Our aim is not to disparage the death care industry but rather to educate the public as to their rights, options, and resources. Hopefully you will gain some valuable insights and learn to protect your family's assets when the time comes, and it will come...................................................
Payment Options
Funerals are, by and large, expensive. We have allowed the industry to goad us into frills and flourishes which contribute little, yet cost much. Having to finance one suddenly can be a burden that many, perhaps most, families are unprepared to face. Not coincidentally, there is often a windfall of money at this time, in the form of life insurance proceeds, so families tend to consider that money 'going away' funds. The industry preys on this feeling that, since it was money the deceased arranged for to help 'put him away', every last dime should be spent on that event!
The fact is, life insurance was never intended to be sucked up on a fancy funeral, but rather as a hedge against disaster for the survivors. Now that funerals routinely run up to, and over, $10,000 ... the funeral itself can BE the disaster! Hence this BLOG, so let's look at the options for paying funeral expenses.
For more information on how much funerals the average funeral usually costs, click on the blue title following:
Just how much does a funeral really cost?
Credit?
NOT! There are absolutely no funeral homes that operate or finances with legitimate credit. The word credit is only used when it is followed with the word, "CARD".
CAUTION! There are a lot of new options being offered to funeral homes by unscrupulous companies that are run by the same guys that ran the "PAYDAY ADVANCE" stores. The interest rates are unreal, in the hundreds of percentages over the service cost. Stay away from them, do not even consider using this type of funeral funding. Once they real you in then you are REALLY encouraged to really rack & stack it up and spend on something that is outside of your budget. If you use a funeral home that offers this type of assistance, MOVE ON! This is probably a very questionable facility that is making very bad business choices by using a company such as this to entice the consumer.
THEY DO NOT CARE ABOUT YOU OR YOUR GRIEF!
THE "SIGN OVER" - Another thing that some facilities do is offer you to "sign over" your car, house, jewelry, property, stocks, bonds etc. as collateral, Stay away from these options and those facilities. They will make more off of you than the service was worth. assigning all kinds of "fees" Any funeral establishment that does that is not worth staying at. The chances are and they are betting that if you do not have the funding now, you will never have it and those things you signed over to them will eventually be theirs. Most of the times facilities that due this have a variety of different vehicles in their parking lott and are making more money on their ill gotten loot than they are the business profits. Be very weary if they mention that they can "have their attorney do up the documents............" You are not the first. Establishments such as this are referred by friends that are unaware of who they are recommending and the damage that can be done.
Cash/Check/Credit Cards
Yes, there are some folks who can simply stroke a check for funeral expenses. Oddly enough, it isn't the idle rich who get nailed with expensive funerals, as they are more inclined to have simple ceremonies following a 'family-only' direct burial or cremation. Look to ritzy Scottsdale for instance, where wealth is a foregone conclusion, and you'll see that over 70% elect cremation. The big-dollar funeral is a blue-collar phenomenon, which is to say ... most of us. Sociologists would have a field day explaining why this is, but survey after survey has proven it true. So, for most of us, ready cash is simply not an option.
Credit cards, however, MAY be an option and even a good one at times. Virtually all funeral homes now accept credit cards, and if you've checked your mail lately you know credit card companies are hungry for business. And, with some of the competitive rates available today, you might well want to put funeral costs on a credit card -- say at its 'introductory rate' of 0%-9%, rather than leave a balance on the books at the funeral home (which charges 12% or more APR on any outstanding balance) while waiting for the insurance proceeds to arrive. This is also a good way to keep your insurance benefits out of the hands of the death industry.
Insurance Death Benefits - Assignments
This is a common way of handling expenses, it is very legitimate and a tricky one if you don't understand how it works. What happens is, you bring the deceased's insurance policy with you, the funeral director calls the company to make certain it is still in force and will pay a benefit, then you (the beneficiary named in the policy) sign forms granting the funeral director all or a portion of those benefits.
This is where it can get tricky, you should never sign away any more than the good-faith estimate provided by the funeral (on the contract) . Funeral directors sometimes want to take control of the entire death benefit, then keep their portion and return the rest ... if any ... to you. DON'T LET THEM DO THIS!
A CORPORATE PRACTICE - You may encounter this ploy, particularly if you let the funeral home handle the cemetery fees as well. Say you get a bill for $8,600 and the itemized bill for the funeral portion is only $4750, what do you know about the rest of the charges? Nothing! Since cemeteries are not regulated by federal law, or required to furnish detailed lists of charges , the funeral director can simply list Cemetery Costs -- $3,850 and leave it to you to ferret out what it was all for. If this sounds like an invitation to abuse and over-charging congratulations, you're learning. Handle the cemetery yourself, preferably in advance, and with the minimum allowable outer container. If you are forced into a position were you must fund through the funeral home, ask to see a copy of the itemized contract from the cemetery. You should get one anyways if you are using an off site mortuary from the cemetery.
