Pre-arranged Funerals

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Funerals can be quite costly. According to the speaker, 10 years ago an “average” same-day (visitation and funeral) service would cost under $5,000, including a medium grade casket but excluding cemetery plot and fees. The same funeral now would cost over $9,000, nearly doubling in 10 years. If you choose a quality casket, that alone could cost over $10,000. The trend is expected to continue. To lock in the cost at current rates, a consumer can enter into a pre-arranged plan with a funeral home, paying up-front either in full, or by installments over a period of time. In return, the funeral home guarantees to provide the agreed service at the contracted price at anytime in the future.

In Ontario, for consumer protection the price paid is actually held in trust by the Board of Funeral Services, and only released to the funeral home at the time of the funeral. This provides protection in the event the funeral home goes out of business, as the family can shop other funeral homes with the funds held in trust.

At the core the plan consists of an insurance contract, where for a series of monthly premium payments a certain lump sum (future value) is available to pay for the funeral. Is it worth it? There are pros and cons, which you can easily research on the internet. My initial reaction as a former financial consultant is to “do it yourself”. Salespeople used to offer us whole life insurance policies, and my typical response then was I’ll buy the cheaper term insurance and invest the difference. If you have self-discipline, you can set aside that lump sum or monthly payment yourself, preferably in a tax-free savings account (TFSA), towards the cost of the funeral. You will have more flexibility as to how you want to invest that money before it is called upon for its intended use. And you can still pre-plan your funeral the way you like it and put it in writing, so that your final wishes are carried out.

One side note is that the death certificate issued by the funeral home is good generally only in Canada. If your deceased loved one has assets outside of Canada, you will need a certified copy of the official death certificate signed by the doctor for settling the estate or insurance claims. For that you have to apply online at ServicesOntario:

Hope you find the above useful when that difficult time comes.

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