Making funeral arrangements? Consider "pre-need" insurance

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LadyGeek
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Making funeral arrangements? Consider "pre-need" insurance

Post by LadyGeek »

When I made funeral arrangements for my late husband in December 2019 (see my post here), I was expecting to sign a contract and hand them a check (planned expense). Instead, I was sold a "pre-need" insurance policy with Funeral Directors Life. The premium was the price of the contract (around $3k - no service, direct cremation). Yes, the funeral director is an insurance agent.

I wasn't in the mood to shop around and simply went with a funeral home that a friend had used before. I wanted to sign the contract and get something in place quickly. I used my standby POA to sign the contract as my husband was not mentally competent at this point in time.

The funderal director agent stated that the policy would not only lock me in to the current price, but I'd get interest to boot.

One week letter, I get a letter from the FDLIC stating that the policy was in-place and I should keep this letter with my important papers. OK, I have the application and the contract, but where's the full policy? I immediately registered on their website for an online account.

Jackpot! The full policy and everything I signed was online. This is my first ever purchase of any type of life insurance product, so my curiosity was peaked to see what these policies are about.

There are guaranteed prices (his service package) and non-guaranteed prices (crematory and administrative fees). He eats the cost for stuff he provides, but I have to pay for price increases in outside services.

Interest? Wading through the verbage, it's the average of the Fed five-year Constant Maturity Treasury Rate, a.k.a. Treasury Yield Curves, for October and November 2019, reduced by 1.25%. Capped at 3%, floor at 1%. From what I can figure, the rate hit the 1% floor. Not a problem, as the website tracked the policy value in real time.

Hang on, the policy has an "Excess benefits" clause which states that anything over the price of the services can be used to purchase additional items or services. The online account tracks the policy value in real time. At the time of my husband's death, the policy had earned $4 interest.

My claws sharpened, as I wanted 3 more death certificates ($20 each, the fee is set by the state). I wasn't about to let that $4 slip away. :twisted:

When I next met him in person, I requested the 3 additional certificates and showed him the current policy value. He just happened to have the previous day's close, which was $0.15 less. Once he knew that I understood the policy details (and that I was not intimidated by him) it then became a game to leverage that extra $4 for the extra certificates. Can I bill you for it? No. Can I write you a check? How about cash? We ended up with 3 additional certificates for $50 cash, a savings of $10.

So, remember to bring cash with you to the funeral home. :)

I pressed him on the negotiation because he was selling me an insurance policy when I could have simply signed a contract and been done with it. BTW, he got $30 commission - I asked. Although my emotions were running high, it was a civil and calm discussion. I just needed to do this.

A few days later, one of my friends said she was forced to pay extra for a family member's funeral because they raised prices several years later (different funeral home).

I did some additional research. Thinking harder, a "pre-need" policy might have prevented my friend's frustration. Here's a tutorial: Tips on pre-planning your funeral and final expense insurance

If I had made funeral arrangements at a time when I wasn't rushed, I might have found a lower price funeral home or one that didn't offer insurance.

Considering that my need was short-term, I didn't need the insurance. For others, it's worth consideration. Or, find a funeral home that offers a price guarantee.

Revised: Clarify this is the first time I've purchased a life insurance product.
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by vtMaps »

LadyGeek wrote: Thu Jan 23, 2020 8:26 pm This is my first ever purchase of any type of insurance product
My condolences on your loss. I admire your ability to function so rationally at such a stressful time in your life. I hope I can do as well as you if/when the time comes.

Have you really never purchased an insurance product (e.g. automobile or homeowners insurance)?

--vtMaps
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by Katietsu »

Thank you for sharing this story.

I am awed at your composure to obtain a copy of the policy and read it in such detail.

I will add that the funeral industry is highly regulated. In the state that I have the most experience, I do not believe you would have been able to sign a contract and pre-pay without the insurance policy. You could have certainly pre planned. When my father was in hospice, I made arrangements including prices in advance but only signed the contract and made payment after his death. My father in law was ill for several years and wished to have his final arrangements paid in advance. An insurance policy was associated with this. I believe that any pre payment in my home state legally necessitates an insurance policy. I believe other states may handle this differently.
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by quantAndHold »

Wow, interesting. Thanks for sharing.