If you choose to assign a policy because you have no other way to finance/fund the service, remember, the assignment company AND the funeral home are going to have their "fees" added to the total cost, traditionally it is around 5% for each ones fees, if you are charged more, consider another facility. REMEMBER! The more you assign the insurance policy, the more you are going to pay out to the funeral home for those "FEES".
For more information on using life insurance to pay for a funeral click on the following link and read:
"I thoght I was going to get somthing back from that $10,000 Insurance policy"
Pre-Payment Plans (AKA Pre-Needs)
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| Are They? |
Good intentions by you, Bad management by them -These sound like a good idea, but rarely are the way they are operated by the funeral industry. They hype the peace-of-mind that comes from knowing your family will not have to shoulder a financial burden when you die, yet very rarely follow through on that. It is a rare pre-paid funeral that includes all costs, with the family typically having to pony-up an additional $1,000, $2,000, or more. It is also rare for a payment plan offered by a funeral home to be anything more than reselling an existing product with an extra layer of profit thrown in. For your best value, get your insurance from an insurance company and cut out the 'middle man'.
A built-in problem with all funeral expenses, and what drives prices into the ludicrous range, is what is known as 'up-selling', and this is due to funeral sales people (laughingly referred to as 'Grief Counselors' in the trade though they cause more grief than they help with) being paid commissions on their sales. It is not uncommon for these sales folks, and cemetery sales personnel as well, to call up their elderly customers who have pre-paid for goods and services and, under the ruse of updating their computers or whatever, get them to come by to verify information. Then they are hit with a hard-sell to upgrade their goods and services. One sales person told us he closes over 40% of these calls.
STORY TIME - An extreme example of up-selling occurred in Florida a while back and made the news again recently, wherein an SCI-owned funeral home had up-sold an elderly lady funeral goods and services totaling $136,000! The victim of this is still alive, living in a nursing home, and largely oblivious to what had happened to her. The family sued, SCI settled out of court for an undisclosed amount, and hopefully folks who read the Associated Press account are a bit wiser.
NOTE - NEVER, EVER SIGN OR AGREE TO A PRE-NEED PLAN/CONTRACT THAT IS ITEMIZED WITH THE WORD OR WORDING "INCLUDED" WHERE THERE SHOULD BE A SPECIFIC MONETARY AMOUNT!
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| "The Affordable Funeral" |
Now on to the various pre-need/pre-purchase plans. The book, "
The Affordable Funeral" goes into detail on these plans, with a break-down of the common ploys, half-truths, and outright lies associated with them, and you are well advised to read up on any plan before you buy, and for certain if you have already bought one . . . to learn what it is you actually purchased. For our purposes here, we'll look at the typical plans offered.
NOTE- Any Pre-Need insurance plan or trust can be used at any funeral home anywhere. It is up to the funeral home that you are presenting it to if they will accept it for all the services selected or written into the plan. Most will take it. They will not turn down an opportunity to earn money, even just a little. So if you see an add in the paper that says, "Will accept other Pre-Needs from other funeral homes", ask them if they will give you everything the other location will for the pre-need price. If they say no, move on. (this is misrepresentation tactic to get you in the door) You can find a place that will take your pre -need as is, and honor it. Also, if you have a Pre-need that you got at another facility that you feel you paid to much for, consider approaching a more affordable location and have it rewritten there, you may be surprised that you will have a refund coming. The Corporate funeral Pre-need program writes alarmingly pricey plans, consider using any pricey pre-need plan at a more affordable location and you will "probably" get some of it refunded.
1. Insurance-based Plans
Quick, would you go to a McDonalds to buy a pizza? No? Then why on earth would you buy an insurance policy from a funeral director? (I provide policies at my funeral home, some families still want them) Typically these policies are little more than a policy offered by another company, to which the funeral director adds additional premiums, names himself as beneficiary, or buys at a discount.
Be wary of those that offer 'coverage to anyone up to 80 years of age!' or something similar. Odds are there are restrictive clauses that will limit the actual pay-out of these policies for several years, and perhaps forever. If you are paying premiums and only stand to get back the total of those premiums, you are just giving someone else money to invest for their futures, not yours.
So, you may be asking, what should one do? Simple: go to the source. If you want an insurance plan to cover your burial expenses, call your insurance agent or broker and add to an existing policy or buy one for enough to cover expenses. Realize that funeral costs historically escalate at a rate nearly triple inflation, so don't settle for what it would take to handle things today, pad it and hope for the best.
2. Trust-based Pre-Payment Plans
TRUST is a great word. You see it on coins, investment companies, and banks. It has a solid feel to it, and that is the intention, to make you ... well ... trust whoever wants your business. Funeral directors love trusts as a prepayment instrument for several reasons. First, they are easy to sell because they sound like a great deal. You pay in money, the money goes on deposit in an interest-bearing account, and when your time comes, voila! the trust is there to defray funeral costs. That's how it looks on the surface anyway. Now for the bad news.
