Pre-Pay Options
Pre-Pay or Save?
When it comes to covering end-of-life costs, you have two main choices: pre-paying a provider or saving the funds yourself. Pre-paying means someone else holds your money—usually a funeral home or insurance company. Saving means you (or your bank) control it.
In most cases, saving (with clear instructions) is safer and more flexible than pre-paying. Funeral homes can close, paperwork can get lost, and families may have trouble accessing funds when needed. Banks and credit unions remain the most secure places to keep your money set aside for final expenses.
Below are common ways to plan financially—along with what can go wrong and what to consider before committing.
Pre-Pay Plans
Terms can vary, so understand the details before signing anything.
Paying a Funeral Home IN ADVANCE of Your Demise
You pay a funeral home directly for selected services before death.
PROs
- Lets you decide exactly what you want.
- May qualify as a Medicaid spend-down (up to your state’s limit).
CONs
- Funds may be lost if the funeral home misuses them or goes out of business.
- Plans often cannot be transferred if you die elsewhere.
- Changes or refunds are rarely allowed.
- Prices may not be guaranteed, leaving survivors to pay more later.
- Funds are not tax deductible, and paperwork can get misplaced.
Paying a Funeral Home With a REVOCABLE Trust
Money is held in an interest-bearing account managed by the funeral home.
PROs
- You can cancel or change the plan and receive funds back (minus fees).
- Earns modest interest.
CONs
- Does not qualify for Medicaid exclusion.
- Administrative fees often exceed interest earned.
- Vulnerable to misuse or business closure.
- May not cover full costs if prices rise or you die far from the chosen provider.
Paying a Funeral Home With an IRREVOCABLE Trust
Money is locked in an interest-bearing account that cannot be changed.
PROs
- Qualifies for Medicaid exclusion (up to your state’s limit).
- Earns interest and secures your chosen services.
CONs
- Cannot be altered or canceled.
- Still subject to fees, business failure, and lost paperwork.
- Funds are inaccessible for other needs, like medical bills.
Buying a Burial/Funeral Insurance Policy
An insurance policy specifically intended to cover funeral and related costs.
PROs
- May cover all expenses.
- Beneficiaries can use funds at any provider.
CONs
- Policy lapses if premiums aren’t paid.
- Beneficiaries can spend the money on anything.
- Long-term payments may exceed the benefit.
Buying a Life Insurance Policy
Money is locked in an interest-bearing account that cannot be changed.
PROs
CONs
Savings Plans
Joint Savings Accounts
A shared account giving another person full access to funds.
PROs
- Simple and immediate—available at any bank or credit union.
- Co-owner can access funds instantly after your death.
CONs
- Co-owner has full access while you’re alive.
- Funds can be used for purposes other than your wishes.
Payable On Death (POD) Savings Accounts
An account that releases funds to a named beneficiary after death.
PROs
- Easy to set up and available at most banks.
- Beneficiary gains access only after death.
- Avoids probate.
CONs
- Access steps vary by institution but are generally simpler than probate.
- Beneficiary can still use funds however they choose.