Does Pre-Need Funeral Insurance Make Sense?

Pre-Need or Prepaid Funeral Insurance is an insurance policy whose benefits cover the cost of the predetermined expenses of a funeral, cremation or burial. The expenses typically include standard funeral home services, funeral merchandise, church services and even burial services and merchandise. The purpose of Preneed Funeral Insurance is to set aside funds for your funeral, before the need arises, thereby protecting your loved ones and your financial assets.

Pre-need "arrangements," as they're sometimes called, are typically made with mortuaries, cemeteries, and/or insurance companies. The benefit of such plans is that, when you move on to the great beyond, your loved ones won't have many arrangements to make. They'll be able to focus mainly on mourning, because plots will have been chosen and paid for, along with the funeral and burial.

The downside of Pre-Need Funeral Insurance is that it tends to cost a lot of money. And that pile of money will be out of your hands and earning interest -- not for you, but for the people you paid.  Let's say you're aged 75 and you pay $5,000 for a cemetery plot and $10,000 for your casket and various services. That's well and good, but what if you're blessed and live another 20 years? You've lost the benefit of that $15,000 for a long time. If you had invested it and earned 10% per year on it, you'd have $101,000 to show for it!  Pre-need plans are often nonrefundable -- and often nontransferable, meaning you can't change your mind or switch mortuaries. They often have hidden fees, meaning your survivors could still wind up forking over plenty of money when you die. Plans can be mishandled, too.

Pre-Need Funeral Insurance has many critics -- even some within the funeral industry. The New York State Funeral Directors Association, for example, has a page on its website titled "NYSFDA is Opposed to Preneed Funeral Insurance," it lists many reasons for its opposition, including the following:

  • "There is great potential to do what is not best for the consumer because of the motivation to make commissions."
  • "These types of small policies are extremely expensive, and do not grow in order to combat inflation."
  • "If the consumer stops paying for any reason, the person loses all benefits."
  • "Pre-Need Funeral Insurance is sold in a way that leads our families to believe that it will completely pay all at-need costs even though that is rarely the case."

Instead of getting Pre-Need Funeral insurance, you can purchase a Final Expense or Burial Expense life insurance policy with little to no health questions.  The proceeds of the life insurance can then be used by your family to pay for the funeral that you have pre-planned without you having to pay everything at once.

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Ways To Leave A Legacy

There are many ways you can leave a legacy. The most obvious, of course, is bequesting an inheritance to your survivors through your last will and testament.  But your legacy is about far more than material things.  Your nephew will be teaching his son how to fish and as he explains the feel of pulling up on the rod, he’ll flash back to the time you taught him that same technique. That’s also a legacy.  Most of what we leave our children and grandchildren are memories – of who we are and what mattered to us. We provide this legacy by being with our loved ones and through our relationships.

But you can do more than just serve as a good role model. You can take a more active approach to leaving a legacy.  For example, you could provide the family history by researching your genealogy.  This is a wonderful way to let your kids and grandkids understand where you and they came from.  Add your personal story to the genealogy record by including anecdotes and feelings. Describe your relationships with your parents and grandparents, aunts and uncles, siblings and children  Doing this will enrich the bare facts and timeline, providing color so your heirs and survivors can know what it really felt like to live during your years. That’s a legacy no one else can provide.

Another way to leave a legacy is by contributing money or the equivalent to a charitable cause that reflects your values.  For example, you can endow a scholarship to your alma mater for future students.

A legacy letter is everything you’d want to tell your loved ones and your survivors if you knew you didn’t have long to live.  Write one that speakx directly to your loved ones and says all those things you wish you had told them earlier. Tell your grandson how much it meant to you to be at his birth and how sad you are that you won’t be able to watch him grow.  This letter can be a way to ensure your spouse or partner knows how much joy your relationship brought and that you hope he or she will find happiness after you’re gone.

And finally, you could prepare an ethical will that lets you share the meaning of your life, beliefs and life lessons. An ethical will is your way of telling your personal story, tying together what you’ve accomplished, how you’ve lived your life and what you hope your heirs will take from you.  It’s your way of still being in the room, which is the point of leaving a legacy.

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What Liens Will Survive Foreclosure?

Due dilligence before purchasing tax liens is so important because what you don't know WILL hurt you.  This business, like most, is full of blanket statements which many times have exceptions.  One of the biggest I hear is that the foreclosure of a tax lien 'wipes out all over liens' or that the property is now 'free and clear of all other liens' .  This general rule can be more accurately stated as: The foreclosure of the superior lien will eliminate the rights of any junior interests in the realty or personal property.   When a superior lien (one that was recorded or 'perfected' before all others) is foreclosed (i.e., through the state's legal foreclosure guidelines) any junior interests will lose their interest in the property. But there are exceptions to this general rule, including, but not limited to: 

1) Federal Tax Liens - Since most liens on a property will likely be liens from the state or a municipality within the state you must be aware of the possibility of a federal tax lien. You can ask your title company to search for this, however a good title company should spot this lien pretty quickly.

2) State Income Tax Liens - Some states which have a state income tax may give priority to any liens for unpaid state income taxes. As the purchaser of the property or the holder of the lien you could still have these liens surviving as encumbrances on your property even after foreclosure.

3) State Sales Tax Liens - Unpaid state sales taxes can result on a lien which attaches to the property of the delinquent taxpayer. You should contact an attorney to find out if your investment state has a sales tax lien which could survive foreclosure.

4) Mechanics Liens and Materialmen's Liens - Work performed on the property where improvements or repairs are made can result in a mechanics lien if payment is not made by the party who contracted for these services. You will find many different names for this type of lien, for example: mechanics liens, materialmen's liens, artisans liens, workers liens, etc. Don't forget to learn more about your investment state as your state could include others or exclude some of these liens. Don't be scared off by this list, BUT be glad that you are now informed about this potential risk. Since you have the knowledge you need only perform adequate research to avoid the risks in this area.

These should not scare you off from investing, they just need to be factored into the costs when evaluating the investment.

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Medicare and Medicaid Turns 50

As Medicare and Medicaid reach their 50th anniversary on July 30, 2015, the two vast government programs that insure more than one-third of Americans are undergoing a transformation that none of their original architects foresaw: Private health insurancecompanies are playing a rapidly growing role in both.  More than 30 percent of the 55 million Medicare beneficiaries and well over half of the 66 million Medicaid beneficiaries are now in private health plans run by insurance companies.  Enrollment has soared as the government, in an effort to control costs and improve care, pays private insurers to provide and coordinate medical services for more and more beneficiaries.

When President Lyndon B. Johnson signed the bill creating Medicare and Medicaid on July 30, 1965, he made clear his ambitions for the programs: They would extend “the miracle of healing to the old and to the poor.”  The architects of Medicare and Medicaid, among them Wilbur J. Cohen and Robert M. Ball, had concluded that private insurance was out of reach for many older and low-income Americans, who could not obtain affordable coverage in the commercial market. At the time, Mr. Ball was the Social Security commissioner, and Mr. Cohen was a top official at the Department of Health, Education and Welfare, who later became secretary. Both men had been inspired by the New Deal and had worked for decades on Social Security.  “They believed that commercial health insurance had failed the elderly, and they wanted to replace it with social insurance, as a first step toward similar coverage for the rest of the population,” said Theodore R. Marmor, a Yale professor and historian of Medicare.  In a secretly recorded telephone conversation in March 1965, Mr. Cohen described the Medicare bill that had just been approved by the House Ways and Means Committee. “Quite frankly,” Mr. Cohen told President Johnson, “there’s no longer any room for the private insurance companies to sell insurance policies for people over 65.”

In the original versions of Medicare and Medicaid, beneficiaries could go to any doctor who would take them, and the government would pay providers a fee for each service. By contrast, in private managed-care plans, beneficiaries use a network of doctors and hospitals, and the federal or state government pays insurers, which receive a fixed amount per member per month.  The original setup of Medicare and Medicaid began to change in the early 1980s after Congress and the Reagan administration created incentives for private insurers to contract with Medicare. Enrollment rose and fell as federal officials tinkered with reimbursement rates.  In the last decade, as private insurers accelerated their marketing of Medicare plans and baby boomers accustomed to managed care reached retirement age, enrollment in the private Medicare plans run by insurance companies, surged.  About 99 percent of beneficiaries now have the option to enroll in plans run by a private insurance companies, and the average beneficiary has a choice of more than a dozen plans.

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