In many states, not all the money you pay in actually goes into an interest-bearing account. In fact, in some states as little as 60% is required to be put on deposit, plus the funeral director is allowed to keep 10% or more as 'Administrative Fees', so now you're down to perhaps 50% of your money actually working for you. The rest is working for the funeral director. Add to this the fine print which may say the funeral director can keep 30% or so of the total paid in, should you decide to cancel the program and 'cash out' the trust, and you'll see that perhaps the funeral home sold trusts are not much good. They certainly bear looking into in any event, and having someone knowledgeable go over it with you ... other than whoever is trying to sell it to you.
Another built-in problem is continuing payments. There may be a clause to the effect that, should you miss three payments in a row, the trust can be locked, with the interest accrued or even the principal going to pay the funeral home's 'administration fees'. A recent case in Virginia points out what CAN happen, and often does.
ANOTHER GOOD STORY - A family lost their father, who died at a nursing home after three years as a resident there. They made the obligatory trips to the funeral home, to pick out the casket, floral sprays, burial vault, etc ... and to the cemetery to arrange for the burial. At both stops they were gratified to see on the 'good faith' estimates no totals, but rather the words "Pre-Paid" written in pen across the balance block. Then came the bad news.
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| Bla, Bla, Bla, Business as usual... |
At 9:30 the morning of the funeral, which was scheduled for 11:30, the funeral home called to say there was a problem and could family members please come immediately. Turns out, according to their records, that the deceased had not made a payment on his pre-payment plan since 1990, the year he had suffered a stroke and lost many abilities! Since the deceased had already been placed in an up-scale casket (the model the deceased had picked out), they had no choice but to buy it. They managed to scale back a bit on services not yet rendered, but still left the funeral home with a bill for over $6,000 and NO MONEY in the trust to help pay it. Then, upon arriving back home, they found a message to call the cemetery and found the same situation there. Oh, and perhaps not coincidentally, both the cemetery and the funeral home are owned by the same giant corporation! The family is considering a law suit, and we wish them luck.
3. Totten Trust (Bank Trust)
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| This is the one that will work for you.... |
So, is there anything we DO recommend? Yes, the Totten Trust. Most funeral homes hate these, They make no money off of them and have little leverage control over the family, you can use them anywhere and the funeral home that was "considered" when writing it wont know. They do not add to the value of the funeral home.
'This is a simple little account you set up with your bank. You pay money in, 100% of it goes on deposit and you get to keep ALL the interest accrued. Should you decide at a later date that you prefer cremation, you can draw the money out . . . all of it if you like . . . with no penalty. Should death occur, the family controls all the money in the trust, including any left over after funeral expenses are paid. Talk with your family bank and/or lawyer on how to set one of these up.
A word of caution, often the 'demonstration' the funeral home gives you on their trust-based program will show an average earnings of several percentage points MORE than you'll get with a Totten Trust through a bank. Don't be fooled by this. Consider that perhaps only 50% of your money will actually be earning interest, and the 'administrative fees' will likely be based on what you have paid into the trust PLUS interest earned and at the end of the year, with the funeral home plan. Taking these into account, plus the 30% forfeiture should you cancel the account or become unable to make the payments, the Totten Trust will likely be your best buy.
Desperate Sources and Resources
It is a fact (A VERY UNFORTUNATE FACT) of life that some people will die without sufficient resources for funeral expenses. Any funeral society anticipates this, to some degree, so most major cities set aside a budget for the burial of indigents, homeless, or basically poor individuals. This is the indigent burial program in Maricopa County, the deceased is placed at the White Tanks Cemetery near Litchfield Park. You must qualify to be placed with this program.. Likewise, MediCare/MedicAid has provisions and programs in place to assist qualified individuals in getting a decent burial. Some churches have funds for this, and there's the other programs with the Salvation Army and certain Indian tribes assist those within their tribe. Ask around at your city and state government offices, as well as churches to see if such funds are available if you have need for them.
HEY! Lets look at Direct Cremation..
Concerned? We should be, REMEMBER! Direct Cremation was meant to be a VERY affordable way for those that have little to handle the final arrangements of the deceased, IT WAS NOT MEANT TO COST thousands of dollars for such a simple procedure. Shop around.
The greater Phoenix Area offers a variety of facilities that provide cremation services for under $800. Avenidas Funeral Chapel, Abels Funeral Services, Angels Cremation and Burial, Harper funeral home, Eastlake Mortuary. These are but a few, and a vast majority of these facilities use the same crematorium. Please shop around.
We wish you the best of luck and encourage your desire to further educate yourself with the funeral industry, its laws, and what is, and is not considered fair businesses practices to you, the consumer.
Miguel legaspi
I take great pride when I sit with a family and feel very good to be able to tell them that they will be getting over $6,600 back to assist them during this time. Families just cant believe that. It puts a little smile on their face during a difficult time.
I take great pride when I sit with a family and feel very good to be able to tell them that they will be getting over $6,600 back to assist them during this time. Families just cant believe that. It puts a little smile on their face during a difficult time.
