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Prepaid Funeral Plans – How do they work? How much do they cost?

Prepaid funeral plans are payment options typically offered by funeral homes or funeral directors as a way to help people finance the cost of a funeral over time.  As such, they provide individuals and families with a way to help alleviate some of the financial burdens on their loved ones.

The cost of the plan is usually paid in full or in installments, and the funds are typically held in a trust or insurance policy. The funeral home or provider typically guarantees that the funds will be available to cover the cost of the funeral when it is needed.

The individual can also make specific choices about the type of funeral service they want so that their wishes are respected when the time comes.

In essence, they are a great way for a family to prepare for the inevitable so that when a loved one pass, worrying about the cost of their funeral won’t be something that distracts from the grieving process.

Instead, the family can focus on what’s important which of course will be grieving the passing of their loved one and providing support to those around them.

Unfortunately, not everyone has the foresight to create a funeral plan far enough in advance to “bank” the full amount of a burial cost.  In this case, the surviving loved ones may still face a significant financial burden when their loved one passes simply because the funeral plan wasn’t established early enough.

For this reason, we wanted to take a moment and discuss some of the costs associated with a burial or cremation and steps that a family can take to make sure that these costs don’t overwhelm them during their time of loss.

Prepaid funeral plans

Prepaid funeral plans allow an individual to plan and pay for their funeral in advance. This can help to alleviate some of the financial burden on loved ones and provide peace of mind that the funeral expenses will be covered.

With a prepaid funeral plan, an individual typically pays a lump sum or instalments to a funeral home or provider. The funds are then held in a trust or insurance policy and guaranteed to be available to cover the cost of the funeral when it is needed.

One of the biggest advantages to a prepaid funeral plan is that many will “lock in” the price of your funeral, meaning that the cost of the funeral will not change regardless of when the individual passes away. This can provide peace of mind that the cost of the funeral will be covered and that loved ones will not have to worry about paying any additional costs.

Other prepaid funeral plans may have a provision for inflation, so the prices will adjust to the cost of living.

It’s also worth noting that in some cases, prepaid funeral plans may only cover certain aspects of the funeral, such as the funeral service itself, but not additional costs such as the cost of a cemetery plot or headstone.

Types of Prepaid funeral plans

There are several types of funeral plans available, each with its own unique features and benefits. Some of the main types of funeral plans include:

  1. Traditional funeral plans: These plans typically include a traditional funeral service, a casket, and transportation for the deceased. They may also include additional services such as embalming and a viewing.
  2. Cremation plans: These plans typically include a cremation service, an urn, and transportation for the deceased. Some cremation plans may also include a memorial service or scattering of ashes.
  3. Burial plans: These plans typically include a burial service, a cemetery plot, and a headstone or marker. Some burial plans may also include a funeral service.
  4. Green funeral plans: These plans typically include an environmentally-friendly funeral service, such as a natural burial or cremation with a bio-degradable container.
  5. Direct cremation plans: These plans typically include only a cremation service, without any additional services such as a funeral or memorial service.
  6. Immediate need funeral plans: These plans are designed to be used in case of unexpected death and typically include the immediate costs of a funeral.

It’s important to compare plans from different providers and read the fine print carefully to ensure that the plan covers everything you need and meets your specific requirements.

Planning a burial service and understanding your needs

One way to better understand your needs and whether or not the funeral plan you’re considering will meet them is to actually plan out an actual funeral ceremony and list what potential costs you may be.  Such a list may include things such as the following:

  1. Casket or burial vault: This is the container that the body is placed in for burial. Caskets come in a wide range of materials and styles, with prices varying accordingly. Burial vaults, which are typically made of concrete or other durable materials, are designed to keep the grave from sinking and can be used to protect the casket from the weight of the soil and other elements.
  2. Gravesite: This is the location where the body will be buried. The cost of a gravesite can vary depending on the location, cemetery, and whether it is a single grave, double grave, or a plot.
  3. Opening and closing of the grave: This includes the cost of digging the grave and then covering it after the burial.
  4. Cemetery or burial plot fees: Some cemeteries have fees for the use of their grounds, including the cost of maintaining the cemetery and the gravesite.
  5. Headstone or grave marker: This is a monument or marker placed at the head of the grave to identify the person who is buried there. The cost can vary depending on the type of marker, the materials used, and the engraving.
  6. Flowers: Many people choose to place flowers on the grave or in the casket as a way to honor the deceased.
  7. Funeral services: This can include embalming, transportation, and a funeral service or memorial. The cost of these services can vary depending on the funeral home and the services provided.
  8. Celebration of Life gathering or reception : This is an additional option that many families are choosing in today’s time to celebrate the life of the deceased person with friends and family.
  9. Obituary notice: The cost of placing an obituary notice in the local newspaper or online.
  10. Death certificates: These are legal documents that are required for various purposes such as settling the estate, insurance claims and other legal issues.
  11. Cremation costs: If the deceased person chooses cremation, there will be additional costs for cremation services and an urn to hold the ashes.
  12. Outer burial container: This is an additional container that may be required by some cemeteries to encase the casket or urn.
  13. Funeral procession: The cost of transportation for the funeral procession, including the hearse and limousines for the family members.
  14. Post-burial care services: Some cemeteries offer post-burial care services such as regular lawn maintenance, flower planting, and tree planting.
  15. Urn vault: If the ashes of the deceased are buried, an urn vault may be required to protect the urn from the weight of the soil and other elements.
  16. Additional services, such as pre-planning, grief counseling, and aftercare services, are also available at some funeral homes and can add to the overall cost.
  17. Charitable donations in the name of the deceased.

