This is Article #4 of a 5 part series that Tate Mortuary had published in the “Tooele Transcript Bulletin” around February of 2005 addressing some frequently asked questions about funeral related issues.
Preneed funerals – selecting and paying for your funeral in advance.
The idea of paying for your funeral in advance has, in recent years, gained almost universal acceptance. Most agree that providing funding for this eventuality is a sound financial goal. From the perspective of the consumer, it lessens the concern that death will cause a financial burden on the survivors. It also provides peace of mind concerned one’s eventual passing. Whatever the motivation, there is merit in planning ahead. From the perspective of the funeral home, it provides a way to solidify a relationship with a family, provides a guarantee of payment for a burial contract, and provides a way to maintain or improve market share in the funeral home’s service area. In some areas, it is not uncommon for funeral homes to sell preneed door to door.
In this article, I will attempt to explain how preneed is sold here in Utah and some of the pros and cons of various funding methods. Before discussing preneed sold thru a funeral home, I will address final expense insurance. There are several insurance companies who sell insurance here in Utah specializing in policies that are intended to pay for funeral and burial costs. These policies pay a benefit in the amount of estimates of funeral costs. A couple of advantages of insurance are: You are not required to select specific products or services, only estimate the cost of your funeral. Also, insurance policies can be paid to any funeral home. This is important especially if you are young with a potential for relocation. Pre-paid plans with a funeral home may have substantial penalties for assigning proceeds to another funeral home. If you would like additional information regarding insurance, we will be glad to provide it to you.
Purchasing a funeral in advance from the funeral home. Preneed funeral purchase, as it is called, is available at almost all funeral homes. In Utah, state law requires that a preneed funeral be purchased thru a guaranteed product contract and that the sales person be affiliated with a funeral home. The contract guarantees that the goods and services listed on the contract are to be provided at the price listed, if it has been paid in full. Some funeral homes may put the money received into trust, while others may choose insurance.
There are a number of advantages to choosing a funeral in advance. First of all, there is no urgency and no emotion entering into the purchase. This advantage is negated if you are purchasing preneed for other family members at the time of a death. Second, it allows the opportunity to review the purchase with other family members or to compare prices between a number of funeral homes. Thirdly, if you find yourself uncomfortable with the funeral home, or the person assisting you or the way you are being treated, you can leave. One strong disadvantage of preneed is convertibility. This may be important to you if you are young or if your employer often requires employees to relocate. It is cumbersome and may be costly to transfer a preneed contract to another funeral home should you move. The amount of difficulty you encounter will depend upon the funeral home and the contract you sign. Read the contract carefully. Your contract may allow the funeral home to retain a significant portion if it is transferable. You should be aware that many, if not most, pre-need sales agents are compensated thru commission. So take your time.