A preneed funeral is a sold directly from a funeral home to the consumer.  You will have the option to pay in full or choose a payment plan. The funds are typically held in a life insurance policy, but sometimes the funds are placed in a Trust account.  A detailed plan of your wishes is written down and will be held at the funeral home.  The funeral home can guarantee most of the costs of the preneed funeral plan from price inflation.  Some items that are not under the direct control of the funeral home may not be guaranteed, such as sales tax, death certificates, obituaries, flowers, etc.​

 

Final expense insurance is purchased from a life insurance company, and the beneficiary can be anyone of your choosing. The policies have death benefits that generally range from about $10,000-$25,000, and the money can be used for anything, including funeral costs, travel expenses, catering, etc. The only payment option is to continue making your premium payments until you pass away. ​In most cases the best choice is to deal with a funeral home directly to prearrange your funeral.  Because you are not only funding your funeral, but you are putting a detailed plan in place for your family to follow.  Thus removing the burden of making many decisions while suffering emotional distress. 

 

Final expense insurance just provides funds to pay for a funeral there is no plan in place.  The money received from a final expense policy is fixed with no guarantees that it will cover the costs involved for a funeral.​The only reason to choose final expense insurance over a preneed funeral comes down to what monthly payment you can afford.  The monthly payment option may fit your budget better than the preneed funeral payment plan.  The main reason why is that the preneed plan will have a time limitation of 3,5,7 or 10 years while the final expense option you pay until passing.​

 

For those of you who can afford to pay the entire cost of your funeral in a lump sum, our advice is to do it.  As long as you get the guaranteed price against inflation you got the best deal you can get.  Remember, the whole point of doing this is to have peace of mind and a plan in place to help your family get through a difficult time.  This is not an investment, it is the last meaningful gift you will give to your loved ones.