Is preplanning and prepaying a good idea?

gravesite
@TonyTheTigersSon via Twenty20

Generally speaking, a basic funeral fee includes planning, transportation of the body, embalming and other care, the casket, use of the funeral home and all the paperwork like the death certificate. An average funeral costs around $9,150, but it can be as little as $1,000 or as much as $20,000, according to Canadian provider Dignity Memorial.

Planning for and prepaying your funeral — as strange as it may seem — can allow you to lock in a price for something there’s no doubt you’ll need eventually. Those caskets, urns and related expenses could be a lot pricier down the road.

Just four years ago, the CEO of Basic Funerals pegged the average cost of a funeral in Canada at around $8,500.

It’s not easy to come up with that kind of money suddenly — especially these days, when so many people are out of work due to the pandemic, or are just getting back on their feet and trying to save or pay down debt.

The downsides of preplanning

Canadian money in the black wallet
Janusz Pienkowski / Shutterstock

It doesn’t always make sense to pay ahead, according to the U.S. nonprofit Funeral Consumers Alliance.

Your survivors may not understand a contract you've made with a funeral provider — or even be aware of them.

If you do decide to prepay, the Alliance recommends making sure your plan allows for a full refund or one with little or no penalty if you need to cancel. Make sure you're also covered by an insurance policy in case the funeral home you've made your arrangements with ever goes out of business or files for bankruptcy.

And if you’ve purchased funeral insurance, the money should be transferable to another funeral establishment should you move, change your mind or the company closes. If you do transfer your funds, however, the new funeral home is not obligated to honor the prices you were originally quoted.

Nontraditional funerals have also been gaining momentum. “Green” funerals or natural burial options incorporate things like biodegradable caskets and fewer chemicals used in preparing a body for burial. It's possible your end-of-life preferences might change in the years before your death.

Some diving into difficult topics, others ducking

grieving
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While COVID has spurred more Canadians to have difficult conversations about end-of-life or estate planning, many people are still determined to avoid them, according to a recent survey from funeral provider Arbor Memorial.

Nearly a quarter of those surveyed said they would rather clean their bathroom than complete their will, and 36% would rather organize their desk. Creating a legal will often takes less than an hour and is an important first step in ensuring your estate lands in the right hands when you're gone.

But Arbor Memorial says including your wishes in your will isn't enough because those documents are typically only read after your funeral. Preplanning not only saves your family members money and stress while they're grieving but also offers an opportunity to ensure your final wishes are carried out exactly.

What else can you do to prepare yourself and your loved ones?

Preplanning your funeral is sort of like buying life insurance. Nobody wants to do it, but it pays off handsomely for your loved ones. And it’s easy these days to get a free life insurance quote in minutes.

If you already have life insurance, the next important end-of-life step is sketching out a plan for your retirement.

You’ll want to enjoy that retirement as long as you can. So once you've set up an RRSP and feel confident in your savings and investments, consider speaking to a financial advisor to make sure you really have the funds you need to have all the fun you're planning.

About the Author

Nancy Sarnoff

Nancy Sarnoff

Senior Reporter/Editor

Nancy Sarnoff is a senior reporter and editor at MoneyWise. Previously, she covered commercial and residential real estate for the Houston Chronicle where she also hosted Looped In, a podcast about the region’s growth, development and economy. Her work has been recognized by the National Association of Real Estate Editors and the Society of American Business Editors and Writers.

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