My Mother started prepaying her funeral expenses in early 2013 so that it would be covered & it not be a burden on me. She recently mentioned while discussing her finances and ways how she could cut back on expenses, which is nearly impossible when you’re down to basics while only receiving Social Security, that she was still paying her prepaid funeral expense. Well, needless to say, being a Corporate Tax Accountant for a Bank and not wanting anyone to take advantage of my Mother, I asked for her documentation.
She had a long trusted Rabbi go with her to the funeral home to discuss her options, I’m not blaming any Clergy since they are there for guidance & support. It’s the funeral homes & the insurance companies that hold the policies that I don’t trust. Funeral homes take major advantage of charging people way too much during their most vulnerable state, either from losing a loved one & scrambling to pay or for products & services in general.
While having your prepaid funeral expenses is a great option, just be sure you understand the amounts involved, if you’re not good with math, take someone you trust who is, especially since the whole ordeal is very intimidating & emotional.
While calculating Mom’s numbers, I also Googled Prepaid Funeral Expense Fraud, it’s shocking to say the least. I checked the Better Business Bureau’s site www.bbb.org, on the funeral home she went to, which had no complaints, but the insurance company involved had numerous.
The main director at the funeral home, which the name is currently withheld, came off to me as being too much of a people pleaser but also sneaky about the prepaid option. On the contract that she signed in 2013, the amount was for approximately $8,000, with the option to pay in monthly installments ranging from 5 to 20 years, she had to choose the 20 year option since it was the lowest of $60 a month, not even thinking about totally up amounts because she trusted the funeral director. He should have known how to split everything out. Plus, he said that if she were to die tomorrow, the contract would be paid in full & no other expenses would be accrued.
A month ago when we met with them, they called the insurance company for the payoff amount, which was around $3,000.
Ok, math time.
8000 divided by 60 = 133 (estimated) months
133 months divided by 12 (12 months in one year) = roughly 11 years
Another way of calculating:
60 times 12 (1 year) = 720
720 a year times 11 years = 7920 (technically under the 8000 amount)
Balance Remaining = 3000
3000 divide by 48 (4 years) = 62.50 (estimated monthly payment)
Now, according to both mine & the insurance company’s amounts are about $600 off, of course theirs being higher, her account should be paid off in 4 more years, which she wants me to wait to see if they stop the automatic payments at that time, but 4 years is a long time & I’ve already started this crusade on social media in order to help other people.
I’m just concerned that she will still be charged the $60 a month for another 9 years because her contract stated that amount for 20 years, which will total to over $14,000.
She never received any kind of statement of her account balance since it was initiated, but hopefully she will now receive them every quarter, but her daughter is not letting it go. However, upon request, the statement she did recently receive did not contain the revolving balance, only the dates & payment amounts.
Another miscommunication is that when we were at the funeral home a month ago, they asked for the payoff balance, so now the insurance company thinks that is what we want, NO, we just wanted to know the balance in general.
In conclusion, yes, prepaid funeral expenses are a great option, just be sure that there is someone who knows numbers that you trust and will also receive any documentation on your contract for your behalf, so that they know that your last wishes have been taken care of. Everyone’s needs are different, please do your research.
As for me personally, if I do prepay for my own last expenses, it will be paid off at that time & not carry a balance, for mine will be simple, to be cremated, with my ashes split in half into separate urns, each to be buried with my parents in different states.
*Note* – When my Mom was at my apartment for Thanksgiving, she had given me all of her insurance documentation so that I can scan them into my computer for if or when I need them, in the mix was the Prepaid Funeral documentation from the above referenced insurance provider, which she didn’t realize that she had received since it was with her life insurance stuff. It stated that there was a 8% annual interest rate of the actual “loan” amount of $5013.60, however they did not include an interest table involved but alot of numbers that would confuse anyone, so what it basically comes down to is that she is paying $39.27 interest every month, which is included in the $60.16. So, when I asked the guy at the funeral home if there was interest, he said no, he was either lying or doesn’t even have a clue of how it all works, however he personally gave me a sneaky son of a bitch feeling.
