CPC Preneed Financial Planning & Contracts

Question 1

What is the primary purpose of a preneed funeral contract?

Accepted Answer

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

Answer

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.

Question 2

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

Accepted Answer

Irrevocable funeral trust

Answer

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.

Question 3

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

Accepted Answer

Irrevocable beneficiary

Answer

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.

Question 4

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?

Accepted Answer

Guaranteed price contract

Answer

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.

Question 5

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

Accepted Answer

The deceased's estate or family

Answer

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.

CPC - Certified Preplanning Consultant Practice Test

CPC - Certified Preplanning Consultant Practice Test

CPC Preneed Financial Planning & Contracts