Funeral Services Preneed Funeral Planning 2 — Questions and Answers
Question 1: A preneed contract that specifies exact goods and services to be provided, regardless of price changes at the time of death, is called a:
- Guaranteed preneed contract (Correct answer)
- Revocable trust contract
- Itemized pay-at-need agreement
- Indexed preneed contract
Correct answer: Guaranteed preneed contract
A guaranteed preneed contract locks in specific merchandise and services at the contracted price; any cost difference is absorbed by the funeral home.
Question 2: Under the FTC Funeral Rule, a funeral home must provide a General Price List (GPL) to anyone who:
- Signs a preneed contract
- Inquires in person about funeral arrangements or prices (Correct answer)
- Calls to inquire about cremation only
- Visits to plan a funeral more than 30 days in advance
Correct answer: Inquires in person about funeral arrangements or prices
The FTC Funeral Rule requires funeral homes to offer the GPL to anyone who inquires in person about funeral arrangements or the prices of funeral goods or services.
Question 3: What happens to the interest earned on preneed trust funds in most states?
- It is forfeited to the state
- It stays in the trust and is applied to the final bill or returned to the family (Correct answer)
- It is paid to the funeral director as a commission
- It is donated to a state consumer protection fund
Correct answer: It stays in the trust and is applied to the final bill or returned to the family
In most states, interest earned on preneed trust funds remains in the trust and is used to offset cost increases or is refunded to the estate upon death.
Question 4: Which of the following is a key difference between a revocable and an irrevocable preneed contract?
- Revocable contracts can never be transferred to another funeral home
- Irrevocable contracts count as an asset for Medicaid purposes
- Revocable contracts allow the purchaser to cancel and receive a refund (Correct answer)
- Irrevocable contracts must be funded by life insurance
Correct answer: Revocable contracts allow the purchaser to cancel and receive a refund
A revocable contract allows the purchaser to cancel the agreement and reclaim their funds, while an irrevocable contract does not allow cancellation.
Question 5: A funeral director selling preneed contracts must typically hold what type of license in addition to their funeral director license?
- Real estate license
- Preneed sales license or registration (Correct answer)
- Securities dealer license
- Life and health insurance producer license
Correct answer: Preneed sales license or registration
Most states require funeral directors who sell preneed contracts to hold a separate preneed sales license or registration issued by the state regulatory authority.
Question 6: If a funeral home goes out of business, what protects the preneed funds of its customers?
- FDIC insurance coverage
- The state preneed consumer protection fund or mandated trust requirements (Correct answer)
- The funeral home's general liability policy
- A federal escrow account managed by the FTC
Correct answer: The state preneed consumer protection fund or mandated trust requirements
State-mandated trust requirements and, in many states, preneed consumer protection funds ensure that funds are available to customers even if the funeral home closes.
Question 7: Which document given to a preneed purchaser outlines all the specific funeral goods and services included in their arrangement?
- Statement of Funeral Goods and Services Selected (Correct answer)
- General Price List
- Outer Burial Container Price List
- At-Need Arrangement Conference Form
Correct answer: Statement of Funeral Goods and Services Selected
The Statement of Funeral Goods and Services Selected (SFGSS) is the itemized form required by the FTC Funeral Rule that lists everything the consumer has chosen and their prices.
Funeral Services Preneed Funeral Planning 2
A preneed contract that specifies exact goods and services to be provided, regardless of price changes at the time of death, is called a: