Preneed Financial Planning & Contracts Flashcards

What is 'portability' in the context of preneed funeral contracts?

Answer: The ability to transfer a preneed contract to another funeral home

Portability refers to the ability to transfer a preneed contract from one funeral home to another, which is important if a person relocates or if the original funeral home closes.

What percentage of preneed contract funds are most US states required to place into trust?

Answer: 90%

Most US states require that at least 90% of preneed contract funds be placed into a regulated trust account, though some states require a higher percentage.

Which document must a preplanning consultant provide to a client before they sign a preneed contract?

Answer: General Price List (GPL)

The FTC Funeral Rule requires that a General Price List be provided to any person who inquires in person about funeral arrangements or the prices of funeral goods or services.

A preneed contract is considered 'irrevocable' when:

Answer: The client cannot cancel or change the contract without the funeral home's consent

An irrevocable preneed contract cannot be canceled or materially altered without consent from the funeral home, and is often required for Medicaid spend-down purposes.

For Medicaid eligibility purposes, which type of preneed contract is typically excluded from countable assets?

Answer: Irrevocable preneed contract

An irrevocable preneed contract is generally excluded from Medicaid countable assets because the funds are permanently committed to funeral expenses and cannot be reclaimed by the individual.

What is the typical 'cooling-off' or cancellation period allowed by many US states for preneed contracts sold through door-to-door or off-premises solicitation?

Answer: 3 days

Many US states follow the FTC's 3-day cooling-off rule for door-to-door sales, allowing consumers to cancel preneed contracts sold off-premises within three business days.