Planning funeral costs

Nothing's As Sure As...

by Gary Foreman

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It's as close to a sure thing that you can get on this earth. Yet, we really don't like to talk about it. No, it's not taxes. But, rather death. And, like it or not, at some point you'll need to be involved with arranging a funeral.

And when you do, you'll be dealing with a very large industry. It's estimated that there are about 20,000 funeral homes in the US and that the industry does $11.95 billion dollars in business annually.

Three corporations dominate, owning 15% of the funeral homes and doing about 20% of the business. They're SCI (Service Corp. International), Stewart and the Loewen Group. And although you've probably never heard of their names before they may own a mortuary in your city. When they buy a local establishment, they prefer to keep it operating under it's old name. That maintains the illusion of a small locally operated business.

As you might expect, it's an unusual business. It's hard to know what many of the products are really worth. You might talk to friends and co-workers about the deal you got on your new car, but it's unlikely you've had a similar discussion about buying a casket. And very few of us will do any price shopping. Even if we don't wait until the last minute, it's creepy browsing at your local funeral home.

OK, so what should a metal casket cost? Most are made from 20 gauge steel and wholesale from $450 and up. Retail prices can vary widely. It's not uncommon for a funeral home to buy a casket at $700 and sell it for $3,000. Mark-ups of 300% are common, but can range up to 700%.

Other items have similar profit margins. A hearse that costs about $25 an hour to operate will be billed to you at $200. Service charges vary widely. These charges are typically for use of the funeral home, ushers, etc. With the average funeral costing $8,000 it pays to consider ways to spend your money wisely.

As you might expect, sound shopping practices apply here, too. Do your shopping before you have a need. You'll always pay more when you must have it now. And shopping doesn't need to be as morbid as you might expect. Most states require funeral homes to give you a written list of prices for all products and services they offer. And federal law requires them to give their prices over the phone. A simple phone call should get a list faxed or mailed to you.

Caskets are typically the most expensive single item you'll be selecting. The same quality casket may have a variety of different names. Unless you're a stickler for color, compare the quality of the material used to construct the casket. Materials range from cloth covered cardboard all the way up to solid brass or copper. The most common are either wood or 20 gauge metal. But even among the 20 gauge steel caskets you'll find a wide range of prices. Selecting a casket is a very personal experience. Only you can decide how important a fancier lining is to your family. Before you make your selection, check with the cemetery or mausoleum to find out what, if any, requirements they might have.

You're not limited to buying from the local funeral home. Casket wholesalers do sell to the public. You can expect to find that same 20 gauge metal casket priced between $600 and $1400. Expect to add about $150 to have it shipped to your city. And, in case you were wondering, you don't have it delivered to your home. They can deliver it to the funeral home of your choice.

Another option is to choose a mortuary that's outside of your city. If you're planning on having a ceremony at your church or synagogue, it's practical to purchase the casket and have body prepared as much as 50 miles away.

The fact that you're shopping early doesn't mean that you should buy early. Buying 'pre-need' is often a mistake. Although it is possible to lock in prices, you run the risk of your money disappearing. And, typically you won't be aware of the problem until you need to use the services. Ideally, you'll shop early and make your final purchase decision a few days or weeks in advance of needing them.

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Even if you do need to make unexpected funeral arrangements, you don't need to rush. Most hospitals and nursing homes will keep your loved one while you do a little shopping.

Be careful who's advice you take. Some firms in the industry have been accused of giving gifts to ICC nurses, hospice workers and even clergy. A recommendation is no substitute for comparing prices.

Besides careful shopping, there are other ways to reduce your costs. For some cremation can provide savings. Don't forget to get competitive pricing for your monument, too. Monument companies can be found in your phone book and do sell direct to the public. In most cemeteries you're not required to buy the headstone from them. Even if you are, knowing other prices could help you negotiate a better deal. There's no shame in asking for a lower price.

The funeral home is probably the most expensive place to hold services. More people are choosing their church or synagogue instead. Even if you're not a member of a local congregation many will allow you to use their facilities for a nominal charge. Another alternative harkens back to an earlier time. More and more people are opting to hold funeral services in their own homes. It's not so many years ago that the home services was the typical method. Finding resources for a home funeral may be challenging. You might want to ask your local hospice.

Updated October 2013

One final suggestion. That's to take charge of your own arrangements. Most funeral directors are perfectly willing to lead you through the process, but naturally they won't be concerned with saving you money. It's surprising, but most states do not require you to use an undertaker at all. If you have questions about what's allowed, contact your state funeral board. A call to the information number for your state government should get you to the right office.

Obviously, saying good-bye to a loved one is a deeply personal event. For some people, paying more at this emotional time could be a good use of their resources. But for others who need or choose to shop around, savings are available. Hopefully, you won't need this information for years. But when you do, a few facts can help you avoid needless expenses.

Gary Foreman

Gary Foreman is a former financial planner and purchasing manager who founded The Dollar website and newsletters in 1996. He's the author of How to Conquer Debt No Matter How Much You Have and he's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, and Gary shares his philosophy of money here. Gary is available for audio, video or print interviews. For more info see his media page.

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