It is that time of the year again when we remember our relatives and friends who have passed away.
All Souls’ Day serves as a reminder to us all of that final destination that we all share – sooner for some, and preferably later for the rest.
We all die. But the question is, are we prepared for it?
Death usually is a spiritual topic, but it also touches on the financial as well; and with all the costs associated with death, how are we preparing for it?
As the “First American” Benjamin Franklin said, “In this world, nothing can be said to be certain, except death and taxes.”
A lot of the talk on personal finance have focused on investments, making money grow, and insurance. But one tool that is invariably given not enough attention are memorial plans, the benefits of which are, at best underrated, if you ask me.
What are memorial plans?
In a nutshell, a memorial or a life plan, is a prepaid service that includes the provision of memorial services, a casket of choice, and a host of other benefits.
A memorial plan enables the plan holder to “pre-pay” future expected memorial needs – at a cost that is substantially lower than when availed of as needed.
A basic memorial plan package includes:
- Memorial services (traditional burial or cremation)
- Casket or urn
- Chapel or mortuary
- Pick-up of the body from house or hospital
- Embalming procedure
- Transfer permit processing
- Death certificate processing, and forwarding of such to the concerned City Hall
To see its advantage, consider this: a simple casket, if bought now at need, would cost an average of P70,000 ($1557.29)*. It still does not include the memorial services, other taxes and costs, and the effort to process them.
A memorial plan, on the other hand, can be had for almost one-third of the price: casket and services and all, making it a very cost-effective product.
But with a lot of product providers, what are the do’s and don’ts in availing of a memorial plan?
Do’s and don’ts when availing a memorial plan
Here are some tips for those interested or contemplating it:
Know your needs. I always say, all purchases of financial products should be done in a larger context: which particular need would it answer? Availing of products without knowing the reason for and actually computing how much is needed, is running around like a headless chicken. Availing of a memorial plan package should be relevant and cost-effective for people. For instance, how much can you afford to shell out for a memorial plan? Luckily, payment terms for memorial plans are very flexible and can be done on a monthly, quarterly, semi-annual or an annual basis. Plans can be had for as little as P300 ($6.67) a month.
Check the company. Admittedly, it is our hard-earned money that goes into premium payments. And it only takes one unstable company to close and send all of that money down the drain if we do not check its stability. Check out these companies with the government regulators like the Insurance Commission or the Securities and Exchange Commission to ensure they are not in trouble. Connie Aquino, an advisor for one of the biggest life plan companies in the country, says, “Consider also how many years the company has been in the business, its reach of branches, and the number of its affiliation with other mortuaries and chapels.”
Shop around. Sales people would almost always try to sell – that’s their job. But our job is to look around, compare and check which company offers the best package – who gives more for every peso you pay.
Check the benefits. Apart from the basic package, some memorial plans also offer additional benefits like dividend pay-outs, return on premiums, financial assistance to beneficiaries, and insurance coverage. These benefits can be the tipping point in the decision to buy. Again, it’s all about getting more out of every peso you pay.
Don’t be forced into buying. The ultimate decision-maker is yourself. Make sure that all the facts have been laid down, the fine print read, and all other competitors laid down on the table. Then choose the one that gives the best package.
Don’t pay more than you can afford. Whether you believe that death is appointed or just accidental, there’s no need to rush and starve yourself to death with premium payments. You can start with the most affordable plan in the meantime [as low as P300 ($6.67) a month or P150 ($3.34) per payday, roughly a tall Frapuccino] and upgrade at a later time as your cash flow permits. – Rappler.com
Rienzie is also an accredited investment fiduciary of Pennsylvania-based fi360 and an international member of the Financial Planning Association, the largest association of financial planners in the US. You may reach Rienzie at firstname.lastname@example.org, his Facebook account or Twitter @rbiolena.
($1 = P44.95)
Funeral image from Shutterstock
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#AskTheTaxWhiz: Is there such a thing as ‘death tax?’
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