We did it the other way around. When mom was in hospice, dad and I went to the funeral home and picked everything out and negotiated prices (and yes, there was some room for negotiation), but didn't sign any papers until after she passed a few weeks later. Then dad paid with a check that bounced, because the joint money market account got frozen when they figured out that mom died. The funeral home was very patient as he sorted that out.

When dad died, I called the same funeral home on the phone, and said "I'll have the same as we had for mom." The price was actually cheaper the 2nd time around, 10 years later. No clue why. The 2nd time, I knew about the frozen bank account problem, and made arrangements to pay them after I got probate opened a few days after the funeral.

I also remember a few fraught moments both times when deciding how many of those expensive death certificates we really needed. It turned out that most places took copies, so we really only needed a couple for each. So I still have 3 or 4 left over for each of them. Not sure what to do with them now.

Also, I'm really sorry for your loss.
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by LadyGeek »

vtMaps wrote: Thu Jan 23, 2020 8:35 pm
LadyGeek wrote: Thu Jan 23, 2020 8:26 pm This is my first ever purchase of any type of insurance product
My condolences on your loss. I admire your ability to function so rationally at such a stressful time in your life. I hope I can do as well as you if/when the time comes.

Have you really never purchased an insurance product (e.g. automobile or homeowners insurance)?

--vtMaps
Thanks for the correction. I have revised my post to state this is the first time I've purchased a life insurance product.
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by LadyGeek »

quantAndHold wrote: Thu Jan 23, 2020 8:44 pm I also remember a few fraught moments both times when deciding how many of those expensive death certificates we really needed. It turned out that most places took copies, so we really only needed a couple for each. So I still have 3 or 4 left over for each of them. Not sure what to do with them now.
Yes, I'm wondering how many I really need as well. Vanguard accepted a cellphone snapshot which I uploaded on their website. The local bank just need to see the copy in-person. I'm waiting to see what the other financial institutions will require (I have a list...).

I've also got another 10 copies coming via the Dept. of Veteran Affairs, which are free to US military veterans. (My husband was a vet.)

I recommend putting a few copies in a safe deposit box.
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by CAsage »

There are probably lots of ways to manage costs on this unavoidable and tragic life event. When my mother died, I called a couple places in the local metropolitan area and shopped purely by price - how much to pick up Mom and cremate her? I found quite a range of prices, by several multiples (below $1k to several $k). I might have shopped a bit earlier just to be ready. If you don't need to lock in a service, coffin, viewing, and/or a plot, I'm still not sure there are better ways to do this. It's never easy. And I also ended up with spare Death Certs, as several banks etc were happy to see the original and make their own copies.
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by joe8d »

I would recommend Pre-planning of a funeral, which I just did for myself, but not prepaying. BTW, the the prices are locked in.
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by venkman »

What happens if you sign up for the insurance many years beforehand, and the funeral home you signed up with ends up going out of business? Would the insurance company pay for the same level of service at a different funeral home of your choosing? The guy you buy the insurance from might be willing to lock in his current rate, but presumably his competitors would have no reason to honor that.
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by Katietsu »

I just did a google search. It appears that many of the protections and regulations are state dependent and some states still provide very inadequate protections. I am fortunate that the home of my “elders” is highly regulated. This discussion has made aware that my current state of residence may not have the same protections and I will need to get more diligent.
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by RetiredAL »

LadyG, thanks for sharing. +1 for pre-planning/buying.

My Mom passed in 2012. Several years before, my parents had bought a joint cremation plot and funeral insurance for a simple cremation for each. She died under Hospice Care, so hospice came to their home, pronounced the death, then my Dad called the Funeral Home to come pick her up. A short time later my Dad and I went to the funeral home where they had already pulled out the records, we went over what had been bought, asked if we wanted any changes, no, Dad's signed some paperwork and we left. It was simple, clean, with no pressure from the funeral home.

As for Death Certificates, we started with 6 and ended up needing more, around 9-10 as I recollect. My Dad ordered more and there are 3 left in the file. I assume I may need those when when I close the trust and everything else out after my Dad passes. Local Banks/Credit-Unions accepted copies they made from an original, everyone else such as Insurance and Retirement, which we had to mail documents to, wanted an original. So get plenty.

