Prepaid Funerals and Prearranged Funerals: What's the Difference?

Prepaying for funerals and pre-arranging funerals are not necessarily one and the same thing. To prepay for a funeral is generally to take out a funeral plan, making monthly contributions, so that when the time comes, your family and friends are spared the financial burden of paying for your funeral. With a prepaid funeral, you might not necessarily have made any plans beyond the actual cost, with the details of the service and burial or cremation being made at a later stage or by your family when the need to make such decisions actually arrives. When you opt to pre-arrange your funeral, you can actually make these plans yourself so that your farewell is precisely how you want it to be.

Paying for the Funeral

A prepaid funeral via a series of monthly instalments does not always come with a funeral home attached. The funeral home can be chosen when the need arises, along with the specifics of the service. A pre-arranged funeral is generally with a chosen funeral home, and any prepayments will be made directly to them. If the funeral home should go out of business, you need to be sure about their contingency plans. Will your money be returned, or will your arrangements simply be assigned to another funeral home? It's crucial that this eventuality is specified in the terms and conditions of any agreement you sign. This differs from a prepaid funeral, wherein the funds are held by the financial institution to whom you make the payments.

Making Your Own Choices

With a prepaid funeral, you still have the option of making key decisions about the service, but there are some details that might be out of your hands—details which can be confirmed with a pre-arranged funeral. While you can obviously choose the crucial elements, such as opting for burial or cremation, as well as the nature of your funeral service, there are some aspects of a funeral which can only be confirmed in advance with a pre-arranged funeral. These can include:

  • The location of the service itself, as per the options provided by the funeral home.
  • Your choice of casket in the event of burial.
  • Your choice of urn in the event of a cremation.

A pre-arranged funeral allows you to make a choice about these elements of your funeral and to pay for them at their current listed price. With a prepaid funeral, the cost of these items can change, since the cost will not be calculated until the funeral plan is enacted, which might not be for many years. There is the possibility that your plan will not cover the cost of your preferred items when the time comes.

Both prepaid and pre-arranged funerals have their benefits, but essentially, if you only want to cover the cost of your funeral without worrying about the details of the service, then prepaid is fine. If you wish to cover the cost as well as arranging the specifics yourself (and ensuring that you'll be able to have these specifics), then a pre-arranged funeral is the best choice.  

For information on how to pre-arrange funerals, consult a resource in your area.