Prepaid funeral plans: Smart idea or buyer beware?

Prepaid funeral plans: Smart idea or buyer beware?
One way to save money is to buy something before you need it, before the price goes up. But is that a good way to pay for your funeral?

Many funeral industry marketers hope you'll think so. They have commercials on TV, promotions online and even in the mail. They're all aimed at a lucrative market -- baby boomers and their parents.

According to the most recent data from the National Funeral Directors Association, the average funeral and burial costs more than $6,000. And like everything else, prices are climbing.

So the funeral industry is promoting prepaid funerals as a way to take financial worries out of the equation.

There are some advantages. The money is already set aside when you die, so paying the bill won't be an issue. You can often lock in the cost at current prices. And you eliminate the financial burden for your family.

"But if you prepay, there are a couple of considerations," said Jean Mathisen of Washington AARP in Seattle.

AARP says planning ahead for your funeral eliminates undue stress for your family. But before you pay in advance, ask questions.

"What if the business closes down? What if you leave town?" asked Mathisen.

There are some potential disadvantages. For starters, your money can be tied up without interest.

The funeral home could still hit your family with inflation charges to make up the difference from the price you paid. You may be restricted to a specific cemetery.

The funeral home can go out of business or change hands. A new owner might not honor the prepaid contract.

And families don't always know about your plans, so they duplicate the payment.

"I know of cases where people move to a different area, they had prepaid for plans here. They passed away in the other area. The family buried them and then found evidence of the prepaid plan.

"And when they approached the funeral home in our area to see what could be done since service had already taken place, they were told it was up to them to sell it through want ads or whatever, and that the funeral home would not buy the package back," said Mathisen.

Here in Washington, a non-profit group called The People's Memorial helps you navigate the funeral industry and avoid the confusion and sales pressure. The group also conducts annual price surveys of 170 funeral homes in Central and Western Washington.

More information:

Funerals: A Consumer Guide

2007 Survey of Funeral Home Costs in Washington State

Laws and rules: Funeral directors

AARP: R.I.P. Off

Bill of Rights for Funeral Preplanning