The funeral home transposed 2 SS digits when they sent records in for the Death Certs, so that had to be corrected. Hopefully someone's SS payment did not get cancelled by that error.
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by Phineas J. Whoopee »

The year before last I had to make last-minute arrangements for a quick cremation, as we called them long ago when I worked non-professionally in the funeral industry (as a job to make money to pay college tuition), what you call a no-service direct cremation. It cost $995, in a high cost of living area. Obtaining enough death certificates from the county was another hundred.

I'm not saying you were had, LadyGeek, just giving my own anecdote about arranging for disposal of remains. No doubt prevailing prices are different in different places.

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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by InMyDreams »

We did not contact the crematory prior to my mother's death, but I had a recommendation from a nursing supervisor. No fuss, called at 4ish in the morning, the price they quoted on the phone was exactly what they charged.

Burial was months later in a different state.

I had requested multiple DC copies - and I think I have almost all of them. I found institutions kept returning them to me after they had looked them over. Go figure.
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by Abe »

venkman wrote: Thu Jan 23, 2020 9:47 pm What happens if you sign up for the insurance many years beforehand, and the funeral home you signed up with ends up going out of business? Would the insurance company pay for the same level of service at a different funeral home of your choosing? The guy you buy the insurance from might be willing to lock in his current rate, but presumably his competitors would have no reason to honor that.
My mother had a paid up burial insurance policy with National Burial Insurance Co., and it was through Memphis Funeral Home. After my mother passed away, the funeral home and the insurance company that she had the policy with were no longer in business. I had to deal with another insurance company, Monumental Life Insurance Company, who was the holder of the policy at the time of my mothers death. Eventhough the policy specifically stated that it would provide for a suitable and respectable funeral service or the cash value, Monumental Life Insurance Co. said they would only pay $250, and that was all they paid. So much for burial insurance.
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by dcabler »

My parents took out a similar policy about 20 years or so before they passed, within a year of each other. They had also pre-arranged everything about their funerals. I have many siblings and man, did this make things easier on everybody.
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by 1210sda »

thanks again, LG.

Were you planning on putting this info in the Wiki?
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by LadyGeek »

Good idea, I'll have to think about it.
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by BolderBoy »

LadyGeek wrote: Thu Jan 23, 2020 8:26 pm(around $3k - no service, direct cremation).
In case you were wondering, I think the price you paid is fair. My mom's "no service, direct cremation" contract (which I arranged a week before her death) cost around $2300 in early 2017 in a very rural part of Virginia.
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by Dottie57 »

joe8d wrote: Thu Jan 23, 2020 9:28 pm I would recommend Pre-planning of a funeral, which I just did for myself, but not prepaying. BTW, the the prices are locked in.
My dad’s funeral was pre-paid. It made the whole process so much easier for us than it would have been. The casket was pre-selected - no pressure for a more expensive one.
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by Gnirk »

I prepaid $1060 (in the form of an insurance policy) for my mom's direct cremation several years before she passed from Alzheimer's. She and Dad had purchased 4 cemetery plots, making $10 per month payments for ten years starting in 1950. The cemetery allows two cremated remains in each plot. We have jokingly referred to them as the family condo.It was helpful to have it all paid for prior to need. However, her celebration of life for very close friends and family a month later was not prepaid.
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by Small Change »

My mother, in a HCOL city, joined a non-profit memorial society about 10 years before she died.

It negotiates prices with local mortuaries and publishes a fixed price schedule, updated each year.

At the time of her death two years ago, I simply called one of the listed mortuaries, gave them the memorial society member number and, as my mother wished, asked for direct cremation.

Price ($995 (and $1,070 including death certificates and county filing fee), which I paid over the phone by credit card, was exactly as shown on the memorial society’s price schedule. It was an easy, no-stress transaction.

We did a church service for family and friends at a later date.
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by bogglizer »

My sister used to own a cemetery. Amazing what you can and cannot do. In many places (unincorporated cities mostly), you can just go bury old uncle Bob in the backyard.
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by LadyGeek »

1210sda wrote: Fri Jan 24, 2020 9:20 pm thanks again, LG.