It is important to keep in mind that these costs can vary depending on location, services are chosen, and the funeral home or cemetery’s policies.

Average cost of a burial and cremation ceremony

After reviewing this list, we think you’ll now begin to see that there really isn’t any limit one can spend on burying a loved one.  Each family will have their own idea on how much is enough or too much.  Some may choose to spend a few hundred, a few thousand while others will spend 10’s of thousands.

That said, however, while there may not be a limit on how much a funeral can cost, there definitely is a limit on how inexpensive one can be.  Simply put, there are some costs that just cannot be avoided and those costs can be expensive.

And while its true that the cost of a burial and cremation ceremony can vary greatly depending on the location, services chosen, and the funeral home or cemetery’s policies, on average, a traditional burial will likely cost a family somewhere between $7,000 and $10,000, while a cremation ceremony can cost between $2,000 and $5,000.

Pros and Cons of a prepaid funeral plan

Here are some pros and cons of prepaid funeral plans:


  1. Peace of mind: Prepaid funeral plans allow individuals to plan and pay for their funeral in advance, which can give them peace of mind knowing that their final wishes will be carried out and their loved ones will not have to worry about the financial burden.
  2. Cost savings: Prepaid funeral plans can help individuals lock in today’s prices for funeral goods and services, which can help them save money in the long run. Prices for funeral goods and services can increase over time, so by prepaying, individuals can protect themselves from inflation.
  3. Customization: Prepaid funeral plans allow individuals to customize their funeral and make their final wishes known, which can ensure that their loved ones carry out their wishes.
  4. Flexibility: Many prepaid funeral plans allow individuals to pay for the plan in installments, which can make it more affordable for them.


  1. Limited options: Prepaid funeral plans may only include certain goods and services, which may limit the options available to the individual.
  2. Non-refundable: Many prepaid funeral plans will contain a non-refundable clause meaning that once an individual has paid for a prepaid funeral plan, the money is non-refundable. If the individual changes their mind or moves to another location, they will not be able to get a refund.
  3. Limited transferability: Prepaid funeral plans may not be transferable to another funeral home or cemetery if the individual moves to another location.
  4. No guarantee of future prices: Even though you may have locked in prices today, some plans may not guarantee future prices, and if the individual dies many years after the funeral plan has been paid for. As a result, the amount of money paid into the plan may not be enough to cover the full cost of the burial.

Other funeral payment options

When it comes to covering the cost of a funeral, there are a few different payment options that individuals and their families can consider. Here are some of the most common payment options:

  1. Personal savings: Many individuals and families use personal savings to pay for funeral expenses.
  2. Credit cards: Some funeral homes and cemeteries accept credit card payments for funeral expenses.
  3. Funeral loans: Some funeral homes offer funeral loans that can be used to pay for funeral expenses.
  4. Government assistance: Depending on the individual’s circumstances, they may be eligible for government assistance to cover funeral expenses.
  5. Life insurance and/or burial life insurance policies

Life insurance and burial life insurance policies

Another option that many families will use to help pay for the costs of a burial will include using an existing term or whole life insurance policies or specifically purchasing burial or final expense insurance policies.  These “types” of life insurance policies can be used to pay for funeral expenses in a few different ways.

Here are a few examples:

  1. Death benefit: A traditional life insurance policy pays out a death benefit to the beneficiaries named on the policy when the insured person dies. The beneficiaries can use the death benefit to pay for funeral expenses.
  2. Accelerated death benefit: Some life insurance policies include an accelerated death benefit rider, which allows the insured person to access a portion of their death benefit while they are still alive if they are diagnosed with a terminal illness. This money can be used to pay for funeral expenses.
  3. Burial life insurance: This type of insurance is specifically designed to cover the cost of funeral expenses and is also known as funeral insurance. The death benefit from a burial life insurance policy can be used to pay for the funeral expenses, the policyholder can choose to pay a lump sum or pay in installments.

It’s important to note that the availability and terms of these benefits can vary depending on the specific policy and the insurance company.

Burial Life Insurance pros and cons

Burial life insurance: Pros:

  1. Tax-free death benefit: The death benefit from a burial life insurance policy is typically tax-free, which can make it a more cost-effective option than other types of insurance.
  2. Flexibility: Burial life insurance policies can be customized to meet the individual’s needs and budget.
  3. Cash value: Some burial life insurance policies accumulate cash value over time, which can be used to pay for funeral expenses or other expenses.

Burial life insurance Cons:

  1. Limited coverage: Burial life insurance policies may not cover all the expenses associated with a funeral, so you may need additional coverage.
  2. Age limit: Some burial life insurance policies may not be available to individuals of a certain age, which can limit their options.
  3. Cost: Burial life insurance policies can be more expensive than other types of insurance, depending on the coverage.

Closing thoughts

It’s important to keep in mind that both burial life insurance and prepaid funeral plans both have their own set of pros and cons. This is why it’s always a good idea to shop both options and compare each to one another.

And while we here at IBUSA don’t offer any prepaid funeral plans, we do offer a wide selection of both term and whole life insurance products from many of the best insurance companies in the industry, so when it comes time to compare your insurance options with a prepaid funeral plan, we’re sure we’ll be able to provide you with enough information for you to make the best decision for you and your family.

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