It is a fact of life that inflation affects everything; home costs, automobile purchases, and even funerals. Though we strive to keep cost increases to a minimum each year, it will make an impact many years down the road. We realize that making funeral arrangements is not something you do every day, so when you do have such an experience, it can seem overwhelming. That is why we developed our Advance Planning Program. In addition to the many reasons why it is important to make plans ahead of time, there are just as many reasons why you should consider prepaying as well. We are aware that there is more and more information available today regarding preplanning, life insurance and social security benefits, but oftentimes the information that you get, especially on television, can be misleading and confusing because it is not directly from professionals in our field. In an effort to serve you better, we have addressed below the differences between the various funding options that, when properly arranged, can guarantee funeral home costs against inflation forever.
These kinds of accounts are traditionally set-up with established trust companies who work widely with funeral homes and in strict compliance with state regulations. They are FDIC insured and are designed to keep pace with inflation. Funeral trusts may also be set up as “qualified” for special tax considerations by the federal government. There are two types of trust accounts for the purposes of funeral prepayment: Irrevocable and Revocable.
- Irrevocable: These accounts include deposits that are held under a written trust agreement in which the owner gives up all rights to cancel the trust or insurance when initiated by the purchaser. Regarding prepaid funerals in the state of Arizona, they are primarily used when applying for Title 19 (AHCCCS/Medicaid) during the asset spend down period. Neither the state of Arizona, nor the creator and the creator’s family, are allowed to touch the money. It remains in the trust or insurance policy for the purpose as stated in the written contract with the funeral home. Funeral Home guarantees apply if the funeral chosen is paid-in-full, and falls within the limits that the state of Arizona has established.
- Revocable: These accounts are opened with the intention that the funds belong to one or more named beneficiaries upon the death of the owner. Regarding prepaid funerals in the State of Arizona, they may be challenged (considered an asset) if applying for Title 19. When setting-up this kind of account for Title 19, it must be done properly and only certain items can go into this type of account. Interest earned on these types of accounts is usually taxable, unless it is in an insurance funded account like the ones Mountain View Funeral Home offers. Revocable accounts can be cancelled and revoked, but that would make any funeral home guarantees null and void and there are additional rules that apply if the account owner is on state aid.
Not all funeral homes offer insurance as a payment option for pre-arrangements. Our licensing and education enables us to offer certain types of special insurance policies that are designed to keep pace with inflation. They are not your traditional insurance policies that have a fixed death benefit that never increases, and you don’t need to purchase “units” of coverage. These policies have a 30 day free trial, are tax-free, transferable to any funeral home if you ever move, and can be set-up to be protected from the Title 19 (AHCCCS/Medicaid) spend down.
There are a few options with these types of policies.
- Single payment: You make one payment that matches your selected funeral arrangements. This will guarantee your funeral home costs against inflation and your survivors will never need to make another payment.
- Monthly payment: Like traditional insurance, there are payment options available. Unlike some traditional insurance policies that you may be familiar with, you only make the monthly premium payment for 3, 5, 7, or 10 years. You choose which plan is best for you according to your age. You will not only guarantee the funeral costs against inflation with these plans, but you also have the chance to have an affordable monthly premium payment with insurance protection built right in.
Insurance offered through National Guardian Life Company