To help you ask informed questions of your funeral director, refer to the following guidelines:
Options. Ask a licensed funeral director what prepayment options are available.
Shop around. Compare products and prices of several funeral homes. All funeral homes are required to provide detailed written price information.
If you choose a trust fund, find out how and where the funds are invested. Make sure you receive confirmation of your deposit soon after the trust is opened and, thereafter, at least annually. If you select an insurance policy or annuity contract, understand the terms and conditions of the policy as well as who the underwriter is. Make sure you receive confirmation soon after the premium is paid, either through receipt of the policy or by a group certificate.
Check the current interest rate or yield.
Ask what the current interest rate or yield is on the plan you have selected (trust, insurance or annuity). Check your account periodically to verify that it is keeping up with inflation.
Understand the difference between revocable and irrevocable agreements.
A revocable agreement is refundable, while an irrevocable agreement is non-refundable. You can benefit from a revocable agreement in that you are entitled to a refund at any time. When the agreement is part of SSI/Medicaid or General Assistance eligibility determination, irrevocable funeral arrangements are necessary and cannot be refunded.
Understand the difference between guaranteed and non-guaranteed pricing.
Both pricing models have certain advantages, disadvantages and limitations. Find out what is or is not covered by the guarantee.
Before signing any paperwork, be sure to:
- Ask what will happen to any excess proceeds. Some plans refund the difference directly at the time of service; others allow the funeral director to disburse the refund shortly thereafter. Excess funds in an irrevocable trust must be sent to the State of New Jersey.
- Have a family member or friend present during your arrangement.
- Review the contract with someone you trust.
- Ask questions. Not all prefunded plans are the same.
Keep your paperwork in a safe place and inform others where it is stored. Do not keep it in a safe deposit box because it will be sealed at the time of death.