Thursday, July 18, 2013

You Just Got Schooled. In Dying.

I find I'm losing patience when it comes to common sense.  Well to be more to the point I'm getting fed up with listening to ignorant people offer up an opinion on a subject they can only speculate on or know absolutely nothing about!  I don't ever offer my opinion about what's right and wrong about a subject I honestly know only snippets (if even that) about.  However, I've read a few 'articles' recently relating to the death care industry about the high, exorbitant costs to die as well as the downside to pre-arranging ones funeral.  I don't think I'm being extreme here when I speculate that likely 10 out of 10 of those times the opinions are offered up by someone completely removed from the funeral industry (maybe they had to arrange a funeral ONCE) or a very disgruntled former funeral director ("who all of a sudden got a conscience?"  Puh-lease!).  So here is a little bit of my opinion on a subject I actually know TONS about, since I live it every day.  Of course I'll probably only skim the surface so if you have read this and have ANY question about the industry at all, please leave it for me in the comments.

Okay, lets take a gander at a situation that has occurred in Nova Scotia (I'll speak mainly from a Canadian standpoint because well...that's where I live and work.  Seems like a good enough reason.).  The actual article is linked up there in the sentence above if you want to make yourself more familiar with the circumstances (it's not long), but I'm just going to zero in on the comments made about the negatives of pre-arranging.

Here's a quick synopsis:
The couple interviewed for this article invested $10,000 (five thousand for each of them) into a CO-OP Funeral Home (pretty much a first of its kind, hence an experimental endeavor/investment) that has since gone belly up.  They, at the time of their investment chose NOT to pre-fund their funeral expenses/plans but rather were relying on the shareholder agreement that upon their death the money they each invested would be refunded back to them to cover the majority of their funeral expenses on top of a 30% discount.

Are we clear on what I just wrote?  Maybe this will help, so lets say their funeral upon their demise would cost $10,000 just to make the numbers easy...they would get 30% off, so that takes them down to $7,000 and then the $5,000 they invested would be returned back to offset the remaining costs, so now their estate just owes $2,000 for the funeral.  Simple right?  Yup!  Provided the Co-op Funeral Home was managed properly and was making money.  Unfortunately that was not the case and they have since gone into receivership and all the investors are out their initial investment.  Recently, the Co-op Funeral Home was sold to another funeral director who already runs four other funeral homes within this Region.  He has AGREED (though he most certainly didn't need to) to offer the investors who did NOT pre-pay their funerals a 35% discount and of course for those that were smart enough to pre-pay their arrangements, their contracts will be honoured completely.

So what have we learned from this dear friends and readers?  Well I'll sum it up for you in a couple sentences.  Investing is risky.  Entering into a legal binding contract (such as a pre-arranged funeral agreement) is safe.

Now lets look at a couple of the ignorant comments that readers of this article felt they needed to share. One suggested that a pre-arranged funeral is similar to buying extended warranties which end up being, frankly, worthless (in his opinion).  Except that a pre-funded funeral is legally guaranteed and protected financially, by the governing bodies of all funeral homes (if the funds are mishandled).  Which basically means that the consumer is protected 100% of the time.  There is also no time limit on pre-paid funerals.  You don't have to die before you are 75 to get it (like term life insurance), you don't have to use it within 5 years (like car warranties), it doesn't matter if you die from an accident, suicide, murder, natural causes, an undiagnosed illness, etc., there will not be some loop hole you have to dance through to get it (again, like life insurance). You just simply have to die!  It really is that easy.  AND, holy shit are you ready for this?  It can be transferred to any other funeral home, like anywhere!  Whoa!  So if you move, you aren't tied to that original location.

Another reader followed up with, "Why bother paying everything years or even decades before your death when you could be investing the money and making a profit?  There will always be cash when you keel over to put you in the ground in some manner."   Oh you stupid, ignorant man (I don't really know that it's a man, I'm just presuming.).  Let me educate you a little.  Funeral costs tend to double every 10 years.  So again, for the ease of math, lets say the average cost to die is currently $10,000 (I can assure you this number is not the real average for a funeral in Canada, it's actually much lower - but that's an entirely new blog post).  That means, for those of you who failed math, that in as little as 10 years (I know I plan to still be around in 10 years, don't know about you.) the same funeral will be more like $20,000.  If you pre-funded your funeral when it cost $10,000 in 20 years you/your estate will have only paid $10,000.  But for Joe Blow who thought pre-arranging was dumb, he's gonna pay $30,000 for the same thing!  Who's dumb now Joe??

