A Word from Marq

I currently represent funeral home providers in Edmonton, but I have also worked for and with other funeral homes in Alberta.
I also act as a consultant and community liason for anyone who needs help understanding how to plan for the eventuality of death and funeral services.
After 20 years, I know the difficulty that some people have understanding the way funeral homes operate, new regulations, what Funeral Homes offer as well as what and how to choose the right one.
This blog is for you. I have access to all funeral home information and will gladly help guide you in your decisions. It is a big one…choose wisely.
I also offer workshops in the Edmonton and surrounding areas to interested parties so if you need a speaker, feel free to contact me!

Compile Your Family History for Your Family Memories

Friday, March 9, 2012

Prepaid Cremation and Funeral Plans

When it comes to prepaying for funeral plans you have a few questions that you have to ask and things you need to take into consideration.

First and foremost....You can call any funeral home and request that they create a file for you without prepaying.  You are under no obligation to pay and should not feel pressure to purchase. 

All the same rules apply for choosing a funeral home when you are looking to prepay.

  • Visit the funeral home of choice...Don't just call for prices!
  • Get recommendation from people who have used the funeral home in the past
  • Ensure you are comfortable with the Directors and staff as these are the same people who will be in service at your time of need.
  • Ensure you are completely clear on all your options and the Director is clear about prices now AND in the future.
Marq' Advice

In Alberta, the Alberta Regulatory Board also monitors prepayment and how funds are protected.  For the most part, you should have no fear in securing your funeral/cremation plans by paying in advance.

Most of the funeral homes in Alberta use Insurance funded agreements.  These are very secure as these funds are also protected by Assuris and therefore your funds are completely protected in the case of the Insurance company defaulting or going bankrupt.  If in fact the funeral home has financial difficulties, your funds are not wrapped up in their business, your funds are with the Insurance company.  If you move or wish to transfer your plan to another funeral home, this can also be facilitated. 
One note of caution here though....you may have to pay more at the other funeral home because their prices will not have been guaranteed under your plan....only the funds.  Most funeral homes are more than fair when it comes to transfers...after all they are in the business to serve their families of the respective communities.

If you enter into an agreement with a funeral home you will have a few payment choices...paying in full, paying over one year and then over a period of years usually up to 15 years.

You will pay more for the 3-15 year plans however, that is not interest or carrying charges....it is guaranteeing the cost of your funeral and insuring your life.  That means that if a death occurs prior to that policy being paid in full, your plan will be paid to the funeral home by the Insurance company....your family will not have to pay the balance.  This is not the case on the one year plan.  With that plan, you will not have insurance and if a death occurs, in this case, your estate will be responsible to pay the balance, less any payments or interest already accrued.

Most Funeral Homes/Insurance policies offer an early pay with no penalty.  With some, you can even cancel your policy, get all your money plus interest back with no penalty.  You have to remember one thing...this is an insurance policy and if you are on a monthly plan, they will probably deduct the insurance for that time frame.  In this way, it is like any other insurance policy and the funeral home has no control over the funds. Check with your funeral home to find out how it would be handled with them.

Under Regulatory Board rules, in Alberta you have 30 days to cancel an agreement without penalty.  This is considered a free look or cooling off period and is designed so you are not pressured into an agreement and have the time to talk to family and ensure you are completely satisfied with your decision.

There is one funeral home that is taking a different spin on this by making you the beneficiary of the policy and not guaranteeing costs.  Like other funeral homes, you will enter into an insurance funded product but instead of the funeral home being able to access the funds, you will have to apply and then pay the funeral home. The also charge a 250 dollar administration fee up front that will be used against your final arrangements if you use them, if you don't then you forfeit the money. Another risk is if they go out of business or you move, you have no way to recover that money either.

Funeral home plans are insurance guaranteed, you can get your money at anytime with a letter submitted to the insurance provider. The funding is there so the funeral home can access the funds immediately upon the death of the person who holds the agreement. They are the beneficiary ONLY if you use them for the services agreed to.  At all times this is your money.

In most cases with funeral homes guaranteeing their costs at the time of purchase, you are protected by inflation and the funeral home bears ALL the risk.  Under law, they MUST provide those services EXACTLY as stated (or replacement of merchandise to the inflated value) no matter what growth your policy has seen.  Each policy on its own may or may not reach the proper growth to cover costs, that is why they retain the funds at the time of death.  Some funeral service providers do refund any overages above their current retail costs at the time of death; they have that prerogative.  You have to assess your risk.

Although a non-guaranteed plan would seem great as you retain all the growth, that only works one way, you also will be responsible if the growth does not meet the retail costs of the funeral home and therefore your estate or family would have to pay that at the time of need..You have to discuss this with your funeral home representative.

I would be very cautious of a funeral home not guaranteeing the costs because telling your family you have everything paid for them and then upon your death they are told to pay additional funds at the time of death could cause additional stress. If this is the route you take then you MUST make your family understand that this is not guaranteed and they could be responsible for payment at need.

I also want to caution you on funeral service providers who offer exceptionally low costs for service.
That might be fine for an at need situation but for prepaying, it can pose a risk as they may not be retain enough revenue to sustain the business for many years.  If they do go out of business, then you will be forced to retain another funeral home for your services. They in turn would be forced to charge you more to meet their current prices.  This is not why people pre-plan and prepay.

Choose a funeral home that has a good standing in the community and has a reputation for fairness and quality.... and like everything else...get a second opinion.  This is a purchase that can really affect your family, so take your time and choose wisely.

Yes, it sounds a little complicated and some have tried to muddy the waters, but it is a good deal and the premiums are fairly small so this is one way to lock in the cost of your funeral, pay over a period of time and ensure that your family has peace of mind.

There are several payment options available and every funeral home has their own way of handling this as well as who they have chosen for an Insurance provider so again.....talk to them and understand EXACTLY what they are offering before committing. Beware of additional charges that are not covered like after hours/holiday transfers and services etc.  Read the fine print and ask questions.

If you have questions, you can always call me and I will help you understand this better. I have reviewed many policies and plans for families.

Prepaying for your funeral is going to help your family because the funds are IMMEDIATELY available to the funeral home so there is no need to worry about how to pay or who will pay.
A regular Insurance policy will take 3-7 days if not longer to be processed so at the time of need, someone will have to pay and then get the money later from the Insurance provider
I have Insurance on  my life to pay bills and look after taxes etc at the time of my death AND a funeral policy that will look after that for my daughter.  This way I have her protected on all fronts.  Most time people forget about the tax implications and a big tax bill for RRSP's or RRIF's can be an unwelcome shock to families, especially in today's economy.

There are many variables here to be aware of and to fully understand this you have to talk to your funeral home of choice and make sure you fully understand everything they offer and that it meets your needs.

A last note...cemeteries are much different so much of this will not apply.  There are municipal, church and private cemeteries and all of them operate a little differently, so again.....Visit, Talk, Understand.

For more information on all things funeral Click here