In prior posts, we discussed the impact that investment return and performance cost increases have on preneed shortfalls. In this post we will look at how installment payment options impact the funeral and cemetery operator.
Many funeral homes do not offer installment payment options because those monthly payments cut directly into the trust earnings that must offset performance cost increases. Using the average funeral cost ($6,623) determined by the Funeral Consumer Alliance of Kansas City, that same funeral will cost $9,803 in 2024 if the same rate of increase (4%) continues for ten years. Depending upon how long a funeral home allows for installment payments, a trust earning a net return of 2% will cause the funeral home to experience a shortfall of between $1,900 and $2,250. Click this hyperlink to see how a spreadsheet analysis of the impact of installment payments.