Funeral Rule - Pre-Need Contracts

Pre-Need Contracts

With the exception of a cemetery plot if you are certain of where you want to be buried or entombed, the Federal Trade Commission does not advocate purchasing pre-need contracts. The Funeral Rule states that all guidelines and rules set forth must be complied with at the time pre-need funeral arrangements are discussed, at the time of contract purchase and at the time of the actual funeral. The Funeral Rule does not cover the language and parameters of the actual pre-need contract, nor does The Funeral Rule set forth guidelines on things such as payment options, costs or ability to modify, transfer or cancel the contract, or administrative fees. If the survivors of the deceased pre-need contract holder inquire about funeral goods or services, alter the pre-need funeral arrangements or are required to pay additional sums of money, all relevant price lists and disclosures must be provided in writing, either printed or typewritten, by the funeral home in a format for them to keep. The survivors must also be provided, in writing, an itemized statement and final cost.

Individuals or organizations selling pre-need contracts on behalf of, or acting as an agent of, one or more funeral homes, but who themselves do not sell funeral goods or services, must comply with The Funeral Rule.

The Funeral Rule does not apply to pre-need funeral arrangements or pre-need contracts purchased before The Funeral Rule went into effect in 1984. However, if a pre-need contract purchased before 1984 is modified after 1984, the modification triggers all of The Funeral Rule's requirements.

Since the actual pre-need contract purchased is not subject to The Funeral Rule, the Federal Trade Commission advocates that consumers who purchase a pre-need contract consider the following: - Understand if funeral goods or services, or both, have been purchased. - Where are the pre-paid funds held? Rules governing the custody of pre-paid funds vary state by state. - Pre-paid funeral arrangements are not covered by federal law and state law varies state by state. - Who benefits from the interest income if the pre-paid funds earn interest? - What protections are in place for the consumer in the event that the funeral home holding the pre-need contract goes out of business or is purchased by a national funeral home chain or is merged into another funeral home. - The specific cancellation or revision policy, including the refund policy. - Transferability of the pre-need contract to another funeral home and the associated expenses. - Up-front and on-going administrative or other fees paid to the funeral home.

A Pre-Need Funeral Contract is not, and should not be confused with a Pre-Need Funeral Plan, also known as a Funeral Plan.