Have you considered any prepaid funeral plans in your life? Prepaid funerals become an interest to many older investors who want to make arrangements before they pass, eliminating the burden that loved ones must face otherwise.
Although prepaid funerals sound like a smart decision, they are not always the best investments to make because of limitations and difficulties associated with changing the plans after they have been made.
Recognize the reasons that people choose prepaid funeral plans
The peace of mind associated with making funeral plans before a loved one passes is the biggest reason people choose to do it. This way the family does not have to deal with the emotional toll of grieving while also having to deal with the financials associated with the funeral.
The biggest advantage to investing in a prepaid funeral involves fixing the cost. Once a prepaid funeral is bought, the price is set and will remain that way regardless of how prices change within the market. Locking in the price helps the customer feel a sense of security because the price will not change over time. However, there is no guarantee that the price of a funeral would be significantly higher in the future, which means that locking the price in may not even be necessary.
Understand the limitations associated with prepaid funeral plans
Overall, a prepaid funeral is an investment product and should be considered as such. All investment products come with varying degrees of risk and limitations, which dictate the value and whether or not they are worth investing in. Let’s go through some of the biggest limitations with prepaid funeral plans now.
First, unlike other investments, there is no return on the money you have paid to the funeral home or insurer, even if the money ends up being held for decades.
Next, the plan itself could be problematic. For instance, the plan might dictate that the choice of funeral home cannot change, or that all specifics remain the same. If personal circumstances change for the funeral, it does not necessarily mean the funeral home will change along with these circumstances. If the initial funeral home changes its services, a prepaid funeral customer may be out of luck. For instance, will it be possible to get part or all of your money back if you decide to move out of the area and establish roots elsewhere? You must understand all of the fine details associated with prepaid funeral plans before choosing to put your money into one.
Furthermore, once a customer is locked into a prepaid funeral, the funeral home may avoid offering any types of discounts on aligned services. This is the case because a person is a captive customer after agreeing to a prepaid funeral.
It is best to consider prepaid funerals as a consumer decision opposed to an investment decision because there is no real opportunity to make money in the process.
Have you purchased a prepaid funeral or do you plan to? What is the main reason that you would choose to buy a prepaid funeral?