Guaranteed versus nonguaranteed A guaranteed advanced planning contract means that the funeral home accepts a customer’s payment as payment in full at the time of death for the goods and services that are selected in his or her contract. Survivors, or the deceased individual’s estate, will not have to pay out additional funds for guaranteed contracts. Certain items that the funeral home has no control over, such as cemetery costs and clergy honoraria, are typically not included in the price guarantee. State laws vary regarding guaranteed advanced planning contracts. A nonguaranteed advanced planning contract means that if the payment option selected is insufficient at time of death to cover the total cost of the funeral chosen, the survivors or estate must pay any difference. Preneed funds in excess of the actual at the time of need are usually refundable to the survivor(s) or to the estate; however, this is not true in all states. It is important to know and understand the rules in your state of practice. The value of advanced funeral planning There are many valid reasons to encourage advanced funeral planning. Consumer organizations concerned with funerals, such as the American Association of Retired Persons (AARP) and the Funeral Consumers Alliance (FCA), encourage preplanning. The process of making these arrangements can benefit both customers and their families. (We refer to the person considering or making a preneed contract as the customer or consumer throughout this course and the funeral home director as the provider.) Advanced funeral planning can be of great value to the customer. Elderly persons often struggle with issues of retaining and losing control. Some people see death as the ultimate loss of control; preplanning for one’s death allows the individual to confront these issues. Planning for the funeral offers an individual something tangible and important to organize and oversee. Having an opportunity to organize some aspects of how the individual will be commemorated can help him or her come to terms with relinquishing independence in other areas of his or her life. Additionally, families that preplan together tend to learn more about the preferences of the family member who is the customer. Preplanning, combined with paying ahead through a preneed contract, can offer the customer more control and peace of mind than simply preplanning. Ideally, the customer learns about his or her options for goods and services. He or she inspects the merchandise and the home’s facilities. Prepaying lifts burdens from loved ones by ensuring that a professional is lined up to handle what needs to be done right after a death, such as transporting, storing the body, and obtaining the needed certificates. In contrast, when a person does not preplan or prepay, his or her family must quickly make important and costly decisions while they are in the midst of intense emotions, including shock, grief, confusion, or anger. Grieving family members and friends may be unfamiliar with both the process and the role of the funeral director. They may feel uncomfortable asking questions. At the same time, they may be vulnerable to pressure from unscrupulous funeral homes, buying more expensive services and goods and spending money “to show how much they care.” They struggle with not knowing how the loved one wanted to be commemorated. These decisions can also create or exacerbate family conflict.
“Guaranteed” is a strong selling point for advanced funeral planning, and it does seem to save the consumer money. A survey found that preneed contracts cost families less than at-need ones. One reason for this, of course, is that prices of goods and services rise over time due to inflation. Another reason is that a customer preplanning his or her own funeral, especially an elderly person used to modest living, might choose less expensive options than his or her grief-stricken family. Funeral homes can offer preneed funding without a guaranteed price lock-in. In fact, a growing number of funeral homeowners and business advisors advocate ending guaranteed funerals or lock-ins entirely. According to a Funeral Wire article, customers simply don’t ask whether their preneed contract is guaranteed. If the provider or agent decides not to offer a lock-in price, he or she must be very clear to the customer, both verbally and in writing, that the preneed does not include guaranteed prices. If the provider or agent does offer it, the customer must be given a choice whether or not to “lock in” to a guaranteed contract. An ethical and reputable funeral home and its provider will include the following: ● A detailed price lists of goods and services before the customer makes his or her selections. ● A written statement listing all of the goods and services selected and their prices. ● A written preneed funeral contract explaining, in plain language, the customer rights and obligations. ● A guarantee in the contract that if any of the selected goods or services are not available at the time of need, goods and services of equal or greater value will be substituted at no extra cost. ● An explanation within the contract of the geographical boundaries of the funeral home’s service area and under what circumstances the customer can transfer the preneed contract to another funeral home if the customer relocates, or if the death occurs outside of the service area. ● A statement in the contract as to where and how much of the funds will be deposited, until the funeral is needed. ● An explanation in the contract of who will be responsible for paying taxes on any income or interest generated by the preneed funds that are invested. ● A disclosure in the contract as to whether, and to what extent, the funeral home will guarantee the price of goods and services selected and purchased. If the prices are not guaranteed, the contract will explain who is responsible for any additional amounts that may be due at the time of the funeral. ● An explanation in the contract whether, and under what circumstances, a cancellation of a preneed contract can be requested and how much of the funds paid will be refunded.
EliteLearning.com/Funeral
Book Code: FTX1625
Page 32
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