What Is the Difference Between Pre-Need Plans and Burial Insurance In 2025
Written by Daniel Ray, Life Insurance Expert | ✅ Fact Checked by 
Lisamarie Monaco | Editorial Disclosure Planning for end-of-life expenses is a thoughtful way to alleviate financial burdens on your loved ones. Two common options are pre-need plans vs burial insurance.
Understanding the distinctions between these can help you make an informed decision that aligns with your preferences and financial situation.
What Is Pre-Need Insurance
Pre-need insurance is a type of life insurance policy designed to cover specific funeral and burial costs arranged in advance with a funeral service provider. The policy’s death benefit is paid directly to the funeral home to fund the prearranged services.
What Is Burial Insurance
Burial insurance, also known as final expense insurance, is a life insurance policy intended to cover end-of-life expenses, including funeral costs, medical bills, or other debts. The policy’s death benefit is paid to a beneficiary, who can use the funds at their discretion.
Key Differences Between Pre-Need Plans and Burial Insurance
Pre-Need Insurance vs. Burial Insurance
| Aspect | Pre-Need Insurance | Burial Insurance |
|---|---|---|
| Payment Structure | Typically involves a contract with a specific funeral home, locking in current prices for predetermined services. | Provides a lump-sum benefit to a chosen beneficiary, offering flexibility in how the funds are used. |
| Flexibility | Less flexible; changes to arrangements may be difficult or incur additional costs, especially if you relocate or the funeral home closes. | More flexible; beneficiaries can use the funds for any expenses, and the policy is not tied to a specific service provider. |
| Portability | May not be transferable if you move to a different area or choose a different funeral home. | Fully portable; the policy remains in effect regardless of location changes. |
| Beneficiary | The funeral home is the beneficiary, receiving funds directly to cover the prearranged services. | You designate a beneficiary (e.g., a family member) who receives the funds to manage as needed. |
*Ballpark Quote
Are Pre-Need Burial Plans Worth It
Are pre-need burial policies a good idea? In short, NO! Here is a list of why…
Funeral directors could claim bankruptcy. How will you know that upon your death, the costs have not increased? The money you have pre-paid may not cover all the funeral expenses.
Your family may still have to come out of pocket as there are no guarantees at all.
Most importantly, the funeral home you choose is now your beneficiary. Usually, it is your loved one, spouse, adult children, etc.
Is is safe to Prepay a funeral?
What happens if the funeral home changes owners? What happens if you move out of state? These are just a few of the questions you must ask yourself before signing a pre need contracts with any funeral home.
What Are Pros and Cons of Pre-Need Plans
Pros & Cons of Pre-Need Funeral Insurance
| Pros | Cons |
|---|---|
| Price Lock: Secures current prices for funeral services, potentially saving money if costs rise. | Inflexibility: Difficult to alter plans if circumstances or preferences change. |
| Specific Arrangements: Ensures your exact wishes for funeral services are planned and funded. | Potential Loss of Funds: If the funeral home goes out of business, recovering prepaid funds can be challenging. |
What Are Pros and Cons of Burial Insurance
Pros & Cons of Burial Insurance
| Pros | Cons |
|---|---|
| Flexibility: Beneficiaries can use the death benefit for various expenses, not limited to funeral costs. | Potential Insufficient Coverage: If policy amounts don’t keep pace with rising funeral costs, additional funds may be needed. |
| Simplicity: Generally easier to set up and manage compared to pre-need plans. | Premium Costs: Premiums can be higher based on age and health status at the time of purchase. |
*Ballpark Quote
Is Final Expense Insurance Worth It
Absolutely! When you apply for final expense insurance as opposed to a pre-need burial plan, you are creating protection from the funeral costs on your loved ones at the most emotional and difficult time of their lives.
Preneed insurance vs. final expense insurance policy?
Unlike pre-paid policies, your beneficiary receives the death benefit upon your death. The death benefit will cover all the funeral expenses we have listed above.
There are no limitations, and if there is money left over, that is to do what they wish.
Is It Wise to Prepay Funeral Expenses
Prepaying funeral expenses can provide peace of mind and relieve your family from financial and planning burdens during a difficult time.
However, it’s essential to consider factors such as the financial stability of the funeral home, the flexibility of the plan, and your personal financial situation before committing to a pre-need plan.
Pre-Need Funeral Planning Checklist
What is a pre need insurance arranger?
Some of these funeral expenses include the cemetery plot, your casket, music, flowers, embalming, gravesite, transportation fee and fee changed by the cemetery. It includes hearse or van use, opening the ground, and all burial services.
Pre-Need Funeral Planning Checklist
1. Personal Information & Documentation
- Full legal name
- Social Security number
- Birth certificate location
- Marriage certificate (if applicable)
- Military service records (DD-214 for veterans)
- Will and estate planning documents
- Power of Attorney and healthcare directive
- Contact list of immediate family members and key individuals
2. Funeral Home & Service Arrangements
- Choose a funeral home and director
- Determine burial or cremation preference
- Select a casket, urn, or burial vault
- Choose burial plot or columbarium niche
- Arrange transportation for the deceased and family
- Set up pre-need funeral contract or payment plan
3. Ceremony & Service Preferences
- Type of service (traditional, graveside, memorial, celebration of life)
- Location of the service (church, funeral home, cemetery, other)
- Select an officiant (priest, pastor, celebrant, etc.)
- List of pallbearers (if applicable)
- Music, hymns, or songs selection
- Readings, scriptures, or poems to be included
- Eulogists and speakers
- Floral arrangements and decorations
- Memorial slideshow or tribute video
4. Burial or Cremation Details
- Select cemetery and finalize plot details
- Choose a headstone or grave marker
- Inscription and epitaph preferences
- Cremation service provider (if applicable)
- Ashes storage or scattering location
- Obtain necessary permits for burial or cremation
5. Financial Planning & Pre-Payment
- Funeral insurance policy or final expense insurance
- Pre-paid funeral plan details
- Savings or bank account dedicated to funeral expenses
- Veteran or government benefits eligibility
- Employer or union benefits for funeral assistance
6. Legal & Estate Considerations
- Will and testament finalized
- Executor of the estate designated
- Digital assets and social media accounts handled
- Beneficiaries and financial accounts updated
7. Notifications & Obituary
- Draft an obituary with personal details
- Choose a publication (newspaper, online memorial, social media)
- Notify friends, extended family, and colleagues
- Arrange for thank-you notes for those offering condolences
8. Personal Preferences & Final Wishes
- Clothing for burial or cremation
- Special items to be placed in casket (if desired)
- Charitable donations in lieu of flowers
- Instructions for the reception or gathering
9. Important Contact Information
- Funeral home and director: _______________
- Lawyer or estate planner: _______________
- Executor of the will: _______________
- Cemetery contact: _______________
- Family representative: _______________
Most importantly, why you should avoid the pre-need plan trap. There are more cons than you realize and as a senior specialist, I want to spare you and your family the heartache that I have seen too many times.
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Pre-Need or Final Expense Insurance For My Parents
I get calls daily from clients asking me what is the best option for them to protect their family from the financial burden when their parents pass away.
Although many people think of pre-paid is the right answer, it truly is not.
In fact, prices today are not prices tomorrow. So if you start making payments on a preneed insurance plan and your mom or dad passes away, will you be able to come out of pocket for the rest of the funeral costs?
Sadly, in my experience, most of my clients answer no.
Why should adult children get final expense insurance policies for their parents?
A final expense policy ensures that when your mom or dad passes away, the insurance company cuts you a check for the death benefit within a 24-48 hour period for the face amount.
What Is The Average Cost Of Funeral Insurance
What affects final expense insurance monthly premium cost?
This is a great question. Final expense policy AKA Funeral Insurance is based on your personal profile, age, medical health impairments. current prescriptions you are taking.
Also, keep in mind, these final expense insurance policies are Day One Level Benefits. This is key.
