery, mausoleum) to receive the body or ashes. There is currently no legislation requiring people to deposit urns in a burial site.

To properly prepare your funeral arrangements, look at the FTC Consumer Information website for a list of mandatory information for Funeral Rules. The contract must include a description of all services and goods and payment and cancellation conditions.

And this is where pre-arranged funerals have disadvantages, from a financial point of view. Indeed, you will need the funeral home or cooperative agreement to change any detail in your contract. If they refuse to change the contract, you can always cancel the funeral arrangements contract. But the cancellation of the agreement, for whatever reason, involves costs that you will have to pay. Funeral homes can charge you a 10% penalty for cancelling your contract as it is allowed by law.

 

On the other hand, this is the second disadvantage of pre-arranged funeral arrangements: these contracts are paid well in advance, making them much more advantageous for funeral companies instead of you. Indeed, the money you have paid is invested and generates interest for 10, 15 or 20 years, collected by the funeral home, and not you. And this interest is sometimes higher than the savings made by planning the funeral. This is why people under 60 years of age shouldn't choose a pre-arranged funeral arrangement contract.

 

Paying in advance has also had its share of misadventures for some funeral home clients. The funeral home must deposit 90% of the money you pay to their company in a trust account within 45 days. It is up to you to verify that this money has been deposited. Believe it or not, but there have been times when the funeral director has passed away before this 45 day period, which leaves the money solely in the funeral home’s hands.

 

The definite advantage of funeral arrangements is the precision you can give in your funeral instructions. You decide on all the details and the budget you wish to allocate to it.

Another even more economical solution, which you can also combine with life insurance for funeral expenses, is the deposit of funeral wishes you can make with a funeral services company or cooperative. This document can be deposited free of charge and allows you to give your loved ones instructions on how you would like your funeral to take place. Providing your loved ones with this document will make them aware of your last wishes and avoid having the funeral services paid a second time upon your death! (This has already happened to people too!)

If you choose to take out a contract with a funeral home, it is also up to you to verify that the arrangement's contents comply with the law and regulations. Funeral directors are not supervised by an order or ethic committee like doctors or lawyers. Therefore, they can practice the rates and sales methods they want. For example, did you know that funeral homes charge urns and caskets for up to five times more than the real cost? Even if you're not comfortable, try to negotiate. It could save you money on the final bill.

 

You have understood that a pre-arranged funeral contract can be very advantageous for you and have certain drawbacks, but keep in mind that it is the opposite of a financial product. As a perfect complement to life insurance funeral expenses, it responds to the need to simplify the family's procedures at the time of death and precisely prepare the funeral to limit the costs.

 

Funeral insurance: an excellent financial product

 

Funeral insurance is a life insurance product regulated by the Financial Markets Authority, regulating and controlling life insurance companies. Funeral Insurance is a financial product where a sum of money is paid directly to your beneficiaries after a claim is made to help with funeral and other end-of-life costs.

As we said earlier, life insurance is a product that has its advantages and disadvantages and is unavoidable in the following situations.

 

If you have debts

You know your personal finances better than anyone else, and you may not have paid everything when due. Or maybe you know you'll need another loan in a while, and then who knows? Your debts may be as mundane as credit card debt, income tax, property tax, payroll taxes, or any bills you haven't had time to pay.

 

If you haven't taken care of yourself...

Then you will likely be hospitalized with unavoidable long-term care costs. Be aware that not all long-term care expenses are reimbursed by private health care insurance. Dental care, vision care, physio, examination fees, braces, crutches, travel expenses are debts that can accumulate and that you may not have seen coming.

 

If you want to leave a significant legacy to your heirs.

Neither pension plan benefits nor pre-arrangement contracts constitute an inheritance, a sum that your heirs can dispose of according to their needs: to pay school fees, for example, if you have grandchildren. Since tuition fees in the US are between $12,000 and $50,000, your family will likely be happy to receive assistance from you.

An inheritance is a way to take care of your family, even when you're no longer there, and to make sure that everything will be sufficient for them, no matter what happens.

When meeting with a counsellor, it is a good idea to add some additional funds to help cover your funeral while still ensuring there is a legacy left behind for your loved ones. Upon your death, the insurance money will be paid directly to the estate to cover funeral expenses in the first instance. Then, the heirs will receive the rest.

 

However, there are two significant drawbacks to funeral life insurance. First, the life insurance company can ask you to undergo medical examinations to qualify. We’ve seen the stress that this requirement can have on people and have decided to make a change.  Our plan has a simplified the application process that has no medical exam requirements.  

Another disadvantage with some funeral insurance plans is that the premium can be expensive if you delay purchasing life insurance. The longer you wait, the more you will pay, even if you are in good health.

 

At Insurance Supermarket Inc, we are  specialists in simplified life insurance. Our focus is on making getting insured simple, so you can avoid financial worries for your loved ones. The experience of losing a loved one is already hard enough, don’t leave your family with financial uncertainty and strain during an already difficult time. We know that this is not the most joyful thoughts, but it is something to consider. If you have any questions about our life insurance options, we'll be happy to help! Please contact us with any questions you have, and our team of professional, licensed advisors will assist you every step of the way. When you feel ready to take the next step, get a free quote now and get the protection your family deserves at a comfortable price.

 

Ressources

https://www.consumer.ftc.gov/articles/0300-ftc-funeral-rule

 

Written by Diane Taes

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