Preplanned Funeral

Preplanned Funeral

Preplanned Funeral

Preplanned Funeral Basically, a "preplanned," "preneed," or "prearranged" fu neral plan is a promotional contract providing for the furnish ing of funeral services and incidental merchandise, such as caskets, outer cases of caskets, and vaults, either with or with out accompanying funeral services. The goods and services are not to be delivered or performed until they are needed, that is after the death of the person purchasing them.

Such plans are referred to as "preneed" because they involve the payment by the purchaser, often on the installment plan, of sums of money years or months or even decades in advance of death, the time of "need." The funds may be paid in weekly, monthly or yearly install ments or may be paid in a lump sum. The acute and often pressing regulatory problem centers around the disposition of the funds paid under such contract, during the period (which may be of some extended duration) before the "need" actually arises.

Some safeguard is necessary to prevent the wrongful diversion, or even the inadvertent dissipation, by the promot ers of the funds paid by the purchasers before the funds are to be applied under the contract terms to the funeral or burial expenses, at the time of the death of the purchaser or pur chasers. Colorado was not alone in recognizing a need for regula tion. Approximately 30 states have attempted to deal with the problem by enacting legislation and have tried various devices. Some states, like Minnesota, have required that all advance payments be placed in trust by the individual or organization selling the contract plan.

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Colorado has provided that the business be regulated under the Banking Law, while other states have placed the contract plans under their insurance laws. Florida's statute is of considerable interest in that it provides that the purchaser of a burial insurance contract or "preneed" plan may demand a full refund of all sums actually paid upon giving five days' notice.

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