Pre-Funded Insurance FAQ
What’s the difference between a traditional life insurance policy and preneed funeral/burial insurance? Traditional life insurance is intended to provide for a broad range of your survivors’ future financial needs, such as providing income, covering education costs, or paying off a mortgage. Preneed funeral/burial insurance is specifically intended to cover only the predetermined expenses of a funeral, cremation or burial. Preneed funeral/burial insurance may be payable immediately to the beneficiary (generally the funeral home) upon the policyholder’s death.
Purchasing an irrevocable funeral/burial insurance policy allows an applicant to pay in advance for an expensive item which they or their family will have to pay for eventually and by doing so they reduce their countable assets and can qualify for Medicaid. An irrevocable funeral trust, because it is a trust and irrevocable, is not counted as an asset by Medicaid. Nor does its purchase violate the 60-month asset transfer rule for Medical Assistance.
What is preplanning for my funeral like? Funeral preplanning or prearranging consists of meeting with a Wenner Funeral Home preplanning professional here at our Cold Spring, MN location or at another location of your preference to document the type of funeral or cremation service you desire, including the type of casket, concrete vault or cremation urn. We can be as general or as detailed as you would like to be, and include as many participants in the arrangements as you would like. Once your funeral prearrangements are made, you may choose to set money aside with our licensed insurance agent so that your money can accumulate interest and be kept secured until your time of death.
How much does preneed funeral/burial insurance cost? That depends on the cost of the merchandise and services you select for your funeral during the preplanning process. You can set up a policy to pay for all or some of the good and services or choose to pay for them all. As for your insurance payments, you can make a single premium payment and owe nothing further or you can choose a plan that provides insurance coverage while you make payments over several years. You may also choose to have the monthly payments withdrawn from your checking or savings account automatically.
Are there tax issues with preneed insurance? As a general rule, preneed funeral/burial insurance benefits are paid in a lump sum at funeral home and have no tax consequences to you or your family. However, please consult with your tax advisor.
Where does my money go? Premiums are paid to our partnered mutal life insurance & annuity company and are used to pay expenses and establish reserves, which are used to pay future claims benefits as they come due. The death benefit is designed to grow over time to help cover the rising cost of funerals. At the time of death, the death benefit is paid to the funeral home after the funeral home delivers the merchandise and services. Any remaining money is then paid back to the estate of the decedent.
What if I just want to set aside funds for my funeral expenses? I’m not ready to select a specific funeral home or funeral service. Final expense insurance plans are available for this type of coverage. You can choose any amount of money to be paid to your beneficiary at the time of your death. You may specifically designate this money to help pay for your funeral arrangements or expenses related to death, whatever they may be.
Can I change my mind after prearranging my funeral services? We keep your records on file here at the funeral home so that you can call us anytime to make changes or set further meetings with us to go over new options.
Can my prearranged funeral contract be transferred if I move? Yes, simply notify Wenner Funeral Home or the insurance company directly either before or at the time of death of your wishes. Our policies are made out to "Wenner Funeral Home or any other funeral home as its interest may appear". At the time of death, the insurance company will pay the funeral home that performs the services.
How do I file a claim and how long does it take? To file a claim, your family simply needs to contact the funeral home that performs the funeral services. The funeral home will handle all of the paperwork and correspondence with the insurance company. The claim is processed and a check may be mailed or electronically transferred to the funeral provider within 5 days of receiving all of the required documentation.