Pre-Need and Funeral Insurance

People often plan for their own retirements. Many have life insurance to provide for their families after their deaths. These same careful planners often assume retirement planning and life insurance are enough to cover final expenses. They can be, but that’s not always the case.

Planning ahead for a funeral and prepaying funeral and burial expenses lessens the burden on your family to design a fitting memorial and locks in today’s pricing. When you plan ahead, you’re able to write down your wishes, from readings and songs to mementos and cemetery property—and make sure all the costs are covered.

Funeral insurance is one way to protect your loved ones against the financial concerns of funeral planning. Known by many other names—burial insurance, pre-need insurance or final expense insurance—funeral insurance products provide financial assistance with the expensive and often unexpected costs of a funeral and burial. 

How is final expense insurance different from pre-need insurance?

Not all funeral insurance policies are alike, and it's important to understand the differences.

Final expense insurance

Final expense insurance is a life insurance policy that pays a flat amount—typically $5,000-$25,000, depending on the plan you select—to your chosen beneficiary to be used to settle your final expenses. The benefit can be used for funeral and burial costs, as well as medical bills, credit card debt and other expenses. The beneficiary decides how the money is spent, and there is no protection against inflation. What’s more: Your family may have to front the money for funeral expenses and wait for the policy to pay later.

Pre-need insurance

Like final expense insurance, pre-need insurance covers final expenses. However, pre-need insurance covers only the expenses associated with a pre-planned funeral, cremation or burial. The benefit is paid directly to the funeral home chosen by the policy holder. This insurance also protects you against inflation, because funeral costs are locked in at current prices.

Dignity Memorial® providers offer pre-need insurance through American Memorial Life Insurance. This allows you to pre-plan a service and pay monthly premiums over a set period of time. Arrangements made ahead of time may include embalming or cremation, a funeral or memorial service, flowers, funeral cars and more, depending on the plan you select.

What are the benefits of pre-need insurance?

Removing the emotional and financial burdens of planning a funeral is the top benefit of pre-need insurance. When someone in your family contacts the designated funeral home to let the provider know that a death has occurred and that there is funeral insurance in place, a funeral director takes care of the rest. This allows family and friends to focus on remembering and celebrating their loved one, instead of dealing with the business side of funeral and burial planning.

The pre-need funeral insurance benefit is paid immediately to the funeral home, instead of taking 30 to 60 days to pay out, as some other insurances can. That way your family isn't left scrambling for the money for funeral expenses. Most importantly, they know the celebration of your life is exactly how you wanted it, because you made all the decisions yourself.

Another reason to buy pre-need insurance is to lock in the prices of funeral expenses at current rates. This means that when you choose a funeral package with a Dignity Memorial provider, you know exactly how much you will pay for a casket or urn, embalming or cremation, transportation and more—and you have the assurance of knowing that even if you live another 10 or 20 years the cost will not go up.

Because pre-need insurance plans are typically easy to qualify for, and because you are making payments over a period of time, you do not have to pay a lump sum when you prearrange your funeral service.

A grandfather talking to his grandson at a reception.

What kind of funeral insurance plans are available?

There are three categories to consider when purchasing a funeral insurance plan: term or whole life; guarantee issue or medically underwritten; and guaranteed or non-guaranteed expense lock. A policy may have a combination of these components.

Term funeral insurance

Term insurance may be less expensive than other types, but it has a limited time for which a benefit will be paid and for which the premium payment will remain unchanged. Term choices usually include 10 or 20 years. If the insurance has not been used and a benefit has not been paid during that time, you may have an option to renew it, but often at a higher premium rate. This type of policy does not protect against rising funeral costs.

Whole life funeral insurance

A whole life funeral insurance plan (sometimes called permanent insurance) has a higher premium because the benefit does not expire in a certain time frame. In other words, a term plan might pay out a claim; a whole plan will pay out a claim. These plans remain in force until the time of death, at which point the benefit is paid in full to the designated beneficiary (funeral home or individual).

Guarantee issue policy

With a guarantee issue policy, you cannot be turned down or denied insurance, regardless of medical conditions.

Medically underwritten policy

If you are in good health or have minor health issues that you think would still allow you to qualify, you could consider a medically underwritten policy. There are questions associated with these policies, but they offer the opportunity for a higher maximum benefit.

Guaranteed pre-need policy

A guaranteed pre-need insurance policy locks in the rate of funeral services. It offers you the chance to plan very specifically with a Dignity Memorial professional who can help you select a casket or urn, flowers, service type, transportation, and a monument or memorial. Pre-planning your service and locking in the pre-need price allows you to choose the exact level of benefit. Once the policy is paid, there are no surprises and no additional charges or expenses. If purchased through a Dignity Memorial provider, whole life, guarantee issue and medically underwritten policies fall under this category.

Funeral insurance through a Dignity Memorial provider

The pre-need insurance plans offered through Dignity Memorial locations provide unique benefits not found through other carriers.

Transferability. You should have to plan your funeral only one time. If you move or decide to change funeral providers, you can rest easy knowing the funeral you planned and the price you paid will transfer to any other Dignity Memorial provider in the country at no additional cost (subject to certain restrictions).

Expert planners with attention to detail. Our compassionate planners have planned traditional memorials and celebrations of life for decades. They will listen intently in order to design the service you envision, from location to music to flowers and more. Knowing how you want to be remembered, we can make sure the funeral insurance product you choose fully covers the costs.

You can talk with a Dignity Memorial professional at one of our locations or in the comfort of your own home to arrange a unique celebration of your life and find out if a pre-need insurance plan is the right step to protect those you love.