Should we prepay funeral costs or buy more insurance?


Q. We would like to prearrange and prepay for our funerals. Is it smarter to do it or should we get life insurance to pay for it?
— Planning

A. Some people find it hard to think about their own demise, but it’s smart for both financial reasons and to make things easier on your surviving family members.

There are several ways to prepare for funeral costs, and it is important to understand the risks and benefits of each before deciding on what’s best for you.

Buying a prepaid funeral plan is one option, said Ken Van Leeuwen, a certified financial planner with Van Leeuwen & Company in Princeton.

“This is a way for you to give yourself and loved ones peace of mind by spelling out exactly what your wishes are, and lock-in today’s prices,” he said.

Prepaid funeral arrangements funded by revocable trusts can be cancelled by the purchaser at any time, with a complete refund of principal and interest, without penalty, upon demand, said the New Jersey Funeral Directors Association. They are also portable and transferable to another funeral home, also upon demand, it said.

“Another option, if you are healthy and can obtain it, may be to purchase a life insurance policy,” Van Leeuwen said. “With a life insurance policy, you gain the flexibility of being able to use the proceeds for any costs associated with your death.”

You also gain the benefit of assigning a beneficiary, who will receive the funds and can carry out your wishes, he said.

“Should your wishes change before your passing, this can be communicated to your beneficiary and executed upon your death with the proceeds from the life insurance,” he said.

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This story was originally published on April 14, 2021. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.