How to Fully Understand
Funeral Plan Guarantees
and "Freezing Costs"
Guaranteed Prepaid Funerals Funded By Insurance Are the Best Way to Prepare With Maximum Certainty
I strongly believe most seniors need to have a guaranteed pre-paid funeral plan in place. But it needs to be correctly understood and done properly. Doing it without over-paying is information too many funeral homes and cemeteries don't want you to have.
A contract called a "Guarantee Form" is attached to a special life insurance policy designed to prepay for a funeral. These two items together constitute a guaranteed, "frozen" funeral plan. The funeral home (funeral service provider) decides which services and merchandise it can freeze the cost of in advance. Frozen costs means these items will be provided at the time of need, regardless of what they are charging new customers. There will be no need for the family to come up with additional money.
The back side of the guarantee form explains how the funeral home can never charge you more than what they receive from the insurance company at the time of death. They can never bill you more for a shortage on anything specificied on the front side of the form:
Click above to enlarge
Note the words "regardless of the market price at the time of need." This is your cost and price guarantee. Remember there is a difference between prices now and your cost of the plan. There is a cost associated with stretching any plan out over time. Today's prices are the basis of the plan. The funeral home isn't obligated to charge today's prices at the time of need. They cannot, however, charge you more than the proceeds of the insurance plan. They must accept what National Guardian Life or other company sends them as payment in full, regardless of their prices at the time of need. Their "insurable interest" is what they are charging at the time of need, but it cannot be more than your insurance on the plan pays. They must "eat" the difference if they are charging more than the insurance or "death benefit" is worth.
If you choose to pay with one payment, your discount can be calculated on the table above as well. If you need a burial vault, add $995. It's all that simple.
If you don't prepay for a funeral, it greatly increases the chances that your family will overpay or overspend, which is normally undesirable. You can only prevent this by prepaying in a way that either locks in the prices as per a "guarantee" contract or a plan that spells out the quality of your services and merchandise as specifically as possible.
What Costs Are Not "Frozen"?
The following costs cannot normally be guaranteed or frozen on a funeral plan contract: cemetery labor, flowers, obituaries, death certificates, sales tax, and a few other things. Whenever anyone wants to make sure these items are covered under one plan, we estimate the costs and include funds for it all on top of the guaranteed items. These funds grow in cash value separately and are pro-rated. (See illustration)
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