Should You Invest In A Memorial Plan?

Someone asked me about this via email, and I thought it was a good idea to share it here as well. There are a lot of financial products out there to choose from and memorial plans are one of those things you need to at least think about.

But the kicker is: If you thought it was hard to talk to someone about life insurance, just imagine how awkward the conversation is when it's a lot more focused on caskets and burial services.

And essentially that's what memorial plans are: they're a very focused sort of life insurance. It's not that you (or your heirs, rather) get money. You just don't have to pay for any deathcare (yep, apparently that's a word) expenses.

Memorial plans are a good product to buy, but it comes with caveats that deserve some really thorough thinking and planing. Let's start with the pros:

  • Price: when you buy one of these plans, typically the cost is equivalent to what you would pay for the service at today's prices. And since it'll be used in the future, and prices go up over time, you're effectively locking in a lower price.
  • You get money back. This can depend on the plan but after some time, you get pretty much what you paid and still get to avail of the service.
  • It's usually transferable. So in case someone passes away, and you don't have much money (and they didn't have insurance) you can still ease the financial burden.

That's a pretty good deal. However, it's not entirely risk-free. There are some concerns you need to at least think about. Here are the cons:

  • It's locked to certain establishments. What if the company closes down in the future? Even if they don't, you might end up living somewhere they aren't near to. Even if you don't, you might get married and your spouse has a plan for a different establishment. Are you really gonna be buried separately? Someone's gonna give way, most likely. You could also end up living abroad, making this plan practically of no value.
  • That money back has very low value. You only get it years later and in installments. And you only get what you paid, meaning that a savings account would earn more. But of course we're after the service, not the money back. It's still a great component of this deal, but it's best not to focus too much on the money back guarantee.
  • You need to weigh this against insurance you might have. If you have term, you can get a memorial plan for the time when you eventually stop availing of life insurance. While you have both though, you're not that efficient in the money you are spending since they address the same thing. If you have whole life, then you might not need this altogether.

Insurance products could take care of these same expenses as well, without locking or limiting your choices. However, life insurance can possibly be more expensive (since it gives you much more money) or not available (if you're uninsurable).

Aside from that there the other factors we always look at:
  • how legitimate the salesperson/agent is,
  • how stable the company selling it is,
  • who regulates this and what to do in case of a dispute,
  • do you know anyone who has availed and what did they have to say (or in this case, their relatives)

Personally, I think it's a good investment. However, like all other financial products it's not an automatic decision. You really have to assess you needs, plan and decide for yourself.

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photo credit: the fire within via photopin (license)

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