This is what we strive for. We will also ask you a comprehensive series of health and lifestyle questions to determine which type of policy you qualify for.
To give you an idea of cost per month (see below)
Male Burial Insurance Rates
| Age of Applicant | $5,000 | $10,000 | $15,000 |
|---|---|---|---|
| 50 | $15.37 | $27.73 | $40.08 |
| 55 | $18.72 | $34.43 | $50.13 |
| 60 | $22.72 | $42.42 | $62.13 |
| 65 | $28.41 | $53.82 | $79.22 |
| 70 | $36.47 | $69.93 | $103.38 |
| 75 | $50.22 | $97.43 | $144.64 |
| 80 | $71.44 | $139.73 | $207.99 |
| 85 | $97.97 | $192.74 | $287.51 |
| 90 | $176.59 | $350.21 | NA |
Female Burial Insurance Rates
| Age of Applicant | $5,000 | $10,000 | $15,000 |
|---|---|---|---|
| 50 | $12.86 | $23.06 | $33.08 |
| 55 | $14.97 | $26.94 | $38.90 |
| 60 | $18.04 | $32.87 | $47.70 |
| 65 | $22.11 | $41.01 | $59.91 |
| 70 | $28.07 | $53.12 | $78.18 |
| 75 | $37.81 | $72.41 | $107.01 |
| 80 | $50.82 | $98.43 | $146.05 |
| 85 | $69.55 | $135.90 | $202.25 |
| 90 | $149.69 | $296.41 | NA |
*Ballpark Quote
As you can see above, now is the time to get final expense policy for your parents. As you age and you do not lock into a policy, rates increase.
Also, keep in mind as you age, medical conditions change and you may not qualify for day one level coverage. Ask us today how to avoid paying more!
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FAQ
Pre-need plans are prepaid funeral arrangements made directly with a funeral home, covering specific services in advance. Burial insurance, also known as final expense insurance, is a life insurance policy that provides a cash benefit to beneficiaries, which can be used for funeral costs or other expenses.
A pre-need plan allows you to plan and pay for your funeral in advance. You select specific funeral services and products (such as a casket or cremation), and payments are made directly to the funeral home. These plans help lock in costs at today’s rates, preventing price increases due to inflation.
Burial insurance is a life insurance policy that pays a lump sum to a chosen beneficiary upon the policyholder’s death. The beneficiary can use the funds for funeral expenses, medical bills, or other costs. Unlike pre-need plans, burial insurance offers flexibility and is not tied to a specific funeral home.
Burial insurance provides more flexibility since the funds can be used for any expenses, including funeral costs, medical bills, and outstanding debts. Pre-need plans are more restrictive because they only cover predetermined services at a specific funeral home.
Some pre-need plans may be transferable to another funeral home if you relocate, but this depends on the contract terms. Refundability varies—some plans allow cancellations with partial refunds, while others do not.
Yes, burial insurance provides a cash benefit to beneficiaries, who can use the funds for any financial needs, including medical bills, legal expenses, or even living costs.
Pre-need plans may be cost-effective if you want to lock in today’s funeral prices and know exactly what services you want. Burial insurance may cost more over time due to ongoing premiums, but it provides more flexibility and covers additional financial needs.
Some burial insurance policies offer immediate coverage, while others (such as guaranteed issue policies) may have a 1-2 year waiting period before full benefits are available.
A pre-need plan is ideal for those who want to make specific funeral arrangements in advance and lock in pricing at a particular funeral home.
Burial insurance is best for individuals who want financial flexibility and the ability to provide a cash benefit to loved ones, allowing them to use the funds for funeral costs or other expenses.
Yes, some individuals choose both options—using a pre-need plan to lock in funeral costs while keeping a burial insurance policy to cover additional expenses or provide financial support to loved ones.
Conclusion
Choosing between a pre-need plan and burial insurance depends on your personal preferences, financial situation, and the level of flexibility you desire. Understanding the distinctions between these options will help you make an informed decision that best suits your end-of-life planning needs.
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