News & FCAME Publications: Reference Guide
V. PREPAYING YOUR FUNERAL
| Introduction I. Funerals II. Cremation III. Earth Burial IV. Legalities V. Prepaying Your Funeral VI. Donation (Whole Body, Organ/Tissue) VII. Veterans Cemeteries |
What is meant by the term "pre-need"?
"Pre-need" is the term used by the funeral industry to describe an arrangement whereby a consumer pays for his or her funeral before the time of "need" (that is, before the time of death). Note that "need" is a euphemism for "death" in funeral industry parlance. Another term for PRENEED funeral is PREPAID funeral.
Is it wise to enter a pre-need agreement?
Generally, no. The FCA discourages pre-need arrangements because of the financial stranglehold they often place on unsuspecting consumers. Indeed Senator Charles Grassley of Iowa examined this very issue at Senate hearings on "Funerals and Burials: Protecting Consumers from Bad Practices," held on April 10 and 11, 2000. He stated: "Pre-need is a troubling area. It needs to be addressed head on, long before the baby boomers are buying these policies in massive amounts."
Approximately one-third of funerals involve pre-need contracts each year. What can go wrong? Survivors may be told they must spend additional sums to complete the funeral transaction though they thought all charges had been paid already. Consumers may have trouble receiving full refunds if they switch mortuaries, move elsewhere, or change their minds about body disposition. Also, high-pressure tactics are a notorious component of pre-need sales: one Florida mortician testified that sales personnel exerted such pressure that one woman ended up pre-paying $132,000! And a former pre-need salesman from California explained--from the prison where he is serving time--that he had absconded with thousands of dollars to be invested in pre-need trust funds.
(There is an instance where it might indeed be prudent to prepay funeral expenses, namely, if you need to “spend down” for Medicaid. Contact your county, state, or a local elderlaw attorney for further information.)
At Senator Grassley's hearings, industry representatives stated that the complaints cited were not representative of most consumers' experiences. We disagree: were pre-need sales not a problem, Senator Grassley would not have highlighted them, nor would he have warned: "Preneed agreements are among the least regulated products of the funeral industry."
What is the difference between PLANNING AHEAD (sometimes called pre-arranging) and PRE-PAYING?
The FCA ENCOURAGES PLANNING AHEAD, in which one sets forth his or her wishes WITHOUT PAYING ANY MONEY. Planning is advantageous because it:
- allows one to shop around and compare prices of mortuaries (which can save hundreds, even thousands, of dollars)
- allows for decisionmaking with a clear mind
- spares survivors the stress of having to second-guess the wishes of the deceased
The FCA DOES NOT ENCOURAGE PRE-PAYING because it is a financial arrangement in which protection cannot be assured.
Note: Some funeral homes use the term "pre-planning" as a euphemism for "pre-paying." Because there is profit in confusion, it is wise to inquire if money must be paid up front.