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 Options
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 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
A broader policy that can cover funeral costs and survivor support.
PROS
Provides flexibility and potentially larger benefits.
Beneficiaries choose how and where to use funds.
CONS
Same drawbacks as burial insurance: lapses, misuse, or total premiums exceeding payout.
May be hard to obtain for older adults or those in poor health.
Savings Options (recommended)
Terms vary, so understand the details before signing anything.
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.
Savings Account with Payable on Death (POD) Designation
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.