A Guide to Preneed and Pre-planning

Navigating the complexities of preneed insurance and pre-planning can be daunting, especially during a time when emotions are high amidst confronting the inevitable. However, taking the time to understand this process can provide significant benefits for you and your loved ones. This article aims to demystify preneed insurance and pre-planning, offering a compassionate and knowledgeable perspective.

Preneed vs. Pre-planning

Preneed insurance is a specialized policy acquired to pre-fund funeral and burial expenses, ensuring these costs are managed and paid ahead of time. Policyholders specify their funeral preferences, and the insurance locks in current prices, mitigating future inflation. Premiums can be paid in installments over a set term, and the funds are held in trust or by an insurance company, regulated to protect against insolvency, ensuring the designated funeral home receives the necessary funds to perform services when the time comes.

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Pre-planning on the other hand, captures plans for the actual funeral arrangements that a corresponding preneed policy insures. When you pre-plan you make arrangements for your own funeral and burial services in advance, detailing specific preferences and decisions regarding various aspects such as the type of service, burial or cremation, and other personalized elements. This proactive approach ensures that one's final wishes are documented and honored and provides clarity and peace of mind for both the individual and their family.

What’s at Stake?

When a loved one passes away, the experience for surviving family members can vary greatly depending on prior arrangements. If a complete, sufficient, and fully-funded preneed plan is in place, the family typically meets briefly with the funeral director to sign authorizations and determine service dates. This allows them to focus on their grief, make phone calls, prepare eulogies, and begin their personal journey towards healing.

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In contrast, without a preneed arrangement, the family must make an estimated 70-125 decisions, such as choosing a casket or urn, deciding on burial or cremation, and planning the service details. This can be overwhelming and may detract from their ability to be present during the funeral. Research indicates that this preoccupation can delay healthy grieving and increase the risk of depression and complex grief, especially for the individual who shoulders most of the burden—often the eldest female relative.

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Family dynamics can add another layer of complexity. Siblings may have strong but unspoken preferences, leading to unresolved tensions. Funeral decisions often reflect long-standing familial patterns, sometimes resulting in conflicts and rifts. A preneed plan can help mitigate these issues by providing clear directives and reducing the potential for family disputes.

The Benefits of Preneed

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Most discussions about preneed focus on the promise of "peace of mind." But the real benefits of pre-planning are more impactful. The advantages to pre-planning a funeral and securing a preneed policy have important financial as well as social-emotional advantages.

Social-Emotional Benefits:

1. Clear Direction:
Preneed plans provide clear, authoritative directives from the deceased, freeing the family from the tension of conflicting interpretations and cognitive distortions.

2. Contractual Funding:
This indicates the deceased's intent, offering family members relief from speculation and second-guessing.

3. Financial Responsibility:
‍Clearly delineated financial responsibilities prevent controversies over funeral costs, especially among siblings with differing financial capabilities.

4. Self-Reflection and Sharing:
Preneed planning offers an opportunity for self-reflection and interpersonal sharing, helping each person understand their needs and resources.

5. Collective Grieving:
‍Research shows that grieving collectively is critical for successful grieving, and a thoughtful pre-plan gives loved ones the space to come together in their loss.

6. Celebrating Life:
Preneed plans allow for unique and thoughtful celebrations of life, chosen by the deceased. These personal elements are often the most comforting to loved ones.

7. Attitude Towards Death:
A well-adjusted, accepting, and courageous attitude towards death benefits the entire community of the living, giving them courage to face their reality.

Financial Benefits:

1. Price Guarantee:
Preneed plans guarantee the price of in-house funeral home offerings, protecting against future price increases.

2. Flexible Payments:
Preneed arrangements can fit various budgets, with options for extended payment terms.

3. Insured Investment:
Preneed insurance is reinsured and overseen by the Department of Insurance, ensuring funds are secured even in the event of insolvency.

4. Protection Against Government Seizure:
Irrevocably assigned funeral funds are protected from government seizure during a Medicare or Medicaid spend down.

5. Prevents Overspending:
At-need survivors often spend up to 50% more on funeral expenses than what the deceased would have spent. Preneed planning helps align expenditures with the planner's values and intentions.

6. Policy Portability:
Preneed insurance policies can be reassigned to any funeral home, providing flexibility if you move.

The Pre-planning Process

If you understand and appreciate the benefits of securing your funeral plan with a preneed policy, you may be considering pre-planning for yourself or a loved one. But how does the process actually work? 

‍A good pre-planning partner should walk you through some version of the following process.

1. Assessment:
‍Evaluate your needs, preferences, and budget. Consider what type of service you want, burial or cremation, and other specific details. A skilled pre-planning counselor such as a Prelude Family Advocate can help you determine what’s right for you if you’re deciding between options or aren’t sure where to start.

2. Consultation:
Meet with a funeral director or a Prelude Family Advocate, to discuss your options and get a clear understanding of the costs involved. Experienced providers can help you tailor your pre-plan to your needs and budget.

3. Documentation:
Clearly document your wishes and preferences. This can include everything from the type of service to specific readings or music. A Prelude Family Advocate can handle all the plan documentation for you and provide you with a copy.

4. Funding:
Decide how you will fund your preneed plan. Options include paying in full or setting up a payment plan.

5. Legal Considerations:
Ensure that your pre-plan is legally binding and that your funds are protected. A Prelude Family Advocate will bind your pre-plan with an official preneed insurance policy.

6. Communication:
Inform your family about your preneed plan. Clear communication can help prevent misunderstandings and conflicts. These topics can be difficult for you and your loved ones, so work with a pre-planning partner who provides you tools for meaningful conversations.

Conclusion

Preneed insurance and funeral pre-plans offer significant benefits, both financially and emotionally. By taking the time to plan ahead, you can provide clear directives for your loved ones, reduce their stress during a difficult time, and ensure that your wishes are honored. This proactive approach can lead to healthier grieving, stronger family connections, and a more meaningful celebration of life. 

If you’re looking for a reliable and experienced pre-planning partner, reach out to our team. We’d be happy to answer any questions you have and connect you with your next steps.

Call or text: (918) 626-0360
Email: info@goprelude.com
Visit: www.goprelude.com