Prepayment  

There has been much hype in recent years regarding the prepayment of funeral costs. Prepayment in any form involves trusting someone else to hold your money and submit it for payment of your final arrangements at the time of your death.Everyone should should pre-plan their funeral, but prepayment may or may not be in your best interest. Benefits of Prepaying:

By paying in advance you may: Ensure that money is available to cover your final arrangements. Provide peace of mind that your funeral will be the way you want it. Minimize stress on your survivors. Risks of Prepaying: By prepaying you may find that: Money paid today may not cover inflated future funeral costs, resulting in possible substitution of cheaper merchandise or collection of additional money from survivors. There may be a penalty if you change your mind and withdraw the funds prior to death. The seller of today's funeral services may not be in business at the time of your death. Your survivors may not be aware you have prepaid for your funeral and may pay for it themselves. Significant Considerations: Before you buy a prepaid funeral plan, consider these things: Most funeral homes no longer guarantee that prepayment will cover future funeral costs in full. What assurances do you have that the  funeral home  will be there at the time of need to pay for your funeral? Is the plan transferable if you move or change your choice of funeral home? Is there a penalty if I change my mind and wish to withdraw the funds prior my death? If I’m paying over time, will the total of my payments be more than the benefits? What happens if I miss a payment? Adapted from PEOPLE’S MEMORIALTM See also Facts & Myths Why a prepaid funeral may not be as good a deal as advertised Edited by Pat McKeough | Filed in: Investing for Beginners Permalink: http://www.tsinetwork.ca/?p=60423 Members of my Inner Circle can ask me and my investment team financial questions of any kind. Aside from questions on specific investments like stocks and exchange-traded funds, members ask us many other questions about how they should be investing their money One intriguing question came from a member who asked whether there is any advantage to investing in a prepaid funeral. I’d like to share this question, and our answer, with you Q: At 57 years old, it seems reasonable to me to lock in funeral costs at today’s prices and pay for it now. This makes even more sense since I can reasonably expect to live another 25 years. Funeral costs for any level of funeral have doubled every 10 years over the past 30 years, according to the brochure. Does this make sense to you A: This sounds like a consumer decision, but it’s also very much an investment decision. When you prepay a funeral, you are investing money in a highly specialized fixed-return investment. You pay now, and get a fixed return (consisting of preselected funeral services) at an indeterminate point in the future — the few days or weeks after your death. As a member of my Inner Circle , you will get individual answers to your personal investment questions. And you will see my answers to questions other investors like you are asking. In fact, you will get virtually all the investment advice I have to give. You will have access to all of our advisories – The Successful Investor, Wall Street Stock Forecaster, Stock Pickers Digest and Canadian Wealth Advisor – and full access to the members-only, password-protected Inner Circle section of The Successful Investor Network website. Although my team carefully researches all the stocks that members ask about, I personally review each and every recommendation. To ensure this close personal attention, only a limited number of members can be admitted to our Inner Circle. Under the pressure of world events, even more investors are asking for my personal investment advice. We are nearing our membership limit already. Click here to secure your membership in the Inner Circle right away. Future problems can’t all be foreseen The one advantage you get with a prepaid funeral is that you fix the cost. However, it’s easy to spot a number of disadvantages For instance, you don’t get any return on the money you’ve paid, though the funeral home (or the insurer) may hold your money for decades. Depending on the plan, you may be stuck with your initial choice of funeral home, even if its service has deteriorated. You may also be stuck with your initial funeral plan, even if it’s hopelessly out of date in relation to community standards or the personal circumstances of you or your survivors Knowing that you are largely a captive customer, the funeral home may drive a harder bargain on related services than it would if it had to win your business as a new customer. Don’t count on a predictable pattern of funeral costs When you’re making a major purchase, it’s best to look beyond what it says in the marketing brochure. Remember, common sense alone can only take you so far. You need to base common-sense decisions on all available common knowledge. For instance, even if funeral costs have doubled every 10 years over the past 30 years, the rise may be due to special factors It may partly reflect the rising disposable income of the past 30 years. It may reflect a change in the ethnic mix — some nationalities prefer more elaborate funerals than others. It may reflect rising costs due to environmental regulations, or rising labour costs due to a shortage of qualified personnel. These and other cost-boosting factors may not all apply equally in the future, or at all. Some may reverse Before you prepay for a funeral, ask yourself if you’d buy other sorts of fixed-return investments from the same company, such as a long-term bond. If you can’t depend on the company to do something as simple as repay a loan, then why trust it to carry out your last wishes?