Preneed Funeral Insurance: Everything You Need to Know

Shawn Plummer

CEO, The Annuity Expert

When someone dies, their loved ones are often left with the burden of organizing and paying for the funeral. This process can be difficult and expensive, especially if the deceased did not have life insurance. One way to help ease the financial burden of funeral expenses is to purchase preneed funeral insurance. This guide will discuss everything you need to know about preneed funeral insurance!

What is Preneed Funeral Insurance?

Preneed funeral insurance is a type of insurance policy that covers the expenses of a funeral, burial, or cremation. This type of insurance is designed to help individuals and their loved ones prepare for end-of-life expenses and avoid financial hardship. Preneed funeral insurance is typically purchased from a funeral home, although some insurance companies also offer this type of policy.


The funeral home typically sells life insurance policies to people who are not insured. The funeral home gets a commission for selling the policy.

Preneed Funeral Insurance

Benefits of Preneed Funeral Insurance

There are several benefits to purchasing preneed funeral insurance, including:

  • Peace of mind: Preneed funeral insurance can provide peace of mind for the policyholder and their loved ones. Knowing that funeral expenses are covered in advance can alleviate the stress and financial burden of funeral planning.
  • Fixed costs: Preneed funeral insurance guarantees that funeral expenses will be covered at a fixed rate, even if the cost of funeral services increases in the future.
  • Flexibility: Preneed funeral insurance policies can be customized to meet the individual needs and preferences of the policyholder. This means that policyholders can choose the type of funeral service they want and their preferred funeral home.
  • Transferable: Preneed funeral insurance policies are typically transferable, meaning that if the policyholder moves to another state, the policy can be transferred to a new funeral home.

Top Preneed Insurance Companies

There are several preneed insurance companies to choose from, each with its benefits and drawbacks. Here are some of the top preneed insurance companies:

  • Assurant: Assurant is a well-known insurance company that offers preneed funeral insurance policies. Their policies are customizable, and policyholders can choose their preferred funeral home.
  • National Guardian Life Insurance Company: National Guardian Life Insurance Company is a top-rated preneed insurance company that offers policies with fixed costs and customizable options.
  • Forethought Life Insurance Company: Forethought Life Insurance Company offers preneed funeral insurance policies with transferable benefits and guaranteed costs.
  • Homesteaders Life Company: Homesteaders Life Company is a preneed insurance company that offers customizable policies with fixed rates and flexible payment options.
  • Physicians Mutual: Physicians Mutual is a preneed insurance company that offers customizable policies with guaranteed costs and transferable benefits.
Preneed Insurance Companies

Preneed Insurance Policy Options

There are several preneed insurance policy options to choose from, each with its own set of benefits and drawbacks. Here are some of the most common preneed insurance policy options:

  • Preneed Burial Insurance: Preneed burial insurance is a type of insurance policy that covers the cost of a funeral and burial. This policy typically covers funeral expenses, including the casket or urn, burial plot, and grave marker.
  • Preneed Life Insurance: Preneed life insurance is a type of insurance policy that provides coverage for funeral expenses after the policyholder passes away. This policy can cover funeral expenses, including the funeral service cost, casket or urn, and burial or cremation.
  • Preneed Plans: Preneed plans are preneed insurance policies allowing the policyholder to plan their funeral. These plans can be customized to meet the individual needs and preferences of the policyholder. They can cover various funeral expenses, including caskets, urns, burial plots, and funeral services.

Selecting the Right Preneed Insurance Policy

When selecting a preneed insurance policy, it is essential to consider several factors, including:

  • Fixed Costs: Look for a policy with guaranteed or fixed costs to ensure that the funeral expenses will be covered at a set rate, regardless of future cost increases.
  • Customization: Consider policies that can be customized to meet your needs and preferences. Look for policies that allow you to choose the type of funeral service you want, the funeral home you prefer, and the type of burial or cremation you want.
  • Transferability: Look for transferable policies so that if you move to a different state, the policy can be transferred to a new funeral home.
  • Financial Strength: Look for policies from companies with a solid financial rating and a good reputation for customer service. Consider checking independent rating agencies like A.M. Best to evaluate the insurance company’s financial strength.

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Frequently Asked Questions

What is a Preneed insurance policy?

Have you ever heard of preneed insurance? It is a form of permanent life insurance, burial, or funeral insurance. With it, one can pay in advance for the expenses associated with their passing away, such as funeral services and cremation/burial costs.

What does preneed funeral mean?

The funeral industry has a unique way of expressing its services: \”preneed \” and \”pre-arrangement.” In brief, preneed is the payment for your own or someone else’s funeral before death. To acquire any say in this matter, it should be done before passing away. Pre-arranging funerals can also be used instead of preneed; however, you don’t necessarily have to pay beforehand when doing so.

Can you use life insurance before your dead?

You can tap into your funds before you pass away, allowing you to use this capital now and not later.

What are pre-paid funeral plans?

Pre-paid funeral plans allow you to cover some of your final expenses, such as hiring a funeral director and caring for the deceased. In July 2022, the Financial Conduct Authority (FCA) will regulate all pre-paid plan providers, ensuring your money is safe and secure. This way, you can have peace of mind knowing that when it’s time to say goodbye to those essential in your life, financial matters don’t need to add extra stress or worry.

What is the main difference between pre-funded and pre-planned funeral arrangements?

Planning a funeral ahead of time involves deciding the service components, such as music, readings, and burial options. It is often seen as part of one’s estate planning process. Pre-funding means setting aside money to cover funeral costs for when that day comes in the future.

What are the types of Preneed insurance?

Before deciding how to cover preneed expenses, seeking advice from an attorney and Medicare or Medicaid (if applicable) is wise. Life insurance, funeral insurance, and bank-held trusts/savings accounts are among the various payment approaches.

*Disclosure: Some of the links in this guide may be affiliate links. I may receive a commission at no cost to you if you purchase a policy. It helps us keep the lights on!

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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