If you are thinking about getting your funeral arrangements in order so your family won’t have to worry about it, then you might also be wondering if there is a tax deduction for prepaying for your funeral? The answer to that question is “no.” So how do prepaid funeral plans work and what are the benefits?
Funeral homes offer prepaid funeral plans as a way to give someone peace of mind that there final expenses are taken care of. The problem is that these type of plans are typically not regulated by any laws and they are a major source of consumer complaints.
One of the problems with prepaid funerals is that you have no idea how long you are going to live. If you are a 70 year old man and you go through all of the effort and money to pre-plan a funeral, but you live another 15 years, your efforts might be futile. The main reason is because of inflation. If you pay for a $10,000 funeral today, that might not buy very much in 15 years. So you think you have your funeral expenses taken care of when you might only have enough money to buy a casket. Another limit with a prepaid funeral is that your family has to use the funeral home where you set up the prepaid plan. If that funeral home goes out of business or if there prices are much higher than other funeral homes in the area, your family will not have the option of going elsewhere.
A better option is a final expense life insurance policy. These are whole life policies so your premiums will never increase and your policy will never be canceled no matter how long you live. For example, a 70 year old man in average health can get a $15,000 final expense policy for about $68 per month. A benefit with final expense policies is that you can always add more money to your policy. So if you live for another 10 years and you don’t think $15,000 is enough, you can increase your policy by $5,000 or so and pay the difference.
If you are thinking about prepaying for your funeral, then be sure to read your contract carefully and weight all of your options. It can be a big financial commitment so be sure to get your family involved before signing on the dotted line. If you need some quotes for life insurance, go here to compare multiple policies for free.