Preneed Financial Planning & Contracts Flashcards

Which of the following is NOT typically included in the cash advance items of a preneed funeral contract?

Answer: Casket

A casket is a funeral home merchandise item, not a cash advance item; cash advance items are third-party expenses paid on behalf of the family, such as death certificates and obituary fees.

What happens to interest earned on preneed trust funds in most US states?

Answer: It remains in the trust to offset future cost increases

In most states, interest earned on preneed trust funds remains in the trust to help ensure sufficient funds are available to cover the cost of services at the time of death.

A CPC should disclose which of the following when presenting preneed funding options to a client?

Answer: The total cost including all fees and potential price adjustments

Ethical preplanning practice requires full transparency, including total costs, all fees, and whether prices are guaranteed or subject to adjustment at time of need.

What is 'assignment of benefits' in the context of a life insurance-funded preneed contract?

Answer: Directing the life insurance death benefit to the funeral home to pay for services

Assignment of benefits directs the life insurance policy's death benefit to the funeral home upon the insured's death, ensuring funeral expenses are covered without family involvement.

Which licensing requirement typically applies to a funeral home employee who sells preneed contracts?

Answer: A state-issued preneed sales license or registration

Most US states require individuals who sell preneed funeral contracts to hold a specific preneed sales license or registration, separate from any funeral director or embalmer license.

If a funeral home goes out of business, what protects a consumer's preneed funds?

Answer: State preneed trust or guarantee fund requirements

State preneed trust requirements and, in many states, a dedicated consumer protection or guarantee fund are the primary mechanisms protecting consumers if a funeral home closes before services are rendered.