You know how that works?  It is because once you pay for your arrangements the prices get LOCKED in at today's costs and your money is invested in an account/policy in your name until the services are rendered.  The funeral home doesn't get the money until you die.  The reason funeral homes practice this is because it secures future business.  The interest that accumulates (and it's quite small) on your invested money is used to offset the rising costs of funerals.  That being said though, if there is excess money in the invested funds than what the funeral costs at the time of death the excess is refunded back to the estate.  On the other hand (which happens more often than not) if the funds come up short, the funeral home absorbs the costs and the estate is not asked to pay anything more on what was pre-funded originally.  Why would a funeral home do this you ask?  Cost of doing business and a chance they are willing to take.  They would rather take a $1000 hit than not do the business at all.

Now since I mentioned the constant increase in funeral expenses, does your life insurance pay-out also increase every ten years to cover these rising costs?  Nope!  Not ever.  So I've heard the old rebuttal of "my insurance will cover my expenses" many times, but if you only have an $8,000 policy it won't (Remember folks, if you make it past 75 years, your term life is kaput)!  Or, the longer you live the less you are leaving for your family after they pay your expenses.  Also, did you know that most funeral homes require a substantial payment up front at the time of your death as a deposit or to cover their out of pocket disbursements they'll conveniently make on your behalf?  Not all do, but most.  It's a sound business practice.  (You wouldn't drive a car for a month before you paid, or use your fridge for three weeks before you paid.)  So who's going to have that extra cash laying around to put out until your insurance money comes in?  If it's pre-paid, the funeral home works directly with the investment company to secure their guaranteed funds. One less thing for your family or executor to worry about.

I am also eager to challenge the comment about there "always being cash around when you keel over to put you in the ground in some manner."  I call complete and utter bullshit!  In today's economic times and the high costs for EVERYTHING, not just dying, more and more people are dying without funds to bury themselves.  More and more pressure is being put on our Regions and tax payers to cover these expenses and more and more funeral homes are taking a great loss on these funerals because the Region will not pay the full expenses.  The funeral homes absorb the remainder of the cost.  A thankless gesture I might add.

You will die.  There is no debate or refusal allowed on your part.  Like it or not, it's really the only guarantee in life.  I can choose to skip out on paying my taxes, I can continue to evade the IRS, but I will die. Eventually.   When my time comes I can choose to sponge off the system (and there are a lot of people out there who are completely okay with this option - they are pieces of shit.  Don't get me wrong there are lots of people who have no other option and I can, 100% of the time, get behind the Region paying for those particular people.), I can leave my family to struggle with what to do with me and come up with the money to cover the costs, or I can prepare for the inevitable and pre-arrange and pre-fund my own wishes.

Funeral homes have made it so much easier to complete this task too.  You can pre-pay it all at once, over 1 year, 3 years, 5 years, 10 years, 15 years or 20 years.  And if you choose to pre-pay over time and come into a windfall of money, you can pay the remaining off.  But aside from that, just another snippet of information....most of the investment carriers work it similar to an insurance product.  For example, if you make your first payment and unexpectedly die, you are covered 100% completely the amount you pre-arranged.  Doesn't matter that you only made one payment.  Your estate is covered.  In the worse case scenario and you have an existing (existing at the TIME of arrangements not at some point during the payment period) terminal (long term or short term) condition, you only need to make it two years into your payment plan before that same scenario works for you.  So if you have a pre-existing condition and you live two years + a day into your 20 year payment plan and you die around the 5 year mark, the rest is paid off for you.  Extra win now!   Oh pre-arrangements you are so terrible, bad and wrong!  (I'm being sarcastic!)

I could go on for 10 more paragraphs on the many other emotional reasons one should pre-arrange and pre-fund their own funeral but I mainly just wanted to tackle the financial naysayers.  Now of course, I work in this industry so I'm more educated on the benefits of pre-arranging, but I have actually pre-funded my wishes, Eric's and both Gage and Roan's wishes.  I am walking the walk, not just preaching the benefits. A small payment comes out of my bank account every month, just like my RRSP's, my Life Insurance payment, my Car Insurance payment, my Mortgage and Home Insurance can see where I'm going here right?  It's totally feasible and responsible!  You can play devils advocate in whatever warped way you can find to twist this and suggest I'm pro pre-arranging because funeral services is what I do for a living, and while that is partially true, I preach it because it makes sense!  Stop sticking your head in the ground and pretending the inevitable outcome doesn't exist.  But more importantly be educated.  Don't listen to the naysayers if they don't have a clue what they are talking about.  Ask a professional.  No funeral home will charge you to ask questions and get information. And if they do, walk away, you do NOT want to deal with them.