Were you planning on putting this info in the Wiki?
This thread is now in the wiki: Estate planning (External links)

This is a complex topic, so it's best to link to this thread for a comprehensive discussion (instead of a dedicated wiki article).
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by Jablean »

It was 1800 for my mom in 2017. Included cremation, urn, wee hours of the morning pickup, 6 or so death certs, they contacted SS and posted death notices. I think they came out to the house while she was on hospice. Therapy dog on site when I visited to get more certs which her money adviser insisted were needed for her funds but which for the most part were not.
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by StealthRabbit »

Small Change wrote: Sat Jan 25, 2020 12:49 am My mother, in a HCOL city, joined a non-profit memorial society about 10 years before she died.

It negotiates prices with local mortuaries and publishes a fixed price schedule, updated each year.

...
Price ($995 (and $1,070 including death certificates and county filing fee), which I paid over the phone by credit card, was exactly as shown on the memorial society’s price schedule. It was an easy, no-stress transaction.

We did a church service for family and friends at a later date.
Likewise, having been a caregiver and hospice volunteer and often called on to help others in this need... I have done this for myself (I'm an international co-op business developer as a public service to others)

...as in one non-profit became... Funerals.coop... good resources, prices, services, and and list of affiliates.
https://funerals.coop/pricing/gpl.html
Consider creating similar services for your community.

Of course my situation became more a tad more complicated with siblings (refused cremation)... so 'dad' and I took a 2500 mile road trip for his burial (had a legal 'transit permit' which one state would not acknowledge, so we had to drive around, rather than through that state). I rented a backhoe and did the graveside US Veteran's flag ceremony and blew the TAPS on dad's bugle and dropped him in and back-filled (had to get the backhoe returned in time). Air-shipment was very inexpensive, but the state would not let me fetch his corpse from the airport. Funeral service wanted $2,000, so... we took the road trip. Gas was but a fraction of that cost. Had a great time, went to all his favorite spots!. a 'healing time' after 30+ yrs of very difficult caregiving. I highly recommend it.
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by basspond »

Condolences for your lose. At least these policies are 100% guaranteed you will be able to use. DW and I have not considered insurance since we both want to be cremated. My parents have/had long term care insurance (but no traditional funeral expense policy) they weren’t able to use for dad because he needed one more week of care to meet his deductible. Their non-traditional funeral expense policy is being a member of a rural church that had its own cemetery (free for members) and their pastor assisted past deceased members with funeral arrangements which added a lot of comfort to the family.

I couldn’t find a WIKI for funeral preparations. Have the administrators thought about adding a WIKI for all that is needed for funeral preparations?
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by clemrick »

Both my in-laws and parents pre-planned and bought insurance from the morticians they were going to use 20-30 years ago.

My in-laws went for direct cremation and no service. When my mother-in-law passed in 2013, everything went smoothly and my father-in-law only had to pay for the death certificates.

My parents were cremation with services. The policies only cover the mortuary and funeral director charges, not church or burial charges. That wasn't made clear to my parents. They thought everything was covered, even after my father changed his mind about cremation a couple years ago and they talked to the funeral director. They knew they would have to pay for a simple wooden coffin, but my mother wasn't prepared for the $6,000 additional she had to pay for the church, burial charges, and his "extra" services, like $200 for a courier for the death certificates and $200 to draft the obituary (which included a column inch advertisement for his funeral business) and we paid for the obit directly to the paper.
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by BolderBoy »

bogglizer wrote: Sat Jan 25, 2020 1:06 am My sister used to own a cemetery. Amazing what you can and cannot do. In many places (unincorporated cities mostly), you can just go bury old uncle Bob in the backyard.
My dad's ashes were buried in the side yard of mom's house (on the farm). For years after he died, nuisance telco calls asking for him were responded to with, "He's out in the yard."
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by bac »

