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"Preplanning a funeral is truly a gift to your family. But if you prepay, it's a gift to the funeral home." Ramsey believes that, if a person has the financial means to prepay funeral expenses, it is a better idea to put the money into an investment account and see it grow.
We don't recommend prepaying unless you must do so to qualify for Medicaid. But if you are committed to prepaying, be sure: Your money is secure, such as in a federally-insured bank. Funeral insurance plans are not as tightly regulated, so take extra caution.
For example, if the fund has less money than total funeral costs at the time of your death, your family will need to pay the difference (by the same , any excess funds are returned to your next of kin and can be used however they see fit).
If you prepay for your services, you're locking in today's price for tomorrow's rates. However, some funeral homes don't factor inflation, so before you sign anything, make sure to ask if the payment you're making is for a fixed price. Otherwise, your family may be hit with unexpected charges after you pass.
Pre-paid funeral plans provide a way for people to pay for their funeral arrangements before they pass. It's for people who want to spare their loved ones from having to make decisions and experience financial stress while grieving.