Financial planning beyond 401ks: Don’t forget advance funeral planning
Learn the importance and value of having your affairs in order with advance funeral planning
If you’re like most people, you want to be prepared for your future in any way possible. People begin financial planning for their future from as early as around 18 years old, when some enter the workforce full time. This type of financial planning often takes the form of a 401k plan. While having a plan to save money for retirement is a very smart thing to do, other types of financial planning should also be considered. Having your affairs in order is one of the most important steps to financial planning, and one way this can be done is through advance funeral planning.
What is advance funeral planning?
Advance funeral planning involves preplanning your funeral to arrange the type of service you want and how the costs will be covered.
Advance funeral planning makes sense for a variety of reasons. Having your affairs in order will also help ease the financial and emotional burden on your loved ones during an already difficult time after you pass. Through advance funeral planning, you can prevent others from overspending on your funeral. After the death of a loved one, people tend to be emotional. This emotion often causes them to purchase items or services that they might not otherwise if the funeral had been planned out ahead of time.
According to Kenn Peterson, Great Western Insurance Company (GWIC®) vice president of national sales – preneed, another benefit of advance funeral planning is the ability to lock in current prices for your future needs. Many funeral homes will offer you the prices of their products and services at the time you met with them, so inflation won’t cause your funeral costs to increase when the time comes.
Advance funeral planning may seem overwhelming to handle on your own, especially when you consider how senior life insurance needs change as you age. This is why GWIC offers a funeral planning guide to help you decide how you want to be remembered and other helpful resources on Preneed Funeral insurance.
How financial planning can help pay for a funeral
GWIC’s Voyage Preneed plan is an advance funeral insurance plan that stands out from others, says Peterson. The plan has a return of premium feature in which the entire premium amount is returned as the death benefit. Essentially, this means that every dollar paid into the premium will be paid back out to the beneficiary. Voyage also offers options to make periodic payments or pay all at once, and the Preneed Funeral insurance plan is transferrable if you decide to move.
Perhaps the most significant difference between Voyage and other Preneed plans is the growth rate of return of the plan. After a death, three categories are analyzed to determine how much money will be returned to the beneficiaries:
- The total premiums that were paid
- The initial face amount with a simple growth rate
- The initial face amount with a compound growth rate
The beneficiaries will be granted money in the amount of the highest-value category. For example:
“Just recently, we fulfilled a Preneed plan that was written in September 2012 for $8,200. When the customer passed away in March 2020, the death benefit was $13,572. It grew $5,300 in eight years. In the past, we had entertained the idea of using other products, but nothing can compete with GWIC’s Voyage plan,” said Kevin Wetzel of Memorial Park Funeral Homes in Gainesville, Georgia.
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