So friends and readers, if you are sitting on the fence, jump off and get'er done.  If you were ignorant, consider yourself more informed.  If you were a naysayer, I hope I've educated you.  Do the right thing, don't leave it for someone else to clean up.

Got more questions that I haven't covered, feel free to ask away.  I'm an open book but if I don't know the answer, I'll find it.


  1. That's why I want a green burial (no embalming...don't let funeral directors tell you that it's is NOT). Read the wonderful book GRAVE MATTERS by Mark Harris to understand more about the green burial movement. It is so much cheaper and easier, an none of the nonsense that funeral homes put you through.

    1. I'm not sure where you live, but here in Canada in the Region where I live there are no Green Cemeteries as of yet. They are in the process of creating one in our Region but by law you still need a funeral home to fulfill the wishes.

      Embalming is not required by law and I don't know any funeral director's personally (I know a lot) who would tell you it is. Again, this falls under the comment, Educate yourself. There are however many 'green' options available that include 'embalming' in a green way with no formaldehyde. It's more a very short term non chemical way of preserving the body. Obviously you won't get the same time frame should you have people traveling in from far distances who want to say their final goodbyes, but it's an option if you want a more Earth friendly choice, but still want to do the 'ritual'.

      I'm confused on what you mean by the nonsense that funeral homes put people through though.

    2. Funeral homes can take advantage of people financially and emotionally at times. I always tell people to educate themselves, too. Caskets can cost a tremendous amount of money, as do the vaults and the opening/closing of plots. Here in the States, you can perform home funerals (wakes are still practiced in many parts) and the green movement is catching on. Some funeral homes are embracing it, but not many.

    3. True about many funeral homes not latching on to the Green movement, but in time it will come! Whether they like it or not.

      Also just so you know, vaults aren't required by law in most cemeteries. Some cemeteries depending on the earth quality require them, but those that don't don't tend to offer that information up to the family.

      At the funeral home, I make sure if a vault isn't required by the cemetery that the family knows that information and understands the purpose of the vault and that it's now a family decision if they still want one. That irks me every time I hear about a cemetery withholding that information.

      I can strongly with great belief try to reassure you that the majority of funeral homes do not try to take advantage of people. If we are in this business, it's probably because we genuinely care about helping people and making a difference. There are the odd bad apples of course as in any business.

  2. I did work at a funeral home, but this was before anyone thought of the pre-paid funeral plans. It makes sense if you can go with a reliable company. Actually, my in-laws did this, so when my father-in-law passed it worked perfectly, and now my mom-in-law is 85 and whenever she goes, her funeral will already be paid for. Hopefully she has some years left of course, but we know the service is there when it is needed and that does relieve the family's minds a great deal.

    1. Exactly the reason! Good for your in-laws for being pro-active. I hope she lives another 20 years! :)

  3. Does this apply for cremations as well?

    1. Yes, you can pre-pay your cremation services as well! Hope that is what you were referring to.

  4. Good information everyone needs to have!! Visiting from the Ultimate Blog Challenge!


  5. I am a huge believer in pre-arranging, not only funerals, but everything. I'm glad you wrote this post and I'd love to see another post on the emotional reasons. I know most of them, having been through it myself, but I think it would draw in more attention to such an important, and wise, topic.

    I think I paid around $8,000 for my husbands funeral. Had we not have previously fundraised for a transplant before that, there would have been no way in hell I would have been able to pay for his funeral alone. Don't even get me started on all of the 'other' things one doesn't ever think of. Ugh. Reality is that the money is likely not going to be there to pay for all the expenses. People don't realize the costs of everything until they are faced with the bills. I'm not going to go on and on because I think you covered everything super well. But I am in agreement :)

    1. Thanks Nikki! Unfortunately you had a huge eye opener so young and have been educated in a very unpleasant way. For most it doesn't need to come down to burying someone close to be educated.

      Thanks for your experienced feedback!! Hope you are doing well! :)