Preneed funeral contract
An agreement, usually paid for in advance, for funeral goods and services to be provided when the person dies.
What it means
A preneed contract may be funded by an insurance policy or by money held in trust, and the two behave differently if the provider closes or the family moves.
Whether the price is guaranteed matters more than the total: a guaranteed contract fixes the cost of the goods and services, a non-guaranteed one does not.
Portability and cancellation rights vary — some contracts can be moved to another provider or refunded, some cannot.
Why it matters
It is a purchase made years ahead, and the family who has to use it usually does not know what it covers. Finding the paperwork is the first problem.
Where a person moves to another state, or the provider is sold, the value of the contract can change substantially.
When you are likely to meet it
- When a parent says arrangements are already paid for.
- When making arrangements for yourself.
- When a funeral home mentions an existing contract.
How this varies by state
How preneed money must be held, whether the contract is portable, and what cancellation rights exist are all set by state law and differ a great deal.