Paying for your funeral expenses in advance can be a confusing matter. Here are four options to consider when you’re thinking about prepaying:

1. Burial and Final Expense Insurance
Burial and final expense insurance is a form of basic life insurance. This insurance is easier to obtain and has more affordable options than whole life insurance. Policies typically range from $5,000 to $20,000 and can be used toward any type of funeral expenses after your death.

2. Regulated Trust Plans
A funeral trust is a contract between the customer and a specific funeral provider. Money is placed into an interest-gaining trust account. After death, all of the funds are paid directly to the funeral provider named in the trust.

3. Pay on Death Account (POD)
A pay on death account, or POD, is an arrangement between a bank and a customer that designates beneficiaries to receive the assets after the account holder’s death. The account holder can change the beneficiary at any time. The money in the account can accumulate interest to offset any price increases in funeral plans. Money can be added to or withdrawn from the account at any time.
Prearrange Without Paying

Just because you want to make funeral plans does not mean that you need to pay for everything today. Making funeral arrangements in advance gives you time to compare prices and visit different funeral homes to see which one you want to choose. If you make any plans, be sure to tell your family that you have made plans but have not paid for the arrangements.

4. Medicaid Protection – Irrevocable Contracts
One of the advantages to prepaying for your funeral arrangement is it is part of a Medicaid spend down. When your prepay funds are set aside in an irrevocable trust, they are excluded when Medicaid benefits are determined. An irrevocable trust is a fund where, after a set grace period, you cannot withdraw your money except to pay for funeral services.

Whatever funeral plans or payments that you make, be sure to let your family know what you’ve decided. Give copies of paperwork and contact information to your executor. Be sure to ask any questions about policies or trusts that are presented to you. It’s important that you fully understand what you are signing and paying for.

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