What Is Pre-Need Insurance? Definition

Why it matters

Pre-need plans can lock in services, but they are less flexible than a regular life insurance policy. If the family moves or changes plans, the benefit may not transfer easily or may be refunded only in part. State laws govern how pre-need money is held, often in trusts or insurance policies. The FTC Funeral Rule applies to funeral providers. Ask what happens if the funeral home closes, if you move, or if you cancel.

Source: consumer.ftc.gov

Where we use this term

Burial insurance: is it different from final expense, and is it worth it?

Related terms

Burial Insurance: Burial insurance is a common name for small whole life policies that pay for burial, funeral, and related costs. The term is used the same way as final expense insurance. The benefit goes to a named beneficiary.
Funeral Insurance: Funeral insurance is a popular name for a life insurance policy bought to pay funeral costs. It is usually a small whole life policy that pays a cash benefit to a beneficiary, not to a funeral home.
Pre-Need Funeral Contract: A pre-need funeral contract is an agreement to pay for funeral goods and services in advance. The money may be held in a trust or backed by an insurance policy.
Funeral Trust: A funeral trust is an arrangement in which money is set aside with a trustee to pay for funeral costs later. State law sets rules for how the funds are held and used.
Funeral Costs: Funeral costs are the expenses for a funeral or other final arrangements, such as services, a casket or urn, a burial plot or cremation, and transport. Prices vary widely by provider and location.

All 241 terms

Why it matters

Where we use this term

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