Preneed Contracts | remembering a life | NFDA

Preneed Contracts

Preneed Contracts

Preneed contracts are filled out if you are prearranging or prepaying for a funeral. It is very important that you always read a preneed contract very carefully and make sure you understand each provision before you sign.

Every preneed contract should include the following components to protect all parties in the agreement:

  • Identification of the seller (the funeral home provider), purchaser and person for whom the contract is purchased
  • Identification of trustee or insurer when applicable
  • Rights and obligations of all parties
  • Complete description of all goods and services purchased and their specific prices
  • How the contract is to be funded
  • How substitutions may be made if goods or services are unavailable at time of need
  • Ability-to-transfer agreement or funding to another funeral home
  • Effect of a change in beneficiaries
  • Where and amount of funds deposited until the funeral occurs
  • Tax implications, if any
  • Party responsible if additional funds are due at time of need
  • Party to receive any excess funds
  • Cancellation and refund policy
  • Effect of missed or late payments
  • What is included or excluded in any price guarantees.*

*There may be goods and services required at the time of the funeral that are not part of a preneed contract since they cannot be paid in advance. Always ask for clarification about the handling of any items that may still be needed when death occurs.

Questions to Ask

Before you make any decisions or sign any contract it is important to ask questions of the advance funeral planning professional. Below are some suggested questions. Write down any others you might have.

  1. Is a license or permit required in this state for you to sell preneed contracts? If so, do you have a license or permit?
  2. What is the name and address of the agency that regulates preneed in this state?
  3. Please explain the difference between the basic services fee for professional services and the other services that might be listed in the contract. Why are there two types of charges?
  4. Please carefully explain any price guarantees and any items that are not covered in my contract.
  5. What happens if I want to change the type of funeral service or what I’ve purchased at a later date?
  6. What happens if my family wants to make changes at my death?
  7. If I need the services of two funeral homes in two different states, will there be two separate bills?
  8. What happens if there isn’t enough money to pay for the funeral when I die?
  9. If I change my mind after signing, how much time do I have to cancel and have my deposit returned? If I cancel after the time limit has expired, what will I be refunded?
  10. How do I know my money is safe? Who do I contact to ask at any time about the status of my account?
  11. What happens to my contract if the funeral home goes out of business or changes owners?
  12. Is there any other vital information I need to know about possible additional charges, documents I’ll need, the cemetery purchase, graveside charges or ground or air transportation?