The BBB has recently been contacted concerning questions about prepaid funeral plans. The purchase of a prepaid, also known as "preneed" funeral or burial plan is big business in the U.S. and it continues to grow. Based on a recent survey conducted for AARP, almost 17 million adults age 50 and above have prepaid some, or all, of their funeral or burial expenses.
A prepaid agreement consists of a contract and a funding mechanism to pay for the funeral or burial plan. Under state laws, the funeral home or cemetery places a percentage of the payment in a state regulated trust or purchases a life insurance policy with the death benefits assigned to the funeral home or cemetery. Most, but not all, prepaid contracts guarantee that the price of the funeral or burial will cost no more at delivery than what was paid at the point of purchase.
Here are some questions you should ask as well as tips before
purchasing a plan:
Is the plan portable? Can the funeral plan be transferred to
another funeral home or cemetery?
Will the plan cover 100% of my expenses? At times the
purchaser's survivors find that a plan does not cover all funeral
and burial expenses, and that an additional amount is required in
addition to the "guaranteed" expenses.
Be careful of high-pressure sales techniques. The seller
generally tries to convince the purchaser to buy more expensive
goods and services. Make the best choice based on your budget.
Be sure to compare prices. Costs for funeral merchandise and
services can vary drastically. The Federal Trade Commission's
Funeral Rule requires itemized cost disclosures from funeral
directors, though it does not cover cemetery sales.
Review the plan carefully. Request a copy of the proposed
contract and financial information about the trust itself, and make
sure and check for proper licensing.
Visit the facility and investigate the seller’s reputation. Do
not depend on the good faith of the person selling the plan, but
the reputation of the company itself.