Plan Your Final Wishes

Smart Planning of Your Final Wishes

Robert had recently retired and his wife Ruth, still worked part time. They were empty-nesters with several children and grandchildren living nearby.

Even with retirement savings and other money put aside for rainy days, they were both concerned with the cost of a funeral. Robert no longer had the group insurance he had with his employer and each of them had a small whole life insurance policy which wouldn't be enough if something were to happen to either of them.

Another concern was not knowing the first thing about funeral planning, or pre-need planning. Fortunately, Robert and Ruth found a site online which helps people plan their final wishes, what to include with a plan, and how the plan should be used when the need arises. They even found answers to the cost of a funeral and a list of reputable local funeral homes.

They spoke with an independent insurance agent who first told them about the FTC Funeral Rule. The Funeral Rule, enforced by the Federal Trade Commission (FTC), makes it possible for you to choose only those goods and services you want or need and to pay only for those you select, whether you are making arrangements when a death occurs or in advance. The FTC funeral rule is also specific about consumer rights when it comes to arranging a funeral:

A funeral director MUST provide price information over the phone and funeral homes must have written, itemized price list including casket prices. 

A funeral home MUST provide a written statement after you decide on what you want but before you pay.

A funeral provider cannot refuse to handle a casket or urn you bought online, at a local casket store, or somewhere else — or charge you a fee to do it. 

The funeral home cannot require you to be there when the casket or urn is delivered to them.

The insurance agent saved Robert and Ruth a significant amount of money just from knowing this.

Now that they knew to have a written plan for their final wishes, Robert and Ruth spoke to the same insurance agent about options to cover the costs of a funeral.

Option 1: Pre-pay and pre-plan with a local funeral director. A funeral home could set them up with a limited-pay plan. Essentially, it's whole life insurance. The problem is the funeral home is the beneficiary and they will keep every dollar which may be left over.

Option 2: Set up an Irrevocable Funeral Trust. A trust is a legal agreement in which an individual (called the Trustmaker or Grantor) sets aside a certain amount of money for a specific purpose or person. In this case, the purpose of the trust is for funeral and burial costs. In creating this type of trust, the money set aside is no longer considered to belong to the Trustmaker, provided the trust is “irrevocable”.  Irrevocable means the trust cannot be changed, reversed, or dissolved for any reason.This would help them protect money from Medicaid spend down. The drawback is they couldn't touch that money for any other reason.

Option 3: Take out a "guaranteed acceptance" whole life insurance plan like Colonial Penn, TruStage, or Gerber Life. They could not be turned down....but their premiums would be high.

Option 4: Apply for medically-underwritten whole life insurance through their independent agent's website. Since Robert and Ruth had only minor health matters, it should be easy to find an insurer that will accept them.....at a much lower premium.

Options 3 and 4 are both whole life insurance plans which feature the same guarantees: a fixed premium and a fixed benefit.

That was just the thing Robert and Ruth wanted to know which provided them, and all their kids and grandkids, with peace of mind.