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Consumer Preneed Bill of Rights

Prior to purchasing any funeral good or services or signing a preneed funeral contract, we urge you to ask us any and all questions you may have regarding your preneed purchases

We will:

Provide you with detailed price list of services and merchandise before you select services and merchandise.

Provide you with, at the conclusion of the funeral arrangement conference, a written statement listing all of the services and merchandise you have purchased and the price.

Give you a written preneed funeral contract explaining, in plain language, your rights and obligations.

Guarantee in the written preneed contract that if any of the merchandise or services you have selected are not available at the time of need, merchandise or services of equal or greater value will be substituted by us at no extra cost to you.

Explain in the written preneed contract the geographical boundaries of our service area and under what circumstances you can transfer the preneed contract to another funeral home if you were to relocate or if the death were to occur outside our service area.

State in the written preneed contract where and how much of the funds you will pay to us will be deposited until the funeral is provided.

Explain in the written preneed contract who will be responsible for paying taxes on any income or interest generated by the preneed funds that are invested.

Inform you in the written contract whether and to what extent we are guaranteeing prices of the merchandise and services you are purchasing. If the prices are not guaranteed, we will explain to you in the written preneed contract who will be responsible for paying any additional amounts that may be due at the time of the funeral.

Explain in the written preneed contract who will receive any excess funds that may result if the income or interest generated by the invested preneed funds exceed future price increases in the funeral merchandise and services you have selected.

Explain in the written preneed contract whether and under what circumstances you may cancel your preneed contract and how much you paid to us will be refunded to you.

Consumer Tips for Arranging a Funeral

At some time in our lives, most of us will make or assist in making funeral arrangements. This will not be an easy time, but we offer these tips for smart planning.

1. Be an informed consumer. Don’t be reluctant to ask questions.

2. Today’s funeral director offers a variety of options to meet your financial needs and wishes. Families should discuss all options with their funeral director when making arrangements.

3. When selecting a funeral director, choose one who is licensed and has a good reputation in

the community. Give thought to this decision as you would choosing a doctor, attorney or other professional.

4. Be prepared! Avoid the burden of making decision while under emotional stress

Consumer Tips on Prepaying Your Funeral

1. Choose a licensed funeral director that has a good reputation in the community.

2. Make sure your funds are secured. Ask you funeral director how the funds are invested and check over time to ensure the funds are keeping pace with inflation.

3. Make sure your plan is flexible that you may be able to alter plans if you wish and/or may be transferred to a funeral director in another state in case you move.

4. Consider carefully before accepting an irrevocable agreement (a contract that cannot be canceled.) Irrevocable agreements are fine when eligibility for Supplemental Security Income (SSI), Medicaid or other public benefits are being determined but may limit your flexibility.

5. Have a family member sit in during arrangements to help plan.

6. Like any contract, before signing, reread it carefully and make sure you understand all the provisions. Ask questions.

7. Keep a copy of your plan in a safe place. Inform a close family member or friend that you have made arrangements and where you the documents are kept.

8. Make sure everything you talk about is put in writing. Get copies for you and your family.

Advance Funeral Planning

NFDA, along with other funeral service associations and consumer groups, encourages families to make funeral arrangements in advance.

Advance funeral planning provides the consumers with peace of mind because preplanning allows individuals to express their funeral service wishes; enables all family members to participate in planning funeral services; avoids conflicts caused by family separations; and, allows family and friends to focus on celebrating the life of the individual at the time of death.

Paying for the funeral in advance give more assurance that personal wishes will be met, increases the value of money spent by providing protection against inflation and relieves the surviving family of facing additional and immediate financial issues during an emotionally distressing time.

An estimated $21.2 billion had been paid in advance funeral arrangements based on 1996 figures compiled by Conning & Company, of Hartford, Conn. An estimated $10.2 billion was held in trust by funeral homes. There was another $11 billing in preneed insurance policies, according the insurance research company.

There are guaranteed and nonguaranteed contracts. If the contract is guaranteed, the funeral director promises to provide the goods and services described in the contract regardless of his or her cost at the time of the performance. If the contract is nonguaranteed, the funeral director agrees to provide the goods and services at his or her prevailing rates at the time of need and there may, or may not be, an additional cost to the consumer.

There are revocable or irrevocable contracts. If the contract is revocable, the parties can cancel the contract and all, or a portion of, the initial investment and interest is returned. If the contract is irrevocable, the parties cannot cancel the contract. An irrevocable contract is often necessary when using monies set aside for a preneed funeral contract in order to qualify for Medicaid assistance.

The primary regulation of preneed contracts is at the state level. All states, except Alabama, have regulations pertaining to preneed contracts. Preneed sellers who are affiliated with funeral homes are regulated by the Federal Funeral Rule, which is enforced by the Federal Trade Commission.

There are three preneed contract-funding instruments. They are primarily trusts, insurance and, too lesser degree, annuities.

Each of these instruments have distinctive advantages and disadvantages based on the means and requirements of the individual consumer and funeral home as well as the instrument’s potential for growth, state regulations, and other considerations.

A preneed trust may earn interest that increases its value, protects against inflation and can be used to pay the cost to administer the fund, depending upon state regulations.

Almost every state regulates the administration of funeral trust. The 100 percent law, in effect in more than half the states, means that a funeral home must deposit or trust all of the prearrangement funds in a financial institution or instrument and may not withdraw any funds until time of death.

Less restrictive laws require only a portion of the funds be trusted. For example, 80/20 laws mean the 80 percent of the deposit must remain in the trust account and the remaining 20 percent can be used by the funeral home. However, all of the funds are applied to the price of the funeral goods and services at the time of death.

Preneed insurance is a customized life-insurance policy purchased specifically for funeral goods and services and directs payment of death benefits to the funeral home. The consumer needs to know how much insurance to purchase to secure a guaranteed funeral and needs to make sure that the insurance amount is increased along with inflation.

State agencies responsible for the regulation of insurance are also usually responsible for the regulation of the solicitation and sale of preneed insurance.

Annuities are sources of income reserved for retirement. A portion of annuities may be set aside, in advance, to pay for funeral arrangements.