Preneed Financial Planning & Contracts Flashcards

What is the primary purpose of a preneed funeral contract?

Answer: To allow families to pre-select and pre-fund funeral services at today's prices

A preneed funeral contract allows individuals to select and fund funeral services in advance, often locking in current pricing to protect against future cost increases.

Which type of preneed funding vehicle provides the strongest consumer protection under most US state laws?

Answer: Irrevocable funeral trust

An irrevocable funeral trust places funds in a regulated trust account that legally cannot be accessed by the funeral home until services are rendered, providing the highest consumer protection.

When a preneed contract is funded by a life insurance policy, the funeral home is typically named as:

Answer: Irrevocable beneficiary

Funeral homes are typically named as irrevocable beneficiaries on life insurance-funded preneed contracts to ensure the death benefit is directed to cover funeral expenses.

What term describes the price guarantee in a preneed contract where the funeral home agrees to provide services at the contracted price regardless of future cost increases?

Answer: Guaranteed price contract

A guaranteed price contract commits the funeral home to honor the contracted prices for selected goods and services regardless of price increases at the time of death.

Under a non-guaranteed preneed contract, who bears the financial risk if funeral costs rise above the funded amount?

Answer: The deceased's estate or family

In a non-guaranteed preneed contract, the family or estate is responsible for any difference between the contracted amount and the actual cost of services at the time of death.

Which federal regulation governs the disclosure and pricing requirements for preneed funeral contracts when sold across state lines?

Answer: FTC Funeral Rule

The FTC Funeral Rule requires funeral providers to give itemized pricing information and governs disclosure requirements for funeral goods and services, including preneed arrangements.