Consumer tips ● Be certain the funeral home, mortuary, cemetery, or licensed insurance producer is licensed with the state as a preneed contract seller. ● A friend or family member should accompany the consumer when making the preneed funeral arrangements. ● Ask the preneed seller for a detailed price list of services and merchandise before selecting anything. ● Before signing a preneed contract, read it carefully and understand all provisions. Ask questions. ● If purchasing a preneed funeral arrangement, the consumer should receive a copy of the contract that explains his or her rights and obligations, along with a written statement of all services, merchandise, and prices of items that have been purchased. ● The contract must clearly state how it is funded (life insurance or trust-funded), as well as the terms of payment. ● If purchasing a trust-funded product, ask how the funds are secured. ● The written contract must state under what terms the contract may be canceled and how much the consumer will be refunded. ● The written contract is required to include to what extent the preneed seller or general provider guarantees the selected merchandise and service prices. If the prices are not guaranteed, the preneed seller should explain who is responsible for paying additional monies that may be due at the time of the funeral. ● Thoroughly consider before accepting an irrevocable agreement (a contract that cannot be canceled). Irrevocable agreements may limit one’s flexibility. ● Keep a copy of the plan in a safe place. Inform a close family member or a friend that arrangements have been made and where these documents are kept. Pricing Q: How will I know that the prices of items I select are the same for everyone? A: The funeral home maintains a general price list as well as a casket and an outer burial container price list. Your preneed arranger will provide these lists before beginning arrangement discussions. When these discussions are finished, you will be given a copy of the preneed contract on which charges will be listed. Charges will only be made for the items selected. If there are any legal or other requirements that mandate the purchase of any items not specifically requested, the preneed arranger will explain the reason for these charges in writing. A consumer may ask a funeral home to purchase certain items or make special arrangements. If the funeral home charges for these services, the consumer must receive an explanation in writing. The charges for these services may be higher than if an individual or a family purchased them directly. At the time of an individual’s death, the family or estate will be given an itemized statement, which will list all of the specific charges. This is a requirement of the Federal Trade Commission. Although not required to do so, some funeral homes may also choose to provide an itemized statement when making these arrangements.
Q: Does a preneed contract qualify as a method for spending down assets for Medicaid? A: Yes. However, each state Medicaid office has its own qualification guidelines. Contact your state Department of Health Care Policy and Financing for further information. Q: Can a contract be used at any funeral home? A. It depends on the state. Some states allow customers who move to another state to transfer, some do not; some allow the provider to charge for the service, some don’t. transfer, but that the original provider can charge for it. The FCA’s position is that either type of contract ought to be transferable without penalty; if the second home is less expensive, the customer should receive the difference. Q: Are the proceeds of an insurance-funded preneed contract taxable? A: Insurance policy premiums and proceeds are not currently considered taxable income for U.S. Internal Revenue Service purposes. Q: Can I borrow the cash value of my insurance policy? The NFDA’s position is that a customer with an irrevocable contract should have the right to A: If your contract is revocable, yes. However, the estate must make up the difference in policy value at the time of death or the preneed contract may be terminated. Q: What if I cancel my life insurance policy that funds my preneed contract? A: The insurance policy will be subject to surrender charges and perhaps a reduced cash value. The preneed contract will terminate when the insurance policy is canceled. Q: What if I fail to pay my insurance premium on my life insurance-funded preneed contract? A: Life insurance policies continue the policy by paying the premium out of the cash value of the policy. Once the cash value is exhausted, the life insurance policy will be canceled, causing termination of the preneed contract. Q: What if I cancel my trust-funded preneed contract prior to need? A: Once again, it depends on your state. Almost everywhere, purchasers have the right to terminate a revocable contract any time prior to use, and the provider must refund your money within a specified time period. However, in some states the provider may retain some of the money. Q: What if my heir(s) or designated representative wants to cancel the trust-funded preneed funeral contract? A: More than half of states have enacted a personal preference law, a statutory obligation for survivors to honor the written wishes of the deceased (with the exception of cremation in a few states). Thus, a customer can specify that the arrangements in the preneed contract must be followed.
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Book Code: FAR0626
EliteLearning.com/Funeral
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