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September 7, 2022
5 Disadvantages of Prepaid Funerals

5 Disadvantages of Prepaid Funerals

As we get older, the financial burden of our funeral becomes more of a priority. One potential option is pre-paying for your funeral directly to the funeral home you intend to use for your future service.

While dealing with a funeral home might seem like a good idea at first, there are some disadvantages.

Today, we’re going to explore 5 major disadvantages that may come from prepaying for your memorial service directly with the funeral home.

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Reason #1: Lack of Flexibility

Prepaying directly with a funeral home restricts your future funeral flexibility.

If you move before you die, you won’t be able to transfer that prepaid funeral to a new location.

Many funeral homes are independently owned or operate as a regional organization. If you move after prepaying for your funeral costs, you are already locked into a location in your old hometown.

When exploring your end-of-life event options, having the ability to work with your lifestyle is important. If you prepare too soon, you may be limiting your options and end up leaving you and your loved ones dissatisfied with your funeral location.

Reason #2: It’s a Big Bet on an Uncertain Future

When you choose to prepay for your funeral costs with a private funeral home, you’re putting a big bet on an uncertain future. That’s because by paying ahead of time, you’re betting that business will still be around years or decades later when you need it.  

Unfortunately, funeral home closures are not that unusual. According to the National Funeral Directors Association, over a thousand funeral homes have closed in the last decade.

In the event of your selected home closing, you can get your prepaid service refunded. However, this can become a surprisingly difficult process, and finding alternative arrangements can become difficult and expensive.  

Reason #3: You Might Need That Money Before You Die

Prepaying for your funeral costs early might be putting the cart before the horse.

Prepayment means those funds are not usable for any other potential expenses that might come before your funeral, such as changes to cashflow or unexpected costs.

It might be nice to know your funeral is completely covered; however, if the payment costs affect the way you live your life, it’s not worth it.

Reason #4: Prices Can Change, Especially for Add-On Services

Prepaying for your funeral may not actually cover all your funeral costs. That’s because there are many different fees and additional service items that can be added to your total cost that you may not know about upfront.

A great example of that is live streaming. A few years ago, the idea of people watching a loved one’s funeral on the internet would have seemed wild. However, this is a service that many funeral homes now offer, especially after pandemic restrictions caused families to find new avenues to mourn together.  

Vendor fees for things like florists, price changes due to inflation, and other so-called hidden fees may also apply. When you have additional funeral costs, those surprise fees fall on your family. That means prepayment through the funeral home might not adequately cover the costs of your funeral.  

Reason #5: No Formal Protections

An important thing to know about funeral prepayment directly with funeral homes is that your transaction has no formal protections. There are no formal protections for self-funded funeral payments at the state level, and they do not typically fall under FTC protection.  

On the other hand, life insurance products offer legal protection on a state and federal level. When making serious financial decisions like this, you want your funds protected.

What To Do Instead

If you want to be prepare for future funeral and burial costs, the most obvious option is final expense insurance. These are life insurance plans designed specifically to cover the costs of funerals and other common final expenses in life.

Final expense plans have a death benefit that's designed to cover the various costs of a funeral or memorial service. These costs could include:

  • Funeral director fees
  • Funeral location and staffing costs
  • Casket costs
  • Burial or cremation fees
  • Embalmment costs
  • Obituary fees
  • Additional costs for add-on or supplementary services

Final expense plans vary in total payout based on plans, with many plans offering coverage beyond the total costs of the average American funeral. That means additional funds to help your family take care of any other costs you may leave behind, such as medical costs.

With a variety of affordable plan options available, you can find a plan that works for you.  

  • Want to learn more about final expense and funeral planning? Check out our previous blog post that goes into those topics in more detail.  


Prepaying for your funeral directly to the funeral home may not be a sound financial option. Not only does it have significant disadvantages, but it may also cost you more money in the long run. Instead, we advise our clients to consider adding a final expense insurance plan.

Final expense insurance plans are affordable, with set monthly premiums that won’t surprise you with any hidden fees or take away money you might need. They offer you flexibility to have your memorial service where and how you want without locational limitations. And with a larger fund, inflation or additional fees won’t become a financial burden for your family.

Want to talk about your final expense possibilities? Reach out to a member of our team for a free quote to explore your death benefit options. And don't forget to download your free funeral planner!

Luke Hockaday
Luke Hockaday
Luke Hockaday is a Customer Success Rep here at Senior Allies. Luke has been helping Medicare-eligible clients with their insurance and retirement-planning needs since 2011. Luke is passionate about 3 things, and 3 things only: senior insurance, football, and food!

Create My End-of-Life Funeral Plan

What songs should play at your funeral? What memory is most important to you? What years did you serve in the military? Write it all down today.

Get My Planner
Create My End-of-Life Funeral Plan

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