BolderBoy wrote: Sun Jan 26, 2020 12:23 pm
bogglizer wrote: Sat Jan 25, 2020 1:06 am My sister used to own a cemetery. Amazing what you can and cannot do. In many places (unincorporated cities mostly), you can just go bury old uncle Bob in the backyard.
My dad's ashes were buried in the side yard of mom's house (on the farm). For years after he died, nuisance telco calls asking for him were responded to with, "He's out in the yard."
After my sister died, I forgot to notify a distant quasi-relative who had been a thorn in both our sides until I was reminded at the memorial service. Interment of ashes was the next day. I sucked it up after the service and called the relative, and she asked if Sissy was in the probable cemetery. I said no, she was downstairs in my foyer. My sister would have loved it.
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by LadyGeek »

basspond wrote: Sun Jan 26, 2020 6:15 am ...I couldn’t find a WIKI for funeral preparations. Have the administrators thought about adding a WIKI for all that is needed for funeral preparations?
Bear in mind that the wiki needs to stay focused on investing and personal finance (estate planning is personal finance). Going into other details, such as selecting flower arrangements, would be best served by other websites. If I misunderstood your intent, please let me know.

Also, the wiki is maintained by the forum members. Any member can create a wiki article - not just admins. Those wishing to help edit the wiki can post in Join the Wiki! or PM me directly.
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by lexor »

I am sorry for your loss and thank you for sharing your experiences for us to learn from.

I was reading some of the tutorial and want to make sure I'm following. Even if you lock in prices wouldn't you do better in stocks and bonds? Is the goal here more peace of mind than finances alone?
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by LadyGeek »

Yes. Emotion is not found on any equation, yet it can have one of the most powerful influences on your investment decisions.* You want peace-of-mind for the loved ones who will have to deal with this after you've passed.

A friend of mine ranted for several minutes about having to deal with a cemetary who wouldn't bury her father until she paid for some price increases. The family had signed a contract and paid the bill in-full. When the father passed a while later, they refused to do anything until she paid them what they wanted. This happened a few years ago and she was still upset today.

* Emotional can also influence a decision to payoff a mortgage vs. investing (discussed elsewhere in the Personal Finance forum).
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by friar1610 »

I'm curious as to whether anyone who has commented on their experiences was using a national (federal) veterans' cemetery as the burial/inurnment location. And if so whether it was easy and efficient or difficult and bureaucratic. I ask because I've had my eye on the Mass. National Cemetery, not too far from me. I've driven through it but haven't spoken to anyone yet.
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by bayview »

https://en.wikipedia.org/wiki/The_American_Way_of_Death

I told my husband to put me out on the compost pile and let me enrich the azaleas.

What a sorry way to treat and take advantage of those who have just lost a loved one. smh
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by PatrickA5 »

DW and I have totally preplanned and prepaid all of our burial/funeral costs. Basically, all my kids have to do is show up at the funeral home and set the time. My dad's was prepaid (at the same cemetery) and it couldn't have been easier. Since he bought his 20 years earlier, prices had gone up significantly which saved us some money. I'm not saying pre-paying is a good investment - it's not, but it does take a lot of the pressure off loved ones. I've written up all of the details in our death planner. All of the kids are aware of our planning/payment and know where the planner book resides.

In my state, insurance is not used. Funeral pre-payment is placed in a trust account at a local bank. Each year we get statements showing how much interest (tiny) our account has gone up. If it is a revocable plan (like ours), we can at any time get our money out.

The cemetery charges (plot, marker, liner, open/closing) are in a different trust owned by the cemetery. This amount can't be refunded to us. The cemetery trust can be transferred to another cemetery that is at least 75 miles away, or can be sold as a package in the private market (most likely for a substantial loss). We won't be going anywhere, most likely.

I'd say pre-planning is very important and should be done by most everyone. Actually pre-paying is an option for some people. It's not a good "investment". Although prices are locked in and won't go up, you also don't have that money to invest so I doubt you will come out ahead. I'd only recommend pre-paying for people that don't need the money to live on (or retire on). Like I said above, our state doesn't do burial insurance policies. Our state is highly regulated and only uses trust accounts.
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Re: Making funeral arrangements? Consider "pre-need" insurance

Post by ncbill »

Buried a relative right around a year ago...under $3,500 for cremation from a full-service funeral home (local, not a national chain)

That price included a church service, tent/chairs for the graveside service immediately following, & opening/closing the grave (cremains interred)
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