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Why Choose a Pre-Need Plan?

More and more people are now realizing that the best financial advice is to have a sound financial and estate plan that takes care of your funeral services, funeral costs and funeral expenses ahead of time. Pre-Need Planning is one of the most common ways to accomplish this type of planning.

A Pre-Need Plan gives your clients the ability to choose their method of disposition, the exact type of services they want, and allows their family to focus more on things such as grieving and recovery. In addition, a Pre-Need Plan is also a good thing because it allows your client to make extremely important decisions through a calm and clear thought process. Emotionally, it is much more likely that someone will create a more rational and logical end-of-life plan when things are done in advance, and in the proper state of mind.

Like so many before us, my family suffered the loss of a loved one in 2008, and we faced the difficult decision of what to do next. Because we were never willing to accept this as a possible outcome, nor did we think about pre-planning a funeral for this incomprehensible loss, we had no idea where to begin or who we could turn to.

Two Critical Pieces of a Sound End-of-Life Plan:

1. Preparing an Estate or Legacy Plan

You might have discussed the estate planning process with your clients, but the sad truth is that approximately 70 percent of Americans die without leaving behind so much as a Will (also known as a Last Will and Testament, which is designed to be the most basic way to describe how they would like to distribute their wealth and other types of assets). So the real question is have you ensured that they’ve properly completed this part of the estate planning process?

Most wills and living trusts are lacking some of the most critical information a family or loved one will need, which is the details regarding their final plans and preferences. The resulting fact is that most families are left to deal with just about every emotional and financial pressure that accompanies planning a funeral including making some of the toughest decisions of their lives and paying for all of the associated costs.

The key foundation to a solid estate plan is learning, choosing, creating, and most importantly, completing a will or living trust. By properly completing one of these all-important documents designed to distribute assets, you have clearly helped your clients and their family take a step in the right direction.

However, as you will see below, there are other important estate planning matters that also need to be addressed.

2. A Pre-Need Plan Documents Your Final Preferences — AND — Prepays Your Funeral Expenses

Similar to planning and preparing your estate plan, another extremely important task is creating a Pre-Need Plan, which specifically addresses, the immediate concerns of your family and your loved ones in advance. In other words, at the time they need this type of advanced planning the most, a Pre-Need Plan is there to provide them with all the final plans and preferences. This even includes using funeral insurance and burial insurance, which are options you can consider to not only plan, but also prepay your funeral expenses.

After losing a loved one, most families find themselves asking questions such as:

• What do we do now?

• Who can we turn to?

• What would they have wanted?

• How will the funeral costs and funeral expenses be paid?

• Was their wish to be buried or cremated?

• What is their preferred final resting place?

• Which church would they prefer?

• Who would they wish to be invited? To speak?

• What kind of memorial service would they have wanted?

In addition, another challenging aspect of planning a funeral is the fact that those responsible for taking care of your final arrangements are forced into making difficult decisions in a timely manner, usually within a few days after your death.

What are the Pros and Cons of a Pre-Need Plan?

When you create an end-of-life plan, which is often referred to as a Pre-Need Plan, it is extremely important that you take the time to fully understand exactly how this funeral pre-planning option works.

It is also equally, if not more important, that you review and understand all of the key advantages and disadvantages of a Pre-Need Plan, especially considering the fact that most families have unique preferences, funeral planning needs, memorial service details, and financial planning circumstances.

Therefore, we cannot stress enough how important it is to not only learn and understand all the facts, but also make sure you work with a qualified professional (most often a local funeral director) to help ensure that you create a smart end-of-life plan that fits you, your clients, and their loved ones in the best possible way.

Pre-Need Plan Advantages

1. It helps to itemize the exact costs of a funeral (including casket, burial vaults, headstones, services of the funeral director and staff, embalming, removal, transportation, preparation of remains, cremation and cremation urns, use of facilities for services and chapel, use of hearse, and many other options).

2. Once someone pre-plans a funeral by choosing and documenting their final plans and preferences, they may also choose to prepay the cost of such a plan, such as your casket, cremation urn, funeral flowers, memorial services, etc.

This is usually accomplished by working with a Qualified Pre-Need Specialist to structure the exact details of what you chose in your Pre-Need Plan as noted above.

3. It is considered to be “inflation-proof” because it establishes a “price-freeze,” which contractually guarantees the total costs of whatever prearranged plan they chose, regardless of any future inflation or funeral price increases.

Pre-Need Plan Disadvantages

1. Unless a single-premium payment is used to fund this Pre-Need Plan, a person must be alive a certain number of years in order for this insurance to fund the entire costs. In other words, if someone chooses to fund this plan over time by using either a payment plan or installments, there is a possibility that their family and/or loved ones could only receive a portion of the funeral or burial insurance. These percentages and details vary depending upon the type of plan and payment methods they choose, their health, and the year someone passes.

2. The total costs of this plan can vary greatly depending on a person’s age, health, and the year in which they pass.

The Overall Benefits of a Pre-Need Plan:

Most financial professionals are beginning to realize that an integral part of a sound financial and estate plan is taking care of your funeral services ahead of time.

Creating a Pre-Need Plan gives your clients the ability to choose their method of disposition, the exact type of services they want, and also takes care of the large majority of their funeral expenses in advance. This offers every client and their family significant advantages since they can now eliminate or minimize the grieving process, many tough choices, as well as unexpected out-of-pocket costs.

So, by working with your clients to create a Pre-Need Plan today, this allows them to make extremely important decisions through a calm and clear thought process.

By preparing such a plan well in advance, it is much more likely that they will create a more rational and logical end-of-life plan. In turn, the memorial service and life tribute can be done in an appropriate way.

Although using a Pre-Need Plan for advanced planning may not fully alleviate the emotional and financial stresses your clients and/or their loved ones will face, this will certainly help them reduce or eliminate most of the stressful decisions, pressures, and expenses, which can only help their families and loved ones ease the pain of a very difficult situation.

About Christopher Hill

Christopher Hill
Christopher P. Hill, RFC® is currently the President of Wealth and Income Group, LLC, with offices located in the Washington, D.C. area. Mr. Hill began the first decade of his career in the financial services industry working closely with one of the nation’s leading money managers. For the past 23 years, Mr. Hill has been a nationally recognized speaker, editor, seminar expert, and MDRT Top of the Table Producer. Mr. Hill also received the IARFC Cato Award in 2008 and 2009 for his contributions to one of the most widely circulated magazines in the financial services industry, “The Register.” After suffering the loss of a close loved one in 2008, Mr. Hill was inspired to create and Today, these family-focused websites are the leading online resource centers to help families and funeral directors make a difficult situation easier, as well as proactively encourage and promote end-of-life celebration planning.

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