Prepaid Funeral Plans: How They Work and How to Choose

A prepaid funeral plan lets you arrange and pay for your funeral in advance, locking in current prices and sparing your family from making difficult financial decisions during grief. Plans typically cost between $7,000 and $15,000 depending on services selected and location.

What Is a Prepaid Funeral Plan?

A prepaid funeral plan is a contract between you and a funeral home. You choose the services you want (burial or cremation, type of casket or urn, ceremony details, transportation) and pay for them at today's prices. When the time comes, the funeral home provides exactly what was agreed upon regardless of how much costs have risen.

Most plans can be paid as a lump sum or in monthly installments over 1 to 10 years. The payment structure and timeline depend on the provider and the type of plan selected.

Types of Prepaid Plans

Pre need insurance funded plan: Your payments fund a life insurance policy assigned to the funeral home. When you die, the insurance pays the funeral home directly. If the policy grows in value, the excess may cover price increases or be returned to your estate.

Funeral trust: Your payments are deposited into a state regulated trust account. The funds grow modestly over time and are released to the funeral home upon your death. Trust funded plans are regulated at the state level with varying degrees of consumer protection.

Pre need contract: A direct agreement with a funeral home that may or may not be backed by a trust or insurance policy. Ask specifically how the funds are held and protected before signing this type of arrangement.

What Is Typically Included in a Prepaid Plan

• Basic services of the funeral director and staff
• Transportation of the body (transfer from place of death to funeral home)
• Embalming or refrigeration
• Use of facilities for viewing, visitation, or ceremony
• Casket, urn, or alternative container
• Hearse or funeral coach
• Preparation of the obituary and death certificate paperwork

Items that are typically NOT included: cemetery plot, grave opening and closing fees, headstone or marker, flowers, and third party charges like clergy honorariums. Make sure you understand what is and is not covered before signing.

What to Watch Out For

• Portability: Some plans cannot be transferred if the funeral home closes or if you move to a different city. Ask whether the plan is portable and whether there is a transfer fee.
• Irrevocable vs. revocable: An irrevocable plan cannot be cancelled or refunded. This benefits Medicaid planning (the funds are exempt from asset calculations) but means you lose flexibility. A revocable plan can be cancelled for a refund but counts as an asset for Medicaid.
• Funeral home closure: If the funeral home goes out of business, your ability to recover funds depends entirely on how they were held. State regulated trusts and insurance policies offer the strongest protection.
• Price guarantees: Confirm whether the plan guarantees the full cost of the services selected or only the funeral home's portion. If third party costs (cemetery, clergy, flowers) increase, your family may still owe the difference.
• Cancellation terms: Ask what happens to your money if you cancel. Some plans refund 100%, some charge a fee, and some return nothing.

How to Compare Prepaid Funeral Plans

Ask every funeral home you are considering these five questions:

1. How are the funds held and protected? (Trust, insurance, or direct?)
2. Is the plan transferable to another funeral home if I move or if this location closes?
3. Is the plan irrevocable or revocable, and what is the cancellation policy?
4. What exactly is included and what is excluded from the price guarantee?
5. What happens if the cost of services exceeds what I prepaid?

Get answers in writing. Compare at least two or three funeral homes before committing.

Prepaid Plans vs. Funeral Insurance: What Is the Difference

A prepaid funeral plan locks in specific services at a specific funeral home. Funeral insurance (also called final expense insurance) is a small whole life policy ($5,000 to $25,000) that pays out to a beneficiary who can use the funds for any purpose, including but not limited to funeral costs.

Prepaid plans offer certainty: you know exactly what services will be provided. Insurance offers flexibility: your family can choose any funeral home and any services at the time of need. Many families use a combination of both.

Is a Prepaid Plan Worth It?

Reasons a prepaid plan makes sense: You want to lock in current prices. You want to record your exact wishes. You want to remove financial decisions from your family during grief. You are planning for Medicaid eligibility and need to reduce countable assets.

Reasons to think twice: You might move. The funeral home might close. You want your family to have full flexibility in choosing services. You would rather set aside money in a payable on death bank account that remains under your control.

How to Find a Funeral Home That Offers Prepaid Plans

Most funeral homes offer some form of pre need arrangement. Start by browsing funeral homes in your state on Evermore Directory, then call the ones nearest you and ask about their pre planning and prepaid options. For more guidance on choosing the right funeral home, see our guide on how to choose a funeral home.