Why consider advance planning
Advance funeral planning is a worthwhile investment. You can make many decisions to ensure that your funeral service and final disposition reflect your wishes, desires, and personality. Advance planning also reduces the emotional and financial burden on your family at the time of death.
A Simple Process
During the advance planning process, we will assist you in completing basic information about you and your final wishes. It is a good idea for you to keep a copy for you in a safe place, and to inform another family member or friend of its location. We also will keep a copy for you. There is no charge or financial obligation for this service.
The Cavin-Cook Funeral Home staff is here to help you consider all of your options and to give you the time to ask questions so that you can make informed decisions. We want to make your planning experience as reassuring as possible. Please contact us to schedule a consultation or to receive a free advance planning guide containing helpful information about planning a funeral or cremation.
Various methods are available for financing advanced funeral arrangements:
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Assignment of Life Insurance Policies
The death benefit amount of a life insurance policy can be assigned to a funeral home to fund funeral arrangements that are made in advance. At time of death, the proceeds of the assigned life insurance policy will be paid directly to the funeral home and will be applied toward the balance of the funeral costs. This type of advance funeral planning does not secure the funeral contract price at the time of the advanced funeral arrangement. At time of death, all price increases that may have occurred from the date of the advanced funeral arrangement will be added to the total cost of the funeral. When the death benefit proceeds are received from the assigned life insurance policy / policies, they will be applied to the total funeral balance. If there is an excess of proceeds, that amount will be returned to the designated family member or to the estate of the deceased. The designated family member will be responsible for paying the difference if the proceeds are less than the total amount of the funeral contract balance.
One advantage of selecting this type of advance funeral funding is in the case of the required asset reduction when applying for Medicaid. All life insurance policies with a value of $1,500.00 or more need to be taken out of the purchaser’s name to meet the required asset reductions when applying for Medicaid. When the insurance policies are assigned to a funeral home, the funeral home becomes trustee of the policies. Thus the policies will no longer be considered an asset of the individual applying for Medicaid.
Advance Funeral Insurance Policy
Commonly, insurance policies purchased for funding advance funeral arrangements are a single premium insurance policy in which the total amount of the advance funeral contract is paid at signing, or a premium insurance policy in which a specified amount and payment period are selected by the purchaser.
The advantage of having either a single or monthly premium is that they are inflation-proof. This means that even if the cost of the contracted funeral amount increases in the future, the insurance company will pay all guaranteed price increases, not the purchaser.
The main advantage of this type of funding is that after the total contract amount is paid, the insurance company pays any and all future guaranteed price increases that may occur.
Like all other life insurance products, the individual applying for insurance must be approved by the insurance company before the advance funeral plan is finalized.
Medicaid & Advance Funeral Planning
Medicaid is a government health program for low-income residents who cannot afford the cost of health care. Eligible applicants must meet several requirements, including certain income and asset limits.
To meet the income and asset limits, generally a person must reduce his or her assets to the amount of $1,500.00. Funding an advance funeral plan is an approved method of reducing assets to help meet Medicaid requirements. Assets include cash, stocks and bonds, checking and saving accounts, and the cash value of life insurance policies when the face value of the policy is over $1,500.00.
Cash and the cash value of life insurance policies are two of the primary ways to fund an advance funeral plan. An irrevocable funeral contract is issued when either payment method is used. An irrevocable funeral contract states that all monies used to fund the advanced funeral plan will be used exclusively for the purchaser’s funeral expenses. The funeral contract is irrevocable so the contracting funeral home becomes the trustee of those funds. Medicaid will no longer consider those funds assets of the purchaser. A copy of the irrevocable funeral contract is given to the Medicaid counselor with all other required paperwork at the time of application.
Please contact your local Medicaid office for more information concerning advance funeral planning and Medicaid.
Advance Funeral Planning Without Funding
If you choose not to fund your advance funeral plan, you can simply have all of your funeral arrangements held on file at the funeral home at no cost. At time of death, the designated family member(s) will be responsible for the full cost of the funeral.
Any type of advance funeral plan, funded or non-funded, can be transferred from one funeral home to another if the need arises (such as relocation, etc.)
REQUIRED ADMINISTRATIVE FEE
The state regulatory agency requires that an administrative fee be paid for all funded advance funeral plans. The funeral home will ask the purchaser for a separate check in the amount of $20.00, made payable to the NCBMS (North Carolina Board of Mortuary Science). This is an administrative recording fee, which in part is placed in a recovery fund used to secure your funds from any future loss. Within 30 days, the purchaser will receive a letter acknowledging that the North Carolina Board of Mortuary Science has received the copy of the funeral contract and administrative recording fee.