How do prepaid cremations work?
Is there an insurance policy involved in prepaid cremations? If so who is the beneficiary? How do they work?
Expert Answer
Prepaid cremation costs will vary according to your location, the goods/services included, and the crematory or funeral home's policies. There could be an insurance policy involved, and with it an 'exclusionary period'. Typically, the longer the pay-in period (and lower the installments) the longer the exclusionary period to cover the crematory (or funeral home) should the insured die prior to paying in full. During this period, let's say two years for example, the benefit paid would be something like the sum of installments paid plus a percentage (10% is common) paid toward the agreed-upon price of the cremation. Like many prepayment plans, the crematory or funeral home will likely be the beneficiary if an insurance policy is involved.
These plans are a great way to take the pressure off your loved ones, and often a very affordable way to go about it. At the very least a prepaid plan (funeral OR cremation) lets the family know what you wanted, and that alone makes it worth doing; sparing them from having to wonder if they guessed correctly.