pre need and arrangements Flashcards
pre need
funeral arrangements made in advance of need
reasons to preplan/pre fund
- make wishes known to NOK
- less emotional and more intelligent
- NOK relieved of financial burden
- merchandise preferences secured
- record statistical information
- can be legally binding
- reduction of assets for public aid
prefunded funeral arrangements
arrangements in advance of need with provisions for funding or prepayment
preplanned funeral arrangements
funeral arrangements made in advance of need that do not include provisions for funding or prepayment
preneed contract - revocable
the contract may be terminated by the purchaser any time prior to the death with a refund of the monies paid
preneed contract - irrevocable
contract cannot be terminated or cancelled can only be used to fund the funeral
preneed contract - guaranteed
fh guarantees that the services and merchandise will be provided at the time of need for an amount not exceeding the original amount of the contract plus any interest regardless of the cost of providing the services and merch at time of death
preneed contract - non guaranteed
fh only agrees that that amount prepaid plus any interest will be credited to the balance due, however the price of the funeral will be whatever the current price is for the services and merch at the time the death occurs
prefunded contracts in general
- trust accounts or life insurance policies
- cant take money and put directly in fh account since service hasn’t been provided yet
- “stored” for safekeeping so available at death
- follow FTC rules
insured plan
- prefunded through specialized life insurance policy
- if insured dies while making payments the balance due is paid by insurance depending on health questions answered within 1-2 years
- long term payment options
- lump sum payment
noninsured/dollar for dollar
- prefunded through specialized life insurance policy
- if insured dies while making payments on policy, balance due is paid by NOK
- no common
- may/may not be price guaranteed
alterations to prefunded contracts
- limited by state law/rule
- no changes to type of disposition without intervention of court
- can make changes to location, merchandise
- if merch/items are not available must offer equal or greater value equivalent
who can sell preneed
- if unfunded = anyone
- if funded = funeral directors and funeral home employees with licensure
insured
is the person for whom the prearrangements are made
owner
the person who pays for the policy
assignee
the person/entity receiving funds that are paid (often the funeral home)
beneficiary
the person who will receive any unused funds
insurance funded through funeral home
- “free look” period (30 days)
- FTC “cooling off rule” = 3 day right to cancel if sale made in “temporary location”
premium
payment made to an insurance company (single or multi pay)
health questions for insurance
to determine if the policy will pay the total amount of the policy if death occurs before all payments are made (first day coverage)
graded policy
- when there is a waiting period before the policy will pay in full
- usually done when health conditions are present
- after 1-2 year period usually paid in full
contestable policy
when death occurs within first year or two insurance company will ask for medical records to confirm initial health questions
trust
bank account set up by the funeral home to deposit monies given to funeral home to fund prearrangements
information on trusts
- need tax ID and permit to open
- made as commingled or separate accounts
- some states FH can take 10%of the total and only deposit 90%
insurance funded through outside insurance company
- whole life, term, or other (annuity, employer life insurance policy)
- must be in good standing at time of death
assignment
an at need promise of payment by the beneficiary for goods and services
- funds sent directly to FH
- excess sent directly to beneficiary
pre assignment
a prearranged assignment of insurance benefits in good faith or by making FH beneficiary (not considered funded prearrangement)
payable on death account
- totten trust account
- savings account created to be paid out at death to a beneficiary
- not subject to probate
- can be used at any FH and moved to any bank
- earnings can be taxed
- countable asset by medicaid
wills
- instructions for death may be included
- families do not always know where or if it exists
- may have trouble accessing it depending on location
consumer trust
- many types
- sometimes used as part of a comprehensive estate plan
- doesn’t take the place of a will, involves specific assets
- controlled by the “trustee” who would be making payments to the FH
power of attorney
- allows the “principle” to grant authority to an “agent” to handle all or some affairs
- cease ate death
durable power of attorney
- effective even if the principle becomes incapacitated
affidavit
- in some states an individual can transfer authority to another person to make at need funeral arrangements
arrangement conference
- meeting between the funeral director and the client family during which the funeral arrangements are discussed
- collect info and fill out forms to be filed and sent off
- intended to coordinate family, religious reqs., legal reqs., and local customs
location for conference
- should be private, quiet, comfortably furnished
- no desk, more of a dining room table setting
- funeral director should be close to the family
at beginning of conference…
- greet family at door and lead around
- once in conference room start with informal conversation
- gather information that unique and meaningful
the obituary
- biographical sketch concerning the death of a person in the media, newspapers, online memorials, programs
- paid and unpaid
death notice
a newspaper item publicizing the death of a person and giving service details
when discussing merchandise
- GPL and CPL before
- must accept 3rd party merch
- set expectations before taking them into selection room
burial transit permit (disposition permit)
a legal document, issued by a government agency, authorizing transportation and/or disposition of dead human body
death certificate
legal document containing vital statistics, disposition, and final medical information pertaining to the deceased
items to request ahead of time from family
- parents names
- birth date
- social security number
- DD214
when discussing financial arrangements
- provide GPL/CPL/OBCPL
- provide statement of funeral goods and services
methods of payment
- federal/state benefits
- employer death benefits
- prepaid funeral contract
- insurance assignment
immediate payment
pay entire amount at arrangement conference or by the day of the funeral
insurance assignment
assign an insurance policies’ proceeds over to the funeral home
credit card as payment
can be divided among family members - funeral home is charged a % of total by the credit card company as a user fee (put that fee somewhere else in bill to make up)
financial institution loan as payment
client goes to a bank or private lender for an agreement to lend the money
wait to settle the estate as payment
can be 6+ months before settled and payment is received
