Funding and Insurance Questions

Start with the plan, then the money

What you want and how you pay for it are two separate decisions. Knowing roughly what your wishes would cost (see how funeral prices work) makes it easier to judge whether a policy or plan fits them.

Ways people fund a funeral ahead of time

A prepaid (preneed) plan with a funeral home

You arrange and pay for specific services now. In Utah, these plans are regulated by state law and funded through a trust or an insurance policy. See how prepaid funeral plans work.

Prepaid funeral insurance (preneed insurance)

One way a preneed plan is funded: your payments buy a policy that pays the funeral home named in the contract.

Life insurance, including burial or final expense insurance

Pays the beneficiary you name, who can use it for the funeral or anything else. It doesn’t choose a funeral home or lock prices. Ask whether the policy has a waiting period, sometimes called a graded benefit, before the full amount is paid.

Savings set aside

Money in an account your family can reach. Ask your bank how the account would pass at your death.

If you’re counting on life insurance

The policy terms, the owner, and the named beneficiary decide who gets the money and when. The funeral home isn’t paid automatically; the beneficiary files a claim, and some funeral homes accept an assignment of the benefit. Make sure your beneficiary knows the policy exists and where it is. See insurance and benefits after a death.

Questions to ask about any plan or policy

1. Who owns the policy or account?
2. Who receives the money?
3. How much is actually meant for funeral expenses?
4. What happens if funeral costs rise?
5. What happens if I move or change funeral homes?
6. What fees, waiting periods, or cancellation charges apply?
7. What is guaranteed, and what is only estimated?

Are prepaid funeral expenses tax deductible?

Not on a personal income tax return. The IRS says funeral expenses can’t be deducted on the final income tax return of the person who died. They may be deductible on a federal estate tax return (Form 706), which only larger estates file. A tax professional can tell you whether that applies.

Before you sign

Read the actual contract or policy, not only the brochure. Keep a copy with your important papers and tell your family it exists. For advice on your own situation, talk with a licensed insurance professional or financial advisor. The Utah Insurance Department licenses insurers and agents and takes consumer complaints.