ch 7 preneed funeral contracts

Question 1

preneeds as a funding strategy

Answer 1

funeral arrangements made in advance of need are called preeneed or preneed cases. a preneed arrangement congerence is one in which a consumer meets. with a funeral service professional and makes arrangements including the selection of goods and services they want to have provided at the time of their death

Question 2

preeneed options

Answer 2

2 types, preplanned, and preplaned & funded, both options include

1) meeting with a funeral director
2) making arrangements
3) planning funeral events
4) selecting goods and services
5) gathering necessary info and documentation

Question 3

reasons for prefunded preneeds

Answer 3

1) the primary reason is the opportunity for the purchasser to pay the expenses in advance
2) to relieve the burden on survivors to pay for the funeral at the time of death
other benifits include discounts, guaranteed pricing and reducing assets for any future medicaid elegibility

Question 4

with preneeds a consumer can exercise greater control by providing intructions on various aspescts of a funeral srvice and the purchase of specific goods and services including;

Answer 4

1) choosing the method of final disposition
2) selecting a final resting location
3) choice of burial container
4) whether or not to have calling hours
5) preference for an open or closed caskey
6) where to hold a funeral or memorial service
7) information to include in a death notice or orbituary

Question 5

family benefits

Answer 5

putting end of life affairs in order prior to death is a thoughtful, considerate and caring decision of great benifit to the survivors at the time of need. by documenting and memorizing death care decisions in advance, the family of a decedent is relieved of making difficult and emotional decisions at a time when grief and loss are a burden on their ability to cope and reason. these decisions may eliminate/resolve conflicts within a family when attempting to reconcile service related issures at the time of need`

Question 6

a trust account is an account:

Answer 6

established by one individual to be held for the benifit of another

Question 7

trust accounts create:

Answer 7

a fiduciary responsibility where one person has an obligation to act for anothers benifit

Question 8

funds in a trust account may only be withdrawn:

Answer 8

as a consumer refund or to pay for the pre-arranged funeral following death

Question 9

a limited number of states use :

Answer 9

escrow account to describe the relationship that exists in a trust account

Question 10

caroline banton describes escrow as:

Answer 10

the use of third party. which holds an asset or funds before they are transferred from one party to another. the third party holds the funds until both parties have fufilled their contracual requirements

Question 11

preneed funds must usually be deposited in an interest-bearing trust account with a financial institution:

Answer 11

the instutution is the trustee of the funds and has fiduciary responsibility to both the purchaser of the preneed and the establishment

Question 12

the trustee:

Answer 12

distributes funds to the establishment after funeral services have been provided

Question 13

states may require funds be held in federally insured institutions paying interest at prevailing reates:

Answer 13

and prohibit funds from being commingled with other accounts or monies. some states require less than 100% of the funds be placed in trust while others require 100%, and some may not mandate earned interest be deposited into account.

Question 14

prepaid preneeds are:

Answer 14

contractual agreements. the establishment agrees to provide goods and services upon the death of the benificiary and recieves payment in advance from the purchaser

Question 15

They purchaser may be:

Answer 15

and often is the same person as the benificiary

Question 16

Many establishments use the FTC statement of funeral goods and services selected for a preneed contract by:

Answer 16

including specific contractual language, such as an express promise to pay and terms of payment. regardless of the form they are contracts, a term that bind the parties to the provisions it contains.

Question 17

recovable contract

Answer 17

may be terminated by the purchaser at an time prior to the death. When terminated, monies must be refunded to the purchaser.

Question 18

irrevocable contract

Answer 18

cannot by terminated or cancelled (may be transferrable). state mandated for a beneficiary seeking medicaid or SSI benefits

Question 19

When a funeral service preneed contract is guaranteed:

Answer 19

the establishment agrees to provide goods and services at the time of need for an amount not to exceed the amount of the preneed contract and any interest earned on that amount, and may be guaranteed for a set number of years.

Question 20

for guarantees with an expiration date,

Answer 20

they may have an option to extend the guarantee for an additional fee. Usually these contract agreements guarantee funeral home charges, but not cash advance charges.

Question 21

when a funeral service prepaid contract is non-guarenteed:

Answer 21

none of the prices on the contract are guaranteed to be the same when the provisions of the contract are carried out at the time of need

Question 22

(non guaranteed contract) the funeral establishment agrees to apply the amount prepaid (and any interest earned) to the final balance due at time of need but

Answer 22

the final balance due is based on the current prices associated with providing the goods and services at the time of need

Question 23

Individuals may open a:

Answer 23

savings or passbook account, purchase a certificate of deposit or open similar accounts with a financial institutionfor the deposit of funds to pay for funeral expenses

Question 24

depending on the state regulations these accounts could be

Answer 24

joint accounts naming the funeral establishment as an account holder, thereby allowing acess to the funds under ‘right of survivorship’ rules

Question 25

others may have a beneficiary listed:

Answer 25

by means of a TOD or POD generally speaking, these accounts are for the purpose of holding funds intended to pay for a funeral in the future, however, the funeral arrangements for which the funds are intended may or may